Indian investigation into CoinDCX and Delta Exchange alleges involvement in tens of billions of rupees in offshore crypto transactions
The Indian Enforcement Bureau ( ED ) has raided premises in Bangalore related to the crypto exchanges CoinDCX and Delta Exchange. The agency claims that these platforms were involved in unauthorized cross-border trading of crypto derivatives and tokenized assets worth hundreds of billions of rupees.
According to a statement from the Enforcement Bureau, its Bangalore regional office conducted searches on three premises on November 4th and 5th in accordance with Section 37 of the Foreign Exchange Management Act of 1999 ( FEMA ).
Who is under investigation?
The enforcement bureau stated that the case originated from information regarding two companies' large-scale violations of FEMA.
- Neblio Technologies Private Limited : Operation CoinDCX
- Excelium Technologies Private Limited : Operation Delta Exchange
The enforcement agency stated that these two platforms offer encrypted futures and options, tokens for real-world assets ( RWA ), as well as tokenized stock trading of foreign companies. The agency noted that despite not having obtained authorization to provide these services, these platforms still publicly promote tokenized foreign stock trading. One advertisement for CoinDCX promotes "trading US stock futures for 100 rupees."
How does the so-called spot trading model operate?
The enforcement bureau described what it referred to as the “double-hop” spot trading on CoinDCX.
- Users deposit Indian Rupees on the platform.
- places an order to buy a certain cryptocurrency token.
- Rupees are converted into the stablecoin USDT.
- USDT was sent to overseas exchanges including Binance, KuCoin, and Gate.io to execute orders.
The institution claimed that these transfers bypassed the cross-border fund transfer frameworks. The enforcement authorities stated that these transactions were conducted through an account held in the name of a Costa Rican entity, which they described as a “paper entity,” and claimed that the transactions were initiated directly from CoinDCX via an application interface ( API ).
The enforcement bureau stated that the scale of these cross-border spot transactions reached hundreds of billions of rupees.
Futures and options are also said to be executed through offshore mirrors.
The enforcement bureau also alleged that the futures and options products of CoinDCX are also executed on overseas platforms, including Binance, Bybit, KuCoin, and Gate.io. According to the agency:
- When a user opens a position at CoinDCX, the exchange will open a corresponding position overseas through the account of that Costa Rican entity.
- Transactions are executed directly through API.
- When a user closes a position, settlement occurs on an overseas platform, and the corresponding position is also closed simultaneously.
The enforcement bureau stated that the scale of these cross-border futures and options transactions also reached hundreds of billions of rupees.
The tough times of CoinDCX
The search occurred CoinDCX weeks after the exchange came under attention due to a wallet recharging incident that resulted in losses of approximately 16 million US dollars. Blockchain investigator ZachXBT accused the exchange of initially denying that such losses had taken place.
The investigation into this institution is still ongoing, and the aforementioned allegations have not yet been confirmed.
