ED Searches CoinDCX & Delta Exchange Over Alleged Illegal Cross-Border Transfers

The Enforcement Directorate (ED) conducted searches at three premises linked to crypto exchanges CoinDCX and Delta Exchange India (DEI) over alleged unauthorised cross-border transactions involving crypto derivatives and tokenised foreign stocks. 

In a statement, the agency said the searches were conducted between November 4 and November 5 across Bengaluru. The crypto trading transactions in question run into thousands of crores of Rupees, as per ED.

“ED Bengaluru has conducted search(es) at three premises linked to Neblio Technologies Pvt. Ltd. (CoinDCX parent) and Excelium Technologies Pvt. Ltd.(which operates Delta Exchange India) under FEMA 1999 in the case of large scale unauthorised cross-border financial transactions involving crypto token derivatives and real world asset tokens,” said ED in a statement.

As per the directorate, ED began its probe into the matter after receiving information of alleged forex violations by CoinDCX and Delta Exchange India.

The agency alleged that CoinDCX and Delta Exchange India facilitated spot trading, futures and options (F&O) trading and trading in tokenised shares of foreign companies – all through cryptocurrencies. 

ED also claimed CoinDCX advertised these products despite not being authorised to offer them.

While CoinDCX is yet to issue a statement on the matter, Delta Exchange India said that it cooperated “fully” with the officials and furnished the information sought. In a post on X, the crypto exchange further claimed that it is not involved in “any cross-border transfer of VDAs (virtual digital assets) in any form or manner”.

“We acknowledge the Enforcement Directorate’s statement regarding their visit to our premises on 4th & 5th November… We cooperated fully with the officials and provided the information that they sought. We remain committed to extending our support and cooperation as may be required…,” said Delta Exchange India. 

CoinDCX’s Alleged Modus Operandi

According to the ED, user funds (deposited in Rupees) were allegedly converted into stablecoins, primarily USDT, and then transferred to overseas crypto platforms including Binance, KuCoin, Gate.io and Bybit. The agency alleged that these transfers circumvented forex rules governing cross-border money transfers.

For spot trades, the ED alleged that CoinDCX used an account, opened in the name of a Costa Rica-based entity, to send the USDT to foreign crypto platforms. Describing the Costa Rican company as a mere “paper entity”, the agency alleged that the transactions were allegedly actually executed directly through CoinDCX APIs.

The directorate also made similar allegations for CoinDCX’s F&O product. ED said that the homegrown platform allegedly opened matching positions via APIs on foreign platforms after users placed orders, with settlements occurring overseas when positions were closed.

The ED also claimed that tokenised-stock trading on CoinDCX was routed through Hyperliquid, an overseas decentralised crypto trading platform. It said that user funds were converted into USDT to open positions, with settlements completed on the overseas platform.

The alleged volumes of spot, derivatives and tokenised-stock transactions were described as running into thousands of crores of rupees. The ED also alleged that CoinDCX paid hundreds of crores in transaction fees to foreign platforms in stablecoins. This, the agency said, contravened forex rules.

Delta Exchange India Under ED Radar

Just like CoinDCX, the Enforcement Directorate also alleged that Delta Exchange India offered spot trading, crypto derivatives and tokenised foreign stocks via cryptocurrencies. 

It alleged that a large volume of DEI’s derivatives and tokenised-stock transactions was routed through CoinDCX, which in turn executed them on foreign platforms. 

The agency alleged that Delta Exchange India also transferred hundreds of crores of Rupees to overseas associate entities. These transfers are under investigation, added the ED.

In a statement, the ED said the fintech products offered by both crypto exchanges appear to have prima facie contravened norms under the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992 and the Reserve Bank of India Act, 1934. The investigation remains ongoing. 

The searches are part of ED’s broader clampdown on forex violations involving crypto platforms. Just days ago, the directorate launched a probe into alleged FEMA violations involving crypto platforms Mudrex and Saber.money as well as decentralised finance (DeFi) protocol Instadapp and its associated platform, Fluid, over alleged unauthorised cross-border fund transfers worth more than ₹4,940 Cr.

Prior to this in June this year, the ED had also searched six premises linked to five platforms, namely Transak, Carret, Xpat, Onramp.money and Onmeta, over alleged unauthorised cross-border crypto transfers. 

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