India’s Enforcement Directorate searched three premises linked to CoinDCX and Delta Exchange India in Bengaluru on Nov. 4 and 5, 2026. The investigation concerns alleged violations of the Foreign Exchange Management Act involving unauthorized cross-border transactions in cryptocurrencies and tokenized assets.

The searches involved Neblio Technologies Private Limited, which operates CoinDCX, and Excelium Technologies Private Limited, the operator of Delta Exchange India. Authorities suspect the companies may have used the stablecoin USDT to execute trades through overseas crypto exchanges Binance, KuCoin, Gate.io and Bybit.

Transactions under investigation

Authorities allege that CoinDCX converted client deposits in Indian rupees into USDT and routed the funds to foreign trading venues. The transactions were allegedly conducted through accounts belonging to a Costa Rica-registered company, with trades executed through an application programming interface.

The investigation also covers trades involving tokenized shares of Apple, Google and Tesla. Moneycontrol reported that authorities believe transactions in those instruments effectively amounted to derivatives trading on the decentralized platform Hyperliquid.

The alleged cross-border transaction volume is estimated at thousands of crore rupees. That figure represents the turnover of transactions under review, not confirmed financial damage.

Exchanges say operations continue

Delta Exchange said it was fully cooperating with law enforcement and continued to operate as usual. It said trading, deposits and withdrawals remained available and that client assets were safe.

The exchange rejected speculation about cross-border cryptocurrency transfers, saying its Indian platform settles transactions exclusively in rupees. Delta Exchange said its operator has been registered with India’s Financial Intelligence Unit, or FIU-IND, since 2023 and complies with applicable legal requirements.

CoinDCX confirmed the visit by Enforcement Directorate officials and described it as a routine inspection. The company said it had provided the requested information and continued serving customers without restrictions.

Industry representatives cite regulatory uncertainty

Crypto industry representative Abhi Nav said the authorities’ claims concerned providing Indian users with access to international markets rather than fraud or misappropriation of funds.

Nav noted that India has taxed crypto transactions for several years, including through a 1% tax deducted at source and a 30% tax on income from digital assets. In his view, authorities have not provided a clear mechanism for legally offering such services.

In another post, Nav discussed the investigation’s implications for new market entrants. He said he had spent the past seven to eight months building partnerships and attracting users for Niyam Exchange, which focuses on derivatives trading in India.

Nav said inspections of the largest platforms could create opportunities for new companies because users would continue trading and seek alternative services. He also said reduced competition could lower marketing costs.

However, he said unclear regulation posed significant business risks because compliance with existing requirements did not ensure that an exchange’s operations would not later be deemed illegal. Investigations could also complicate relationships with brokers, educational organizations and other partners.

“This is a window of opportunity, but it’s not safe. The next 12 months will determine whether those who entered the market earlier gain an advantage, or whether they become the next targets of investigations,” Nav noted.

The investigation comes amid discussions about further cryptocurrency regulation in India. The Reserve Bank of India supports banning digital assets outside the regulated financial system.

Source: Incrypted