The Enforcement Directorate raided three locations in Bengaluru linked to crypto trading platforms Coin DCX and Delta Exchange on 4 and 5 November. The investigation found evidence of international crypto transactions without legal authorisation and large-scale violations of FEMA, or the Foreign Exchange Management Act. FEMA is a law that regulates foreign-exchange transactions, cross-border transfers and foreign investment in the country. Its aim is to safeguard India’s foreign-exchange reserves and make international trade and payments easier and more transparent. Accused of facilitating derivatives trading without approval The entire controversy is linked to the illegal facilitation of ‘derivatives trading’ on foreign platforms and the transfer of thousands of crores out of the country without government approval. In regular trading, a person buys a share or crypto coin and becomes its owner. But in derivatives trading, you do not buy anything directly; you only bet on whether its price will rise or fall in the future. It is alleged that these two Indian platforms were openly promoting such trading while allowing their customers to trade on foreign crypto websites without any approval. USDT, a stablecoin, was being used to send money out of the country in this entire operation. Normally, when a person or company sends money abroad through a bank, the Reserve Bank closely monitors the transaction. To evade this legal process and scrutiny by the banking system, the platforms used USDT as a means of transferring the money. USDT essentially functions like a digital dollar, whose value remains fixed at $1. It can be transferred anywhere in the world in the blink of an eye through the blockchain, without any bank interference. The investigation has revealed that CoinDCX was sending hundreds of crores to major foreign crypto platforms such as Binance, KuCoin and Bybit through USDT, citing business expenses and transaction fees as the reason. Delta Exchange, meanwhile, was routing a large share of its customers’ trades through CoinDCX and also transferring funds to its foreign partner companies. According to the ED, thousands of crores were digitally sent abroad from India in this manner without banking records and without paying taxes, in violation of foreign exchange law. Also violate SEBI and RBI regulations Investigations by probe agencies have revealed that these platforms not only violated FEMA but also breached several major rules related to the stock market and banking. The fintech products of these crypto companies were found to be contrary to the standards prescribed under the SEBI Act, 1992, the Securities Contracts Act, 1956, and the RBI Act, 1934. Crypto investors’ money could get stuck This legal action could directly affect ordinary investors. If investigative agencies take strict action against these platforms and their bank accounts or crypto wallets are frozen, the funds of ordinary users trading on them could remain stuck for a long time, increasing the risk of losing their money. Post navigation Jio-OneWeb submitted security papers before Starlink:Spectrum security clearance still pending; Musk had said Indian industrialists were blocking entry
