India’s Enforcement Directorate (ED), the country’s financial crimes agency, said it searched premises linked to crypto exchanges CoinDCX and Delta Exchange India over alleged unauthorized cross-border transactions and a violation of foreign exchange law.
The agency said in a post on X that on Nov. 4 and Nov. 5 it searched three premises in Bengaluru linked to Neblio Technologies, which operates CoinDCX, and Excelium Technologies, which operates Delta Exchange, under Section 37 of the Foreign Exchange Management Act, or FEMA, the 1999 law that governs how money moves in and out of the country.
CoinDCX is India’s largest crypto exchange by trading volume. Still, its 24-hour trading volume of about $700,000, according to Coingecko, is far smaller than that of its global peers. Delta Exchange India’s is smaller still.
The two exchanges mentioned the visits in X posts last week. Neither had responded to CoinDesk’s request for comment before publication time.
The ED alleged that both platforms routed customer money abroad to trade derivatives and tokenized shares of foreign firms, even though neither was authorized to do so. The ED’s X post shared an ad from CoinDCX that read “Trade in U.S. stock futures” and said trading could start with just 100 rupees ($1.05).
According to the agency, CoinDCX moved money abroad in three ways.
On spot trades in some tokens, it said the exchange converted customers’ rupees into the stablecoin USDT, a token designed to track the U.S. dollar, and sent it to foreign exchanges, including Binance, KuCoin and Gate.io, to fill the orders. The ED said this was done bypassing the framework for cross-border money transfers.
It alleged the trades ran through an account in the name of a Costa Rica-based entity, which it found to be a paper entity, and that they were in fact made straight from CoinDCX through software links known as APIs.
In futures and options, the ED alleged that CoinDCX mirrored each customer’s positions on a foreign platform, one for one. When a user opened a position on the platform, a matching position opened on Binance, KuCoin, Bybit or Gate.io, through an account in the name of a Costa Rica-based group entity, which the ED also described as a paper entity. When the customer closed the position, the foreign one was closed too, and the deal settled abroad.
