India’s Enforcement Directorate alleges that CoinDCX sent its users’ rupee deposits offshore as USDT and executed their spot, futures and tokenised-stock trades on foreign platforms including Binance, KuCoin, Gate.io, Bybit and Hyperliquid, largely through an account held in the name of a Costa Rica entity it describes as a paper company. The agency searched three Bengaluru premises linked to CoinDCX and Delta Exchange India on Nov. 4 and 5 under the Foreign Exchange Management Act. Both exchanges say they comply with Indian law and are operating normally.
What the ED alleges
The agency’s Bengaluru zonal office set out its case in a press release dated Nov. 6. It said the searches, carried out under section 37 of FEMA, targeted Neblio Technologies, which runs CoinDCX, and Excelium Technologies, which runs Delta Exchange India, over “large scale unauthorized cross-border financial transactions involving crypto token derivatives and Real World Asset (RWA) tokens.”
The ED described three routes. For spot trades, it said a user deposits rupees, the rupees are converted into USDT, and the stablecoin is sent to foreign platforms such as Binance, KuCoin and Gate.io to fill the order. Those trades ran through an account in the name of a Costa Rica-based entity, executed directly from CoinDCX through APIs, according to the release.
For futures and options, the agency said CoinDCX opened a matching 1:1 position on foreign venues including Binance, KuCoin, Bybit and Gate.io through an account in the name of a Costa Rica-based group entity, which it also called a paper entity. When the user closed the position, the offshore position was closed too.
The third route covers tokenised stocks. CoinDCX advertised trading in shares of foreign companies such as Apple, Google and Tesla. The ED said these were in fact derivative positions opened 1:1 on Hyperliquid, which it called “a foreign based decentralised crypto trading platform,” funded by converting user money into USDT.
The agency put the volume of each route at “thousands of crores” of rupees. One crore is 10 million rupees. It gave no precise totals.
Fees, foreign accounts and Delta Exchange
The release makes two more claims about CoinDCX. It says the exchange held crypto in enterprise trading accounts on foreign platforms in breach of FEMA. It also says CoinDCX paid “hundreds of crores of rupees” in transaction fees to those platforms, settled in USDT rather than through the foreign-exchange framework the law sets out.
On Delta Exchange India, the ED said a large share of its futures, options and tokenised-stock business was routed through CoinDCX, which then executed it on Binance, KuCoin, Gate.io, Bybit and others. It said Delta Exchange India had also transferred hundreds of crores to associate entities abroad, which it is investigating. The agency added that products offered by both platforms appear prima facie to run against the Securities Contracts (Regulation) Act, the SEBI Act and the RBI Act, and that those questions are “being further examined.”
How the exchanges responded
CoinDCX said ED officials visited its Bengaluru office “as part of a routine enquiry on 4th November,” that it cooperated fully, and that it complies with Indian law “including FEMA (1999).” It said trading, deposits and withdrawals “remain fully operational.” The ED, by contrast, described searches carried out over two days. The CoinDCX statement did not address the Costa Rica account, the offshore execution or the fee payments.
Delta Exchange India said it was operating as usual, that user funds “remain secure in Indian banks,” and that it has been registered with India’s Financial Intelligence Unit as a reporting entity since 2023. It went further than CoinDCX on the central allegation: “At Delta Exchange India, our business does not involve any cross-border transfer of VDAs in any form or manner. We operate a dedicated INR-settled exchange for Indian users only.”
The two accounts do not necessarily collide head-on. The ED did not say Delta itself moved crypto abroad. It said Delta’s derivative orders were routed through CoinDCX, which executed them offshore, and that Delta sent money to associate entities overseas. How the order flow between the two companies worked is likely to be central to the case.
Why it matters
The case goes to how Indian platforms have been able to offer deep crypto futures markets and exposure to U.S. stocks to local users. If the ED’s description holds, part of what users saw as trading on an Indian exchange was a front end for offshore order books, paid for in stablecoins outside India’s foreign-exchange rules.
FEMA contraventions are dealt with through civil adjudication, so the immediate risk is financial rather than criminal. Under section 13 of the Act, a contravention can draw a penalty of up to three times the sum involved where that sum can be quantified. With volumes described in thousands of crores, the exposure could be large, though no penalty has been proposed and no case has been adjudicated.
The probe also lands in an increasingly crowded market. Coinbase relaunched in India in June with rupee transfers and perpetual futures, and local platforms have been competing on derivatives and tokenised stocks.
What to watch next
The ED said further investigation is in progress. Watch for a show-cause notice under FEMA, any move by SEBI or the Reserve Bank on the securities and banking questions the agency raised, and whether CoinDCX responds directly to the routing allegations.
FAQ
Are CoinDCX and Delta Exchange India still operating?
Yes. Both exchanges said trading, deposits and withdrawals are functioning normally after the searches.
Has the ED charged either exchange?
No charge or penalty has been announced. The ED carried out searches under FEMA, which is enforced through civil penalties, and said its investigation is continuing.
Which foreign platforms does the ED name?
The release names Binance, KuCoin, Gate.io and Bybit for spot and derivatives trades, and Hyperliquid for CoinDCX’s tokenised-stock product.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
