India’s Enforcement Directorate (ED) searched CoinDCX and Delta Exchange India over overseas transactions. The November 4-5 Bengaluru searches examined suspected violations of the Foreign Exchange Management Act (FEMA).
ED Questions Overseas Trading Arrangements
Three premises were linked to Neblio Technologies, which operates CoinDCX, and Excelium Technologies, which operates Delta Exchange India.
The ED alleged that customer funds were routed abroad for cryptocurrency derivatives and tokenized foreign shares without authorization. The transactions allegedly involved tens of billions of rupees.
According to the ED, CoinDCX converted customer deposits into USDT before executing certain spot trades through Binance, KuCoin and Gate.io. The agency alleged that a Costa Rica-based entity was a paper entity.
Derivatives and Tokenized Shares Under Scrutiny. Bin
The ED alleged that CoinDCX replicated customers’ futures and options positions on overseas exchanges, including Bybit.
For tokenized shares linked to companies including Apple, Google and Tesla, the agency claimed that customer positions were mirrored on Hyperliquid, a decentralized trading platform.
The ED further alleged that Delta Exchange India routed substantial derivatives activity through CoinDCX, which subsequently executed transactions overseas.
Investigators are examining Delta’s foreign affiliates and payments made to offshore trading platforms. The agency also raised potential concerns under securities and central banking legislation, but its findings remain allegations.
Exchanges Reject Allegations of Noncompliance
CoinDCX described the November 4 visit as a routine inquiry and said its services remained operational.
“We operate in strict compliance with all applicable Indian laws, including FEMA (1999), and also adhere to all KYC, AML and reporting obligations,” the exchange stated.
Delta Exchange India said customer funds remained with Indian banks. “At Delta Exchange India, our business does not involve any cross-border transfer of VDAs in any form or manner,” it said.
Delta added that it has been registered with India’s Financial Intelligence Unit since 2023. Both exchanges said they cooperated with the authorities.
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