CoinDesk
India's Enforcement Directorate searched three Bengaluru premises linked to CoinDCX and Delta Exchange India on Nov. 4 and 5 over alleged unauthorized cross-border transactions. The agency alleged that flows involving the exchanges amounted to tens of billions of rupees and violated foreign exchange law. Both companies said they were operating normally.
Why it matters
The ED alleged that CoinDCX converted customer rupees into USDT and sent the stablecoin to foreign exchanges to execute some spot trades outside India's cross-border transfer framework. It also alleged that CoinDCX mirrored customer derivatives positions on foreign platforms and used USDT to open matching positions in tokenized stocks on Hyperliquid.
A large share of Delta's derivatives and tokenized-stock trading flowed through CoinDCX and was then executed on foreign platforms, the agency alleged. The ED said its investigation was continuing and that the products also appeared to contravene other Indian financial laws.
Market impact
The searches put the cross-border execution methods used by two Indian crypto platforms under regulatory scrutiny. The ED named Binance, KuCoin, Gate.io and Bybit among the foreign venues involved in the alleged trading flows.
CoinDCX said it complies with Indian law and that trading, deposits and withdrawals remain operational. Delta said user funds remain in Indian banks and denied that its business involves cross-border transfers of virtual digital assets.
Frequently asked questions
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What transactions is India's Enforcement Directorate investigating?
The agency is investigating alleged unauthorized cross-border transactions involving spot trades, derivatives and tokenized stocks. It alleges that the flows violated India's foreign exchange law.
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How was USDT allegedly used in CoinDCX spot trades?
The ED alleged that CoinDCX converted customer rupees into USDT and sent the stablecoin to foreign exchanges to execute some spot orders.
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What connection did the ED allege between Delta and CoinDCX?
The agency alleged that a large share of Delta's derivatives and tokenized-stock trading flowed through CoinDCX before being executed on foreign platforms.
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Are trading and withdrawals still operating at CoinDCX?
CoinDCX said trading, deposits and withdrawals remain operational. It also said it complies with Indian law.
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How did Delta respond to the cross-border allegations?
Delta said it was operating as usual and that user funds remain in Indian banks. It denied that its business involves cross-border transfers of virtual digital assets.
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