India’s Enforcement Directorate (ED) has alleged that cryptocurrency exchange CoinDCX routed Indian customers’ trading activity through overseas cryptocurrency exchanges using accounts held in the name of a Costa Rica-based entity. The agency is investigating suspected violations of the Foreign Exchange Management Act (FEMA), 1999, involving transactions worth thousands of crores of rupees.
The investigation follows searches conducted at three premises in Bengaluru linked to CoinDCX operator Neblio Technologies Private Limited and Delta Exchange India operator Excelium Technologies Private Limited on November 4 and 5, 2026. According to the ED, Indian rupee deposits were allegedly converted into USDT and transferred to overseas platforms to execute cryptocurrency trades and derivatives positions. CoinDCX and Delta Exchange have said they cooperated with the authorities, while the companies’ responses and the agency’s allegations remain important to understanding the ongoing investigation.
ED Alleges CoinDCX Used Costa Rica Entity to Route Crypto Transactions
The ED’s Bengaluru Zonal Office conducted searches under Section 37 of FEMA as part of an investigation into alleged unauthorised cross-border financial transactions involving cryptocurrency derivatives and tokenised real-world assets.
According to the agency, CoinDCX allegedly used accounts held in the name of a Costa Rica-based group entity to facilitate transactions on foreign cryptocurrency exchanges.
The ED has described the entity as a paper company allegedly used to circumvent India’s prescribed framework for cross-border money transfers.
The agency alleges that customers deposited Indian rupees into their CoinDCX accounts and placed orders for cryptocurrency trading. The platform allegedly converted the funds into USDT, a stablecoin pegged to the US dollar, before transferring the digital assets to overseas exchanges.
The transactions reportedly involved platforms including:
- Binance
- KuCoin
- Gate.io
- Bybit
The ED further alleged that the trades were initiated directly through CoinDCX’s application programming interfaces (APIs), even though the overseas accounts were held in the name of the Costa Rica-based entity.
The agency said the volume of the alleged cross-border spot transactions ran into thousands of crores of rupees.
These are allegations under investigation. The searches and preliminary findings do not by themselves establish that the companies have committed violations.
How the Alleged Overseas Trading Arrangement Worked
The ED’s investigation focuses on how transactions initiated by Indian customers were allegedly executed through foreign cryptocurrency platforms.
Under the alleged arrangement, a customer would deposit money in Indian rupees on CoinDCX and place an order to buy or sell a cryptocurrency.
CoinDCX would allegedly convert the funds into USDT and transfer the stablecoins to an overseas exchange. The customer’s order would then be executed through the foreign platform using accounts associated with the Costa Rica entity.
The agency claims that this arrangement enabled Indian users to access overseas trading liquidity while the underlying transactions were conducted outside the prescribed cross-border payment framework.
The alleged process can be summarised as follows:
| Stage | Alleged transaction |
|---|---|
| 1. Deposit | Customer deposits Indian rupees into CoinDCX |
| 2. Conversion | Funds are converted into USDT |
| 3. Overseas transfer | USDT is transferred to foreign exchange accounts |
| 4. Trade execution | Orders are executed on overseas cryptocurrency platforms |
| 5. Account structure | Foreign accounts are allegedly held through a Costa Rica-based entity |
The use of stablecoins is central to the investigation because USDT can transfer value across cryptocurrency platforms without using conventional banking transfers for each transaction.
The ED is examining whether the arrangements complied with the legal requirements governing foreign exchange transactions and cross-border transfers.
ED Also Investigates Crypto Futures and Options Trading
The investigation extends beyond spot cryptocurrency trading to futures and options contracts.
The ED alleges that when customers opened derivatives positions on CoinDCX, the platform opened corresponding positions on overseas exchanges through accounts associated with the Costa Rica-based entity.
Under the alleged arrangement, the foreign positions mirrored customer transactions on the Indian platform.
When a customer opened or closed a position, the corresponding overseas trade was allegedly opened or closed as well. The agency said settlements took place through the overseas trading infrastructure.
The ED is examining whether these arrangements amounted to unauthorised cross-border financial transactions under FEMA.
The agency also alleged that CoinDCX maintained enterprise trading accounts on foreign cryptocurrency exchanges and held crypto assets through those accounts in circumstances that may have violated the applicable foreign exchange framework.
Another issue under examination involves payments to overseas exchanges. The ED alleged that CoinDCX paid hundreds of crores of rupees in transaction fees to foreign platforms using USDT.
These payments are being investigated separately from the trading volumes cited by the agency.
Tokenised Stocks of Apple, Google and Tesla Also Under Scrutiny
The ED has also raised questions about CoinDCX’s products offering exposure to tokenised stocks of foreign companies.
