Key Takeaways
- The co-founders of CoinDCX were arrested by Thane Police on March 22.
- The $85,000 fraud allegation stems from a complaint, but CoinDCX calls it a conspiracy by impersonators using fake websites.
- India’s crypto enforcement remains patchy, depending on PMLA and general criminal laws, exposing compliant exchanges to impersonation risks.
In a dramatic turn of events, the co-founders of CoinDCX, the country’s largest crypto exchange, were taken into custody.
Sumit Gupta and Neeraj Khandelwal, the two co-founders who built CoinDCX, were arrested by Thane Police over the weekend.
What makes the CoinDCX founders’ arrest particularly startling is the company’s firm assertion that the entire matter stems from sophisticated impersonators, not any wrongdoing by the exchange itself.
The Alleged $85,000 Scam
The allegations at the heart of the CoinDCX founders’ arrest center on a reported fraud of ₹71.6 lakh (approximately $85,000).
The complainant, a 42-year-old insurance advisor, claims he was lured between August 2025 and February 2026 with promises of high returns on cryptocurrency investments and exclusive “franchise opportunities” tied to CoinDCX.
According to the FIR, the accused, including the named founders, allegedly assured regulatory approvals and lucrative payouts. The victim reportedly transferred funds through cash and bank deposits to third-party accounts. When no returns materialized, and the promised franchise rights failed to appear, the parties allegedly became untraceable.
At first glance, these claims paint a picture of classic investment fraud. However, the exchange has categorically denied any involvement, calling the FIR “false” and part of a larger conspiracy.
In an official statement, CoinDCX declared:
“The FIR filed against our co-founders is false and filed as a conspiracy against CoinDCX by impersonators posing as Founders of CoinDCX and cheating the public at large.”
The company revealed it has reported over 1,212 fake websites impersonating coindcx.com between April 2024 and January 2026. Fraudsters allegedly created lookalike sites, impersonated the founders, and diverted funds to unrelated accounts.
CoinDCX emphasized that the entire conspiracy falsely claims that funds were transferred in cash to third-party accounts with no relation to CoinDCX.
The exchange has issued public warnings on its website and social media, condemned the rising incidence of brand impersonation in India’s digital finance space, and reiterated its full cooperation with authorities.
The surprise element here is the fact that no evidence links the transactions to CoinDCX’s official platforms, wallets, or operations, pointing instead to external scammers exploiting the brand’s popularity.
The Detention
The arrest of the CoinDCX founders unfolded on Saturday, Mar. 22. Thane Police apprehended Sumit Gupta and Neeraj Khandelwal from Bengaluru, where they were reportedly based for business operations.
The duo was swiftly produced before a holiday court in Thane over the weekend. The court remanded both co-founders to police custody until Monday, Mar. 23.
As of early Mar. 23, the founders remain in custody as investigations continue. This police remand allows authorities time to question them, gather evidence, and potentially expand the probe.
Police invoked provisions of the Bharatiya Nyaya Sanhita (BNS) for criminal breach of trust and cheating.
The arrest followed a First Information Report (FIR) naming six individuals, including the two promoters. CoinDCX has confirmed it is fully cooperating with law enforcement while maintaining its innocence in any actual fraud.
This short-term detention, limited to police custody pending further court proceedings, highlights the proactive but sometimes abrupt nature of local police actions in financial complaints.
No immediate bail details have emerged, and the case remains under active scrutiny.
India’s Fragile Crypto Enforcement Rules
The arrest of the CoinDCX founders highlights India’s evolving yet fragile landscape of cryptocurrency enforcement.
While virtual digital assets (VDAs) are legal, the regulatory regime relies heavily on the 2023 amendments to the Prevention of Money Laundering Act (PMLA) rather than a dedicated licensing law.
All crypto exchanges must register as reporting entities with the Financial Intelligence Unit-India (FIU-IND), implement strict KYC/AML norms, maintain records for five years, and file suspicious transaction reports.
Recent updates, including the January 2026 AML/CFT guidelines, reinforce these obligations with penalties for non-compliance, including daily fines proposed in Budget 2026-27 discussions.
Enforcement has been aggressive: FIU-IND has issued show-cause notices and blocked access to non-compliant global platforms like Binance, KuCoin, and others.
The Enforcement Directorate (ED) frequently steps in to investigate money laundering angles in large frauds. Yet critics argue the framework remains patchwork and reactive.
The arrest of the CoinDCX founders serves as a cautionary tale. It reminds investors to double-check URLs, avoid unsolicited franchise pitches, and stick to verified exchanges.
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Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
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