India’s ED Raids CoinDCX and Delta Exchange
The ED is investigating possible FEMA violations involving USDT flows, derivatives, and tokenized shares through foreign exchanges. CoinDCX and Delta Exchange say they are fully cooperating.
Key Takeaways
- India’s ED searched offices linked to CoinDCX and Delta Exchange in an investigation into alleged unauthorized cross-border transactions and violations of currency law.
- According to the ED, customer funds were sent via USDT to foreign exchanges for derivatives and tokenized shares without permission.
- CoinDCX and Delta Exchange say they are fully cooperating and deny that customer funds were transferred across borders.
India’s financial investigation agency, the ED, searched offices linked to CoinDCX and Delta Exchange India in an investigation into alleged unauthorized cross-border transactions and violations of currency law. The case once again puts the spotlight on crypto exchanges in India, where regulators have long been taking a close look at money flows across borders.
What the ED Is Investigating
According to the ED, the searches took place on November 4 and 5 at three locations in Bengaluru linked to Neblio Technologies, the company behind CoinDCX, and Excelium Technologies, which runs Delta Exchange. The agency says the investigation falls under section 37 of the Foreign Exchange Management Act, better known as FEMA, the law that governs how money can move into and out of India.
The ED says both platforms sent customer funds abroad to trade derivatives and tokenized shares of foreign companies, even though they did not have permission to do so. In CoinDCX’s case, rupee funds were allegedly converted into USDT and then sent to foreign exchanges, including Binance, KuCoin, and Gate.io, to fill orders.
The agency also says CoinDCX had enterprise trading accounts on foreign crypto exchanges in earlier years and kept crypto assets there. According to the ED, part of the trading ran through a Costa Rican entity that was effectively a shell company. For futures and options, customer positions were allegedly mirrored one to one on foreign platforms, including Binance, KuCoin, Bybit, and Gate.io.
Delta and CoinDCX Respond
CoinDCX said on X last week that ED officials visited on November 4 for what the company called a routine inquiry. The crypto company says it is fully cooperating and says it operates in line with Indian law, including FEMA, KYC, AML, and reporting requirements. According to CoinDCX, trading, deposits, and withdrawals remain available as usual.
Delta Exchange India also acknowledged the ED visits and said the company continues to operate normally, while customer funds are held in Indian banks. The platform says its activities do not involve cross-border transfer of VDAs and that it has been registered with India’s Financial Intelligence Unit as a reporting entity since 2023.
Why This Matters
For European crypto followers, this matters mainly because India is tightening its oversight of crypto platforms, especially products that look like derivatives, tokenized shares, and stablecoin-driven money flows. The case also shows how quickly a crypto exchange can come under scrutiny when rupee deposits move through USDT and foreign platforms. The ED has carried out similar searches at other Bengaluru companies before, which suggests this is not an isolated incident. The rise of tokenized shares also makes it clear why regulators are paying extra close attention to products that combine stocks and crypto rails.