Investigators from the Bengaluru Zonal Office of India’s Enforcement Directorate (ED) visited three operational premises belonging to two crypto exchanges, CoinDCX and Delta Exchange India. The two-day searches conducted on November 4 and 5, 2026, centered on alleged violations of the Foreign Exchange Management Act (FEMA). Officials are examining how both entities handled crypto asset transactions routed to offshore exchanges.
The legal entities behind both exchanges, Neblio Technologies for CoinDCX and Excelium Technologies for Delta Exchange India, were subjected to operational document scrutiny by the ED team. The investigation focuses on the movement pathways of customer funds crossing India’s financial jurisdiction toward international exchanges.
Transaction Routes and Rupee Conversion Flows
At CoinDCX, ED investigators examined three distinct transaction routes. The first route involved overseas spot trade execution. The second route involved crypto derivative instruments paired directly with positions on foreign exchanges. The third route included foreign stock products linked to the Hyperliquid platform. Authorities are scrutinizing all three transaction channels regarding their compliance with foreign exchange regulations.
The scheme under investigation begins when customers deposit rupee (INR) currency onto the platform. These rupee deposits are then converted into the Tether (USDT) stablecoin. Once converted into the US dollar-pegged digital asset, the funds are transferred to international exchanges such as Binance, KuCoin, Gate.io, and Bybit.
This flow of exchanging rupees for USDT and subsequently routing it to global platforms is the central focus of the ED’s foreign exchange compliance enforcement. Investigators are probing whether shifting digital assets to offshore exchanges bypasses official banking forex oversight mechanisms monitored by Indian authorities.
Four Regulatory Clarifications and Exchange Responses
The law enforcement probe went beyond FEMA forex provisions. The ED also sought detailed clarifications regarding compliance with three other financial legal frameworks: the Securities Contracts (Regulation) Act 1956, the SEBI Act 1992 overseeing capital markets, and the central bank’s Reserve Bank of India Act 1934. Inquiries from officials covered the legality of offering foreign stock products and derivative contracts under domestic financial market laws.
Both exchanges issued official responses following the search operations. CoinDCX described the two-day review as a routine visit and stated that the company remains fully compliant with applicable laws. Meanwhile, Delta Exchange India confirmed that all operational activities continue as normal, emphasizing that customer funds remain secure in local Indian banks.
For India’s crypto market participants, this probe underscores law enforcement’s focus on conversion channels routing local fiat into overseas exchanges. The inquiry represents a real test for domestic exchanges in aligning their operations within foreign exchange and banking regulatory boundaries.
Sourced from crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
