ED Investigation Puts CoinDCX Under Regulatory Scrutiny Over Alleged FEMA Violations; Company Says User Funds Remain Safe
India’s cryptocurrency exchange industry is facing renewed regulatory scrutiny after the Enforcement Directorate (ED) conducted searches at premises linked to CoinDCX in Bengaluru over alleged violations of the Foreign Exchange Management Act (FEMA), 1999.
The investigation has brought attention to how Indian cryptocurrency platforms facilitate international trading, particularly through stablecoins, overseas cryptocurrency exchanges and derivatives products.
The ED conducted searches on November 4 and 5, 2026, at three premises linked to CoinDCX and Delta Exchange. The agency is investigating alleged unauthorised cross-border financial transactions involving cryptocurrency futures, options and tokenised foreign stocks.
According to the ED’s preliminary findings, CoinDCX allegedly facilitated certain transactions by converting Indian rupee deposits into USDT, a dollar-pegged stablecoin, and routing them through overseas cryptocurrency exchanges, including Binance, KuCoin, Gate.io and Bybit.
The agency is examining whether these arrangements bypassed India’s regulatory framework governing international financial transactions.
The ED has also alleged that CoinDCX maintained enterprise trading accounts on overseas exchanges through an entity registered in Costa Rica. Investigators are examining whether this arrangement was used to facilitate international transactions outside India’s prescribed financial regulations.
Another major area of concern involves tokenised shares of international companies, including Apple, Google and Tesla. According to the agency, customers were able to take positions in these products through transactions executed on overseas platforms such as Hyperliquid, rather than directly acquiring the underlying shares.
The ED has indicated that the transaction volumes involved in these arrangements ran into thousands of crores of rupees. It is also examining payments made to overseas cryptocurrency exchanges, including transaction fees reportedly routed through stablecoins.
The investigation extends beyond FEMA. The agency has indicated that certain products offered by the platforms could also raise questions under the Securities Contracts (Regulation) Act, the SEBI Act and the RBI Act. However, these are allegations and regulatory concerns under examination, not established findings of guilt.
CoinDCX has maintained that it is cooperating with the authorities. The company stated that it is registered with the Financial Intelligence Unit of India (FIU-IND), follows applicable KYC and anti-money-laundering requirements, and remains committed to complying with Indian laws, including FEMA.
Importantly, the ED’s searches do not automatically mean that customers’ funds have been frozen or that the exchange has been ordered to shut down. The November 10 report also noted that the searches themselves did not result in an immediate blocking of customer funds.
The controversy has nevertheless raised questions about the regulatory position of cryptocurrency derivatives and tokenised international stocks in India. The industry will be closely watching whether the RBI or SEBI initiates separate regulatory action following the ED investigation.
For CoinDCX, the immediate challenge is to maintain customer confidence while addressing regulatory questions surrounding its international trading arrangements. The outcome could have wider implications for how Indian cryptocurrency exchanges structure their products, manage overseas liquidity and serve customers.
The investigation remains ongoing. The allegations should not be treated as proof of wrongdoing.
