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India ED raids CoinDCX and Delta Exchange over FEMA cross-border crypto flows

The ED searched three Bengaluru premises Nov 4–5, 2026, alleging CoinDCX and Delta mirrored user trades on Binance, Bybit, KuCoin, Gate.io and Hyperliquid.

by 4 min read
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India's Enforcement Directorate (ED) searched three premises in Bengaluru on Nov 4 and 5, 2026 under Section 37 of the Foreign Exchange Management Act (FEMA), 1999, targeting two domestic crypto exchanges: CoinDCX, operated by Neblio Technologies, and Delta Exchange India, operated by Excelium Technologies. The ED posted the action on X on Nov 6 and published a press release on the CoinDCX search. CoinDesk and Decrypt carried the details Nov 12.

What the ED alleges

The directorate says CoinDCX and Delta ran a system that converted customer rupees into USDT, routed the flow through an account held by an unnamed Costa Rica-based group entity the ED calls a "paper entity," and opened matching positions on foreign venues — specifically naming Binance, KuCoin, Gate.io, Bybit and Hyperliquid. Three product lines are listed:

  • Spot: rupees converted to USDT and sent to foreign exchanges via APIs linked to the Costa Rica account.
  • Futures and options: each customer position mirrored one-for-one on a foreign platform and settled abroad.
  • Tokenized stocks: described by the ED as derivatives routed to Hyperliquid, with user funds converted to USDT and positions opened there.

A large share of Delta's derivatives and tokenized-share trading was itself allegedly executed through CoinDCX on those foreign platforms.

The alleged FEMA violations

Per the ED's press release and the two outlets, the directorate flags four violations:

  1. Unauthorized cross-border transactions that bypassed India's framework for sending money abroad.
  2. Holding enterprise trading accounts with crypto assets on foreign platforms.
  3. Routing fee payments to those foreign platforms in stablecoins, booked as business expenses.
  4. Sending funds to overseas group entities — the ED specifically points to Delta transferring "billions of rupees" to associates abroad, which it says is still under investigation.

The ED adds that the three products also appear to contravene the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, and the RBI Act, 1934 — bringing a potential securities angle on top of the forex one.

Scale

The ED's figures are in rupees, not dollars, and are given as ranges per product line:

  • Each of CoinDCX's three flows (spot, F&O, tokenized stocks) totaled "tens of billions of rupees."
  • Delta's cross-border derivatives and tokenized-share trading: "several tens of billions of rupees."
  • CoinDCX fees paid to foreign platforms: "billions of rupees," paid in stablecoins.
  • Delta transfers to overseas associates: "billions of rupees," under investigation.

No addresses, tx hashes or exact totals are published in the materials released so far.

Company responses

CoinDCX posted on X that the visit was "part of a routine enquiry," said it had cooperated "fully," and that trading and withdrawals remain operational. The exchange reiterated that it operates under Indian law including FEMA (1999).

Delta Exchange India posted on X that its business "does not involve any cross-border transfer of VDAs in any form or manner" and noted its registration with India's Financial Intelligence Unit since 2023.

Neither exchange named a spokesperson; the ED did not name any investigating officer.

What to watch

  1. Whether the ED moves from searches to attachments or arrests, especially on Delta's overseas transfers.
  2. SEBI and RBI involvement — the ED's citation of SCRA, the SEBI Act and the RBI Act leaves room for parallel proceedings.
  3. The Costa Rica entity. The ED has not named it; attribution will dictate how far the chain of liability runs into Binance, Bybit and others listed.
  4. Whether withdrawals on CoinDCX and Delta remain fully unaffected; the ED statement is about alleged conduct, not an operational suspension.

Context

CoinDCX has been in the ED's orbit before on different facts: in October, the exchange disclosed moving $16M in USDT to retired wallets after an earlier incident (earlier post), and the Reduce-Only futures mode that followed (earlier post) already made its reliance on foreign-venue liquidity public. Today's filing is the first time the Enforcement Directorate has turned that reliance into a FEMA case tied to a specific offshore structure.

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