Crypto in India: CoinDCX and Delta Exchange targeted by searches

India is tightening the screw. The Enforcement Directorate (ED), the Indian agency responsible for financial investigations, raided three premises in Bengaluru on November 4 and 5. It suspects CoinDCX and Delta Exchange India of having executed transactions abroad in violation of Indian foreign exchange regulations. The investigation concerns in particular crypto derivative products and contracts presented as tokenized shares.

The key points of this article

The ED raided three premises linked to CoinDCX and Delta Exchange India in Bengaluru.

According to the agency, CoinDCX allegedly converted rupees into USDT to execute certain orders on foreign platforms.

Products presented as tokenized shares of Apple, Google or Tesla would have given rise to positions on derivative products via Hyperliquid.

CoinDCX claims to comply with Indian foreign exchange law. Delta Exchange India states that its business does not involve any cross-border transfer of cryptoassets.

CoinDCX suspected of having executed orders abroad

According to the ED press release, CoinDCX would have converted into USDT the rupees deposited by its clients to execute certain spot orders on Binance, KuCoin or Gate.io. For futures and options, the platform would have opened an equivalent position on a foreign platform (Bybit) then closed it at the same time as that of the client.

The agency claims that CoinDCX directly executed these transactions through accounts opened in the name of a group company based in Costa Rica, which it describes as an empty shell.

The ED describes a similar mechanism for products marketed as tokenized shares. According to her, the orders gave rise to positions on derivatives traded via Hyperliquid and whose value followed the price of securities like Apple or Tesla. The agency estimates the volume of each of the three circuits at tens of billions of rupees.

CoinDCX and Delta Exchange India defend their activities

The agency estimates that a significant portion of Delta Exchange India's transactions in derivatives and tokenized securities passed through CoinDCX before being executed overseas. It is also examining separate transfers to Delta-linked companies outside India, amounting to several billion rupees. Delta ensures that its users' funds remain in Indian banks and that transactions on its platform are settled in rupees.

CoinDCX called the November 4 visit a routine check and said it cooperated fully with investigators. The platform claims to respect the foreign exchange law as well as its customer identification and anti-money laundering obligations. Both companies say trading, deposits and withdrawals are operating normally.