India Probes CoinDCX, Delta Exchange Over Alleged Offshore Crypto Trading Worth Thousands Of Crores
India’s Enforcement Directorate (ED) has searched premises linked to crypto exchanges CoinDCX and Delta Exchange in Bengaluru. The agency alleges unauthorised cross-border transactions in crypto derivatives and tokenised assets worth thousands of crores.The ED’s Bengaluru Zonal Office searched three premises on November 4 and 5 under Section 37 of the Foreign Exchange Management Act (FEMA), 1999, according to a statement from the agency.Who Is Under InvestigationThe ED said the case began with information alleging large-scale FEMA violations by two companies:Neblio Technologies Private Limited: operates CoinDCXExcelium Technologies Private Limited: operates Delta ExchangeAccording to the ED, both platforms offered crypto futures and options, trading in real-world asset tokens and tokenised stocks of foreign companies. The agency said they openly advertised tokenised foreign stock trading even though they were not authorised to offer it. One CoinDCX advertisement promoted “Trade in US Stock Futures” starting at ₹100.How The Alleged Spot Trading Scheme WorkedThe ED described what it called “double hop” spot trading transactions on CoinDCX:A user deposits Indian rupees on the platformThe user places an order to buy a crypto tokenThe rupees are converted into the stablecoin USDTThe USDT is sent to foreign exchanges, including Binance, KuCoin and Gate.io, where the order is executedThe agency alleged that these transfers bypassed the framework for cross-border money transfers. It said the trades ran through an account held in the name of a Costa Rica-based entity, which it described as a “paper entity”, and were carried out directly from CoinDCX through application programming interfaces (APIs).According to the ED, the volume of these cross-border spot transactions runs into thousands of crores.Futures And Options Allegedly Mirrored AbroadThe ED alleged that CoinDCX’s futures and options products were also executed on foreign platforms, including Binance, Bybit, KuCoin and Gate.io. According to the agency:When a user opened a position on CoinDCX, the exchange opened a matching position abroad through the Costa Rican entity’s accountThe trades were carried out directly through APIsWhen the user closed the position, settlement took place on the foreign platform, where the matching position was also closedThe ED said these cross-border futures and options transactions also run into thousands of crores.A Difficult Stretch For CoinDCXThe searches come weeks after CoinDCX faced scrutiny over a deposit wallet incident that led to losses of about $16 million. Blockchain investigator ZachXBT had accused the exchange of initially denying that the loss had taken place.The agency’s investigation is ongoing, and the allegations have not been proven.