The Enforcement Directorate (ED) has searched three premises in Bengaluru linked to cryptocurrency exchanges CoinDCX and Delta Exchange India over alleged violations of foreign exchange regulations. The searches took place on November 4 and 5 under the Foreign Exchange Management Act (FEMA), 1999. The agency is investigating cross-border transactions involving crypto derivatives and tokenized shares of foreign companies, with the alleged transaction volumes running into thousands of crores of rupees.
CoinDCX Allegedly Routed Customer Funds Through Overseas Exchanges
The agency alleges that the platforms offered spot crypto trading, futures and options, and trading in tokenized shares of overseas companies without the necessary authorisation. It is also examining whether customer funds were moved through foreign cryptocurrency exchanges using stablecoins such as USDT.
According to the ED, customers deposited money in Indian rupees on CoinDCX, which was allegedly converted into USDT and transferred to overseas platforms, including Binance, KuCoin, Gate.io and Bybit.
The agency claimed that some transactions were routed through an account belonging to a Costa Rica-based company, which it described as a paper entity. However, the actual trades were allegedly executed through CoinDCX’s application programming interfaces (APIs).
The ED also alleged that CoinDCX facilitated futures and options trading by opening matching positions on foreign exchanges against customer orders. Settlements reportedly took place on overseas platforms when users closed their positions.
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The investigation also covers tokenized shares of foreign companies such as Apple, Google and Tesla. The agency claimed that these trades were executed through Hyperliquid, an overseas decentralized cryptocurrency platform, rather than involving purchases of the underlying shares.
The ED further alleged that CoinDCX paid hundreds of crores of rupees in transaction fees to foreign exchanges through stablecoins, potentially bypassing FEMA requirements.
Delta Exchange Transfers Also Under Investigation
The ED alleged that a significant volume of Delta Exchange India’s derivatives and tokenized-stock transactions was routed through CoinDCX before being executed on overseas platforms.
The agency is also examining transfers worth hundreds of crores of rupees that Delta Exchange India allegedly made to its foreign associate entities.
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Delta Exchange India said it fully cooperated with officials during the searches and provided the requested information. The company also denied involvement in any cross-border transfer of virtual digital assets. CoinDCX had not issued a statement on the matter at the time of the report.
The ED said the products offered by both platforms may also raise questions under the Securities Contracts (Regulation) Act, the SEBI Act and the RBI Act. The investigation remains ongoing, and the allegations have not been established as violations.
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