India’s Enforcement Directorate (ED), the country’s financial crimes watchdog, searched three premises linked to CoinDCX and Delta Exchange India on November 4 and 5. The allegations centre on unauthorized cross-border trades under the Foreign Exchange Management Act of 1999 (FEMA). Both platforms deny wrongdoing and say their services are running normally.
🔑 Key Takeaways
- The ED searched three premises tied to Neblio Technologies (CoinDCX) and Excelium Technologies (Delta Exchange India) on November 4 and 5.
- The agency alleges offshore execution via Binance, KuCoin, Bybit, Gate.io and Hyperliquid without authorization.
- Volumes are cited in the tens of billions of rupees, but they are notional figures, not net outflows.
- Both firms say operations are normal; no findings have been established and the probe is ongoing.
Searches Built on the FEMA
The ED’s Bengaluru zonal office carried out the operations on November 4 and 5 at three premises linked to Neblio Technologies Private Limited, which operates CoinDCX, and Excelium Technologies Private Limited, which operates Delta Exchange India. The agency disclosed the searches on November 6. They were conducted under Section 37 of FEMA, the law governing the movement of funds into and out of India.
According to the ED, the probe followed information pointing to unauthorized cross-border transactions involving crypto derivatives, real-asset-backed tokens and tokenized equities. The central question is therefore whether these flows crossed the border within an authorized framework, regardless of the technology used.
Three Alleged Flows, Three Mechanisms
The ED says CoinDCX and Delta Exchange India offered Indian clients spot trading, futures and options on cryptocurrencies, as well as products tied to foreign stocks, without authorization. A CoinDCX advertisement cited in an ED publication invited users to “trade US stock futures” from 100 rupees, or about $1.05 according to the release. The agency argues that neither platform was permitted to offer these products.
The filing describes three flows, summarized in the table below.
| Flow | Alleged mechanism | Offshore platforms cited |
|---|---|---|
| Spot | Rupees, then USDT, transfer and execution abroad | Binance, KuCoin, Gate.io |
| Futures and options | Mirror position opened via API, closed when the client closes | Binance, KuCoin, Bybit, Gate.io |
| Foreign equities | Conversion to USDT, matching positions | Hyperliquid |
Spot: A Two-Step Circuit
In spot trading, the client deposits rupees on CoinDCX and places a buy order for tokens. The platform converts the rupees into USDT, a stablecoin pegged to the US dollar, and transfers the USDT to offshore exchanges, including Binance, KuCoin and Gate.io, where the order is executed. The ED says this route bypasses the framework governing cross-border fund transfers. Trades ran through an account held in the name of a Costa Rica-based entity, which the agency labels a “façade entity”, and were sent directly from CoinDCX via application programming interfaces (APIs).
Futures and Options: Mirror Positions
For derivatives, the ED alleges that CoinDCX replicated client positions on a one-for-one basis on foreign platforms. When a user opened a position in India, a corresponding position was opened on Binance, KuCoin, Bybit or Gate.io, through an account held by a group entity based in Costa Rica. When the client closed the position, the offshore leg was also closed and the trade settled abroad.
Foreign Equities: The Hyperliquid Detour
The third flow concerns products linked to foreign equities. The ED says client funds were allegedly converted into USDT and used to open matching positions on Hyperliquid, a foreign decentralized trading platform, which were closed when clients closed their own. CoinDCX’s guide to its “Global Futures” describes perpetual contracts linked to global stocks and indices, tradable in rupees, that give price exposure without conferring ownership of the underlying share. Its guide to US stock futures cites Tesla, Apple, Meta and Alphabet, and the ED names Apple, Google and Tesla among the companies concerned.
Volumes That Are Hard to Interpret
The ED puts each of the three flows in the tens of billions of rupees. Other reports express the volume in “thousands of crores”. One crore equals 10 million rupees, and both formulations are consistent with volumes of several tens of billions. Delta Exchange India is also under scrutiny: the ED values at several tens of billions of rupees the derivatives and tokenized securities transactions allegedly routed through CoinDCX, and is examining several billion rupees sent to affiliated entities abroad, an amount some summaries describe as hundreds of crores.
A technical point is essential: a figure in the thousands of crores measures notional trading volume. On its own, it cannot establish that the amount corresponded to new funds leaving India. A rigorous reconciliation must separate notional volume, collateral transferred, cash or stablecoin settlement and any funds returned. The same reasoning applies to the transaction fees of several billion rupees that the ED says were paid to offshore platforms and booked as business expenses.
Market data remains thin. CoinDCX was presented as India’s largest crypto exchange by trading volume, yet CoinGecko recorded a 24-hour volume of roughly $700,000, well below those of its global peers. Delta Exchange India’s volume was even lower. The sources document no price move or measurable volume shift following the searches.
Company Responses and Earlier Incidents
CoinDCX said on X that ED officials visited its Bengaluru office on November 4 as part of a “routine inquiry” and that the company had fully cooperated. The exchange says it complies with all applicable Indian laws, including FEMA 1999, and with its know-your-customer, anti-money-laundering and reporting obligations. Trading, deposits and withdrawals remain fully operational, it added.
Delta Exchange India also acknowledged the visits, stating that its platform operates normally and that client funds are held in Indian banks. The company said:
“At Delta Exchange India, our business does not involve any cross-border transfer of virtual digital assets, in any form or manner whatsoever.”
Delta Exchange India, statement posted on X
Delta also says it has been registered with the Financial Intelligence Unit-India as a reporting entity since 2023. Before CoinDesk published its report, neither CoinDCX nor Delta had replied to its request for direct comment, although both companies had published responses on X.
The searches should be distinguished from earlier security incidents affecting CoinDCX. Crypto.news references the reopening of rupee withdrawals after an intrusion that caused losses of $44 million. According to TradingView/Coinpedia, the searches followed by several weeks a deposit wallet incident that caused losses of about $16 million; that report also says blockchain investigator ZachXBT accused CoinDCX of initially denying the loss. The sources do not establish whether these are the same incident or two separate events, nor do they reconcile the two amounts.
Outlook: What Remains to Be Established
The ED’s allegations have not been proven and the investigation is ongoing. Several points must be established through the records of CoinDCX, the offshore platforms and the accounts involved: the true beneficial owner of the Costa Rica account, the origin of the assets funding the positions, the source of the stablecoins (company capital or client orders), and the relationship between local and foreign contracts, including which party owed payment on each side. For Hyperliquid, a trade record can identify the platform, account and transaction, but linking a specific position to rupee funding would require an allocation document or another reliable link.
Beyond FEMA, the agency has raised preliminary questions under the Securities Contracts (Regulation) Act of 1956, the Securities and Exchange Board of India Act of 1992 and the Reserve Bank of India Act of 1934. According to Crypto.news, these product-related questions are distinct from the suspected FEMA violations that prompted the searches. Three outcomes remain open: closure without further action, administrative or criminal penalties, or regulatory clarification that forces the platforms to revise their offering for Indian residents. None has been decided at this stage.
Sources
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