The products reportedly included price exposure linked to companies such as Apple, Google and Tesla.
According to the agency, these products were not necessarily purchases of the underlying shares. Instead, the ED alleges that they involved derivative positions executed through Hyperliquid, an overseas decentralised cryptocurrency trading platform.
Under the alleged arrangement, customers deposited Indian rupees and placed orders for products linked to foreign stocks. The funds were reportedly converted into USDT, with corresponding positions opened on Hyperliquid.
This distinction is important because purchasing an actual share and trading a derivative linked to its price are different financial activities.
Owning a company’s stock can provide shareholders with rights associated with the underlying security, subject to the applicable terms. A derivative generally provides exposure to price movements without necessarily giving the customer ownership of the actual shares.
The ED is examining whether the products and their overseas execution complied with India’s applicable financial and foreign exchange regulations.
Delta Exchange India Also Faces FEMA Investigation
The investigation also involves Delta Exchange India, which operates through Excelium Technologies Private Limited.
The ED alleges that a substantial volume of Delta Exchange’s cryptocurrency derivatives and tokenised stock transactions was routed through CoinDCX.
According to the agency, CoinDCX subsequently executed the corresponding trades on overseas platforms, including Binance, KuCoin, Gate.io and Bybit.
The ED also alleged that Delta Exchange transferred hundreds of crores of rupees to overseas associate entities. These transactions are under investigation.
The agency said the combined trading activity involving the two platforms ran into several thousand crores of rupees.
However, the reported transaction volumes should not be confused with customer losses, company revenue or the amount of money allegedly transferred to foreign entities. They refer to different categories of financial activity.
CoinDCX and Delta Exchange Respond to ED Searches
Both companies have said they cooperated with the authorities during the searches.
CoinDCX described the officials’ visit to its Bengaluru office as a routine enquiry. The company said it provided the requested information and assistance and remains committed to complying with FEMA and other applicable Indian laws.
It also said that trading, deposits and withdrawals continued to operate normally following the visit.
Delta Exchange India said it cooperated with the ED and that its operations remained unaffected.
The company stated that it is registered with the Financial Intelligence Unit-India (FIU-IND) as a reporting entity and follows applicable know-your-customer and anti-money-laundering requirements.
Delta also maintained that its business operates as an INR-settled exchange for Indian users and does not involve cross-border transfers of virtual digital assets. It said customer funds remained in Indian banks and that trading, deposits and withdrawals continued normally.
The companies’ statements represent their positions on the investigation. The ED’s allegations and the platforms’ responses have not yet been resolved through a final adjudication.
Investigation Could Have Wider Implications for India’s Crypto Industry
The investigation raises questions about how Indian cryptocurrency platforms structure their access to overseas liquidity and execute customer transactions.
Crypto exchanges often rely on international infrastructure to support trading activity across different digital assets. However, arrangements involving overseas accounts, stablecoin transfers and foreign derivatives platforms can raise regulatory questions when Indian customers and rupee deposits are involved.
The ED has also said that certain products offered by the platforms appeared, prima facie, to raise issues under other Indian financial laws, including the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, and the Reserve Bank of India Act, 1934.
These aspects are being examined separately, and the agency has not announced a final determination on the alleged violations.
The investigation could encourage other cryptocurrency businesses to review how they handle overseas trading arrangements, customer funds, settlement mechanisms and relationships with foreign entities.
The Bigger Picture
The CoinDCX investigation highlights the regulatory challenges created by cryptocurrency markets that operate across national borders. Indian customers may interact with domestic platforms, while the actual execution of certain transactions can involve overseas exchanges, stablecoins and foreign corporate entities. Regulators are examining whether such arrangements comply with India’s rules governing foreign exchange and financial markets.
The case also demonstrates why registration with FIU-IND and compliance with anti-money-laundering requirements do not automatically settle every regulatory question. Different laws govern different aspects of financial activity. The outcome of the ED investigation could therefore have implications for how cryptocurrency platforms structure their international operations and offer derivatives or tokenised asset products to Indian customers.
Looking Ahead
The ED’s investigation into CoinDCX and Delta Exchange remains ongoing. Authorities are examining the alleged use of the Costa Rica-based entity, USDT transfers, overseas trading accounts, derivatives positions and payments to foreign exchanges. Further regulatory action will depend on the evidence gathered and the findings of the investigation.
For Indian cryptocurrency users, both companies have stated that their platforms continued operating normally after the searches. The investigation does not, by itself, establish that customer funds have been lost or that the platforms have been found guilty of violating FEMA. The next developments will depend on the authorities’ findings and any further responses or disclosures from the companies.
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