India's Enforcement Directorate (ED) has launched a FEMA probe into CoinDCX and Delta Exchange India. Officials searched three premises in Bengaluru on November 4 and 5 over suspected unauthorized cross-border crypto transactions.
The investigation focuses on alleged foreign fund transfers linked to cryptocurrency derivatives and tokenized shares. The agency suspects both platforms used overseas exchanges to process customer trades without proper authorization.
The searches targeted Neblio Technologies, which operates CoinDCX, and Excelium Technologies, which runs Delta Exchange India. The ED conducted the searches under Section 37 of the Foreign Exchange Management Act (FEMA), 1999. The agency claims these transactions involved several thousand crores of rupees.
According to the ED, CoinDCX allegedly converted customer deposits from Indian rupees into USDT. The platform then routed these funds to overseas exchanges, including Binance, KuCoin and Gate.io. The agency claims these transfers helped execute spot trades and cryptocurrency futures positions abroad.
The investigation also covers tokenized shares linked to foreign companies such as Apple, Google and Tesla. The ED alleges these products involved derivative trades through Hyperliquid rather than actual share purchases. It also suspects Delta Exchange routed several trades through CoinDCX for overseas execution.
Both exchanges have maintained that their regular operations continue despite the investigation. CoinDCX said officials visited its Bengaluru office during a routine inquiry. The company added that it cooperated fully and followed applicable Indian laws, including FEMA.
Delta Exchange India also confirmed the ED's visit and denied facilitating overseas transfers. The company stated, "Our business does not involve any cross-border transfer of VDAs in any form or manner." It also confirmed that customer funds remain in Indian banks and withdrawals continue normally.
The probe could bring greater regulatory scrutiny to India's growing crypto exchange industry. The ED is also examining possible violations of securities and banking laws, including the SEBI Act, the Securities Contracts (Regulation) Act and the RBI Act.
The investigation remains ongoing, and the allegations do not establish any final finding of wrongdoing. Its outcome could influence how Indian crypto exchanges offer overseas derivatives and tokenized stock products.
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