CoinDCX, Delta Exchange Raided by India's ED Over FEMA Breaches

India's Enforcement Directorate (ED) has raided three locations in Bengaluru tied to the crypto platforms CoinDCX and Delta Exchange. It accuses them of moving very large sums across borders without permission, using crypto derivatives and tokenized stock products. Both companies deny wrongdoing and say customers can still trade, deposit and withdraw as usual. The inquiry is still open, and no charges have been announced.

What the agency alleges

According to the ED's statement dated November 6, its teams carried out the searches on November 4 and 5 under the Foreign Exchange Management Act (FEMA), the 1999 law that governs money flowing in and out of the country. The targets are Neblio Technologies, the company behind CoinDCX, and Excelium Technologies, which operates Delta Exchange. The agency says neither firm had approval to list leveraged contracts on crypto tokens, or to market exposure to shares of overseas companies in tokenized form.

On CoinDCX specifically, investigators describe a mirroring arrangement. When an Indian customer funded an account in rupees and placed an order, the platform allegedly converted the money to the USDT stablecoin and opened an equivalent position on a foreign venue. The agency names Binance, KuCoin, Bybit and Gate.io as destinations. It says those positions sat in accounts under a Costa Rica-based group company that it calls a shell, and that orders were pushed through automated API connections straight from CoinDCX.

The tokenized equity products, covering names such as Apple, Google and Tesla, were allegedly not backed by actual shares. The ED says they were derivatives contracts opened on the decentralized exchange Hyperliquid. It puts the cross-border flows in each of these categories in the hundreds of millions of dollars, and says CoinDCX also paid tens of millions of dollars in USDT as fees to overseas exchanges while keeping crypto in corporate accounts there.

Delta Exchange's alleged role

The agency says a large portion of Delta Exchange's derivatives activity was routed through CoinDCX. It also says Delta moved tens of millions of dollars to affiliated entities abroad, and that this transfer is now being examined. Beyond FEMA, the ED suggests the companies' fintech offerings may conflict with Indian securities and central banking rules.

How the companies responded

• CoinDCX says officials came to its Bengaluru office on November 4 for what it called "a routine enquiry", and that it cooperated fully. It also says it complies with Indian law and its obligations as an entity registered with the country's Financial Intelligence Unit.
• Delta Exchange says it has cooperated and that its business involves no cross-border movement of virtual digital assets (VDAs), the term Indian authorities use for crypto. It describes a separate rupee-settled venue for domestic users, registered with the Financial Intelligence Unit since 2023.

Background: a rough period for CoinDCX

CoinDCX ranks among India's biggest crypto exchanges, and the raid lands after several setbacks. Last month it acknowledged a $16 million loss tied to retired wallets, only days after its co-founder and chief executive, Sumit Gupta, had dismissed breach reports as a false alarm. That followed an exploit of roughly $44 million in July 2025. Coinbase, which has backed the company since 2020, recently received clearance from India's competition regulator to enlarge its minority holding in the parent business.

Historically, India has treated crypto with a mix of heavy taxation, registration requirements for service providers and little in the way of a dedicated licensing regime. That gap leaves enforcement agencies leaning on older statutes such as FEMA, which was written long before tokenized assets existed.

What to watch

The central question is whether the ED's reading of FEMA, under which mirrored trades on foreign exchanges count as unauthorized outward remittances, survives scrutiny. The companies' denials rest on a different account of how the trades are structured, and the sources offer no independent confirmation of either side. Next steps could include formal notices, asset freezes or adjudication proceedings, though none has been reported.

For Indian users, the immediate effect appears limited, since both platforms say operations are normal. The wider signal is for any local venue offering derivatives or synthetic stock exposure backed by offshore liquidity: regulators are looking closely at where the underlying positions really sit. How Coinbase and other investors react to the pressure on CoinDCX will also be worth tracking.