India's Enforcement Directorate Searches Crypto Exchanges CoinDCX and Delta Exchange, Alleging Offshore Routing of Indian Users' Trades

What happened: three locations searched

According to Decrypt, India's Enforcement Directorate searched three locations in Bengaluru linked to crypto exchanges CoinDCX and Delta Exchange over suspected violations of foreign exchange rules. Decrypt describes the ED as India's main financial crimes investigator. Decrypt says the searches were carried out on Nov. 4 and 5 under India's Foreign Exchange Management Act (FEMA). The ED's statement is dated Nov. 6 and was shared publicly on X on Thursday.

Decrypt reports that the ED alleges the platforms carried out unauthorized cross-border transactions worth hundreds of millions of dollars through crypto derivatives and tokenized assets. Derivatives are contracts, such as futures and options, whose value depends on another asset. Tokenized assets use blockchain tokens to represent assets such as stocks. The targets are Neblio Technologies, which operates CoinDCX, and Excelium Technologies, which runs Delta Exchange. The ED says both platforms offered futures and options on crypto tokens and openly advertised trading in tokenized shares of foreign companies without authorization.

How the ED says it worked

Decrypt reports that the ED alleges CoinDCX used stablecoins such as USDT to execute users' trades on offshore exchanges including Binance, KuCoin, Bybit and Gate.io. The ED says this bypassed India's framework for sending money abroad. Stablecoins are crypto assets designed to track a government-issued currency such as the U.S. dollar. The ED says that after users deposited rupees and placed orders, CoinDCX converted the funds into USDT and opened matching positions on the offshore exchanges. These orders included spot orders, which buy or sell the asset itself, as well as derivatives orders. The ED says the trades went through accounts held in the name of a Costa Rica-based group entity. It describes that entity as a shell entity, meaning a company that exists on paper without real operations. The ED also says the trades were carried out directly from CoinDCX through APIs. An API is a programming interface that lets computer systems send instructions to each other automatically.

Decrypt also reports the ED's claim that trades in tokenized shares of companies such as Apple, Google and Tesla were in fact derivatives positions opened on Hyperliquid. Hyperliquid is a decentralized exchange, which means it runs on blockchain programs rather than being operated by a single company. The ED further alleges that CoinDCX holds crypto assets in enterprise accounts on offshore exchanges. It also says CoinDCX paid tens of millions of dollars in fees to those platforms in USDT, in breach of FEMA.

Decrypt additionally reports the ED's claim that a large share of Delta Exchange's derivatives trading was executed through CoinDCX. The ED also says Delta Exchange transferred tens of millions of dollars to its overseas group entities, and those transfers are under investigation. The ED adds that the two firms' fintech products also appear to contravene India's securities and central banking laws, and that its investigation is ongoing.

How the two companies responded

According to Decrypt, CoinDCX said in a Nov. 6 post that ED officials visited its Bengaluru office "as part of a routine enquiry" on Nov. 4 and that it had fully cooperated. CoinDCX says it is registered with India's Financial Intelligence Unit. It says it follows its KYC (customer identity verification), anti-money-laundering and reporting obligations. The company also said trading, deposits and withdrawals remain fully operational.

Decrypt further reports that Delta Exchange said in a Nov. 6 post that it had cooperated fully with officials. Delta Exchange said its business "does not involve any cross-border transfer of VDAs in any form or manner." VDA (virtual digital asset) is India's term for crypto assets. The company says it runs a dedicated rupee-settled exchange for Indian users only and has been registered with India's Financial Intelligence Unit since 2023. It also says trading, deposits and withdrawals are functioning normally.

What this means for ordinary readers

The case shows that Indian authorities are scrutinizing two things. One is how crypto platforms handle local users' funds and offshore trading. The other is whether products such as tokenized stocks and derivatives are authorized. All statements so far are the ED's allegations and the two companies' responses, as reported by Decrypt. The investigation is ongoing and has reached no conclusion.

Decrypt also notes that CoinDCX confirmed last month a $16 million loss from retired wallets. A few days before that, its co-founder and CEO Sumit Gupta had called reports of a breach a "false alarm." Earlier, in July 2025, the exchange suffered an exploit of roughly $44 million. Decrypt also reports that Coinbase, which has invested in CoinDCX since 2020, won approval from India's competition regulator to increase its minority stake in the exchange's parent company.

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