India’s Enforcement Directorate searched three premises in Bengaluru on November 4 and 5, targeting crypto exchanges CoinDCX and Delta Exchange. The agency alleged the platforms executed unauthorized cross-border transactions worth hundreds of millions of dollars through crypto derivatives and tokenized assets. These searches occurred under the Foreign Exchange Management Act, with the investigation focusing on Neblio Technologies and Excelium Technologies. Both firms openly advertised trading in tokenized shares of foreign companies despite lacking authorization for such activities.
The Alleged Mechanism
The Enforcement Directorate claims CoinDCX converted user rupees into USDT to bypass India’s framework for sending money abroad. When users placed orders, the exchange opened matching positions on Binance, KuCoin, Bybit, and Gate.io using a Costa Rican "paper entity." This shell structure allowed trades to run directly from CoinDCX through APIs, creating a clear breach of financial regulations. The agency further stated that tokenized stock trades for Apple, Google, and Tesla were actually derivatives positions on Hyperliquid. CoinDCX also holds enterprise accounts on these foreign platforms and has paid tens of millions of dollars in fees via USDT. A large share of Delta Exchange’s derivatives trading allegedly ran through CoinDCX, while Delta transferred funds to overseas entities.
Company Responses and Context
CoinDCX described the visit as a "routine enquiry" and stated it operates in strict compliance with Indian laws. The company noted that trading remains fully operational and that it adheres to KYC obligations as an FIU-registered entity. Delta Exchange claimed its business does not involve any cross-border transfer of VDAs and runs a dedicated rupee-settled exchange for Indian users only. It highlighted its registration with the Financial Intelligence Unit since 2023. These legal battles arrive during a turbulent period for CoinDCX, which confirmed a $16 million loss from retired wallets last month. That incident followed a roughly $44 million exploit in July 2025, a sequence of events that clearly undermines investor confidence in the platform’s security protocols. Coinbase recently won approval to increase its minority stake in the exchange’s parent company.
