Key Highlights
- The Enforcement Directorate alleged that CoinDCX and another platform routed customer funds abroad for derivatives and tokenized foreign shares without authorization.
- The agency said CoinDCX converted rupees into USDT and sent the funds to overseas exchanges including Binance, KuCoin and Gate.io.
- The ED alleged that CoinDCX mirrored customers’ futures and options positions on Binance, KuCoin, Bybit or Gate.io through Costa Rica-based entities it described as paper entities.
ED details alleged CoinDCX cross-border trading routes
The Enforcement Directorate (ED) alleged that CoinDCX and another platform routed customer money abroad to trade derivatives and tokenized shares of foreign companies, despite neither platform being authorized to conduct those transactions. In a post on X, the agency shared an advertisement from CoinDCX that read “Trade in U.S. stock futures” and said customers could begin trading with 100 rupees ($1.05).
According to the ED, CoinDCX moved customer funds abroad through three methods. For spot trades in certain tokens, the agency said CoinDCX converted customers’ rupees into USDT, a stablecoin designed to track the value of the U.S. dollar. The tokens were then sent to foreign cryptocurrency exchanges, including Binance, KuCoin and Gate.io, to execute customer orders.
The ED alleged that this process bypassed the regulatory framework governing cross-border money transfers. It also said the transactions were routed through an account held in the name of a Costa Rica-based entity that investigators identified as a paper entity. According to the agency, the trades were actually executed directly from CoinDCX through software connections known as application programming interfaces, or APIs.
How CoinDCX allegedly mirrored derivatives positions
For futures and options trades, the ED alleged that CoinDCX replicated each customer’s position on a foreign trading platform on a one-for-one basis. When a customer opened a position on CoinDCX, a corresponding position was opened on Binance, KuCoin, Bybit or Gate.io through an account held in the name of a Costa Rica-based group entity.
The agency also described that Costa Rica-based group entity as a paper entity. When a customer closed a position on CoinDCX, the corresponding foreign position was allegedly closed as well, with the transaction settled outside India.
Why This Matters
The allegations place CoinDCX’s international trading arrangements under scrutiny because they concern the movement of customer funds across borders, the use of foreign cryptocurrency exchanges and the execution of derivatives and tokenized-asset transactions through overseas entities. The ED’s account focuses on whether these arrangements operated outside the authorized framework for cross-border transfers and trading activity.
Frequently Asked Questions
What did the ED allege about CoinDCX?
The ED alleged that CoinDCX routed customer funds to foreign exchanges for spot-token trades, futures and options, and tokenized shares of foreign companies without authorization.
Which overseas exchanges were named?
The ED named Binance, KuCoin and Gate.io in connection with spot trades and also identified Binance, KuCoin, Bybit and Gate.io in relation to futures and options positions.
What role did the Costa Rica-based entities allegedly play?
The ED said the transactions were conducted through Costa Rica-based entities that it described as paper entities, while the trading activity was allegedly executed directly from CoinDCX through APIs.
