India’s Enforcement Directorate has searched premises linked to CoinDCX and Delta Exchange India as part of an investigation into alleged violations of India’s foreign exchange rules. The action took place on November 4 and 5, when officials visited three Bengaluru locations connected to Neblio Technologies, the parent company of CoinDCX, and Excelium Technologies, which operates Delta Exchange India.
The probe is being conducted under Section 37 of the Foreign Exchange Management Act, 1999. According to the agency, the exchanges enabled customer exposure to offshore crypto derivatives and tokenized shares of foreign companies without the authorization required for cross-border financial transactions.
What the agency alleges
The ED said CoinDCX used multiple channels to move customer activity onto foreign venues. In one alleged route, rupee balances from certain spot trades were converted into USDT and then transferred to overseas exchanges including Binance, KuCoin and Gate.io to execute orders.
The agency further alleged that these transactions were routed through an account linked to a Costa Rica-based entity it characterized as a paper company. It said the trades were in practice executed directly through CoinDCX by using application programming interfaces, or APIs, rather than through an independently operating offshore intermediary.
Derivatives and tokenized stock exposure in focus
Investigators also described a similar setup for futures and options trading. According to the ED, customer derivatives positions on CoinDCX were mirrored one-for-one on foreign exchanges such as Binance, KuCoin, Bybit and Gate.io.
The agency separately questioned CoinDCX’s tokenized stock offerings tied to companies including Apple, Google and Tesla. It alleged that these products functioned as derivatives trades executed on Hyperliquid, with customer funds first converted into USDT before matching positions were opened overseas. The ED said each of the three transaction channels involved tens of billions of rupees.
Claims involving enterprise accounts and Delta Exchange India
Beyond transaction routing, the ED alleged that CoinDCX maintained enterprise accounts on foreign crypto exchanges, held crypto assets through those accounts and paid billions of rupees in transaction fees. According to the agency, those payments were made in stablecoins such as USDT, recorded as business expenses and handled in a way that breached FEMA requirements.
Delta Exchange India is also part of the same investigation. The ED said the platform offered spot trading, futures, options and tokenized shares of foreign companies, but investigators found that much of its derivatives and tokenized stock activity was routed through CoinDCX before being executed on overseas platforms. It estimated the value of those transactions at several tens of billions of rupees and said it is separately examining billions of rupees that Delta allegedly sent to overseas associate entities.
Company response and what comes next
Both companies acknowledged that officials visited their premises, but they disputed the implications of the probe. CoinDCX described the searches as part of a routine inquiry and said it fully cooperated with the authorities.
The ED has also said the products under review may raise issues beyond FEMA, including possible conflicts with the Securities Contracts (Regulation) Act, the SEBI Act and the RBI Act. For now, the confirmed next step is the continuation of the agency’s investigation into how the trades were structured, where customer funds moved and whether the relevant approvals were in place.
Source: cryptopotato.com