The Thane Police have arrested Sumit Gupta and Neeraj Khandelwal, the co-founders of major Indian cryptocurrency exchange CoinDCX, following allegations of a fraud scheme involving approximately Rs 71.6 lakh ($75,000). The arrests, executed on March 21 or 22 after the founders were summoned for questioning, mark a startling escalation in regulatory enforcement against the country’s first crypto unicorn. While the specifics of the case involve a single complainant, the detention of executives from a platform serving over 15 million users signals a pivot in how Indian authorities are handling financial disputes in the digital asset sector.
The development comes at a precarious time for CoinDCX, which is arguably still stabilizing operations following a debilitating $44.2 million security breach in 2025. CoinDCX has characterized the fraud incident as a case of sophisticated brand impersonation rather than internal malfeasance, a defense that highlights the growing friction between crypto platforms and local law enforcement mechanisms.
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. We have taken cognizance of the fact and published a notice to public at large on our website that CoinDCX is…
— CoinDCX : India Ka Crypto Coach (@CoinDCX) March 21, 2026
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Arrest Details and CoinDCX Fraud Allegations
According to the First Information Report (FIR) registered on March 16 at the Mumbra police station, the investigation was triggered by a complaint from a 42-year-old insurance advisor. The complainant alleges that between August 2025 and March 2026, he transferred funds totaling Rs 71.6 lakh via cash and bank channels under the promise of high returns on crypto investments and exclusive CoinDCX franchise rights—neither of which materialized. The funds were allegedly routed to third-party accounts unrelated to the exchange’s official corporate structure.
Police have invoked provisions of the Bharatiya Nyaya Sanhita (BNS) covering criminal breach of trust and cheating against six individuals, including Gupta and Khandelwal. The founders were remanded to police custody until March 23 by a holiday court in Thane. The specifics of the remand suggest that authorities are treating the executives as vicariously liable for the loss, a common prosecutorial strategy in India when financial platforms are involved in downstream fraud claims.
these indians have a $2,450,000,000 company, and someone scammed $76,161 using their name
sumit gupta and neeraj khandelwal are cofounders of india’s largest exchange
a complaint was filed on march 16 in thane about a fake site posing as coindcx
that fake site promised 10-12%… pic.twitter.com/ccChgsjVoG
— Maran (@TheMaran) March 22, 2026
CoinDCX has vigorously denied direct involvement, pointing to a surge in phishing scams targeting its user base. The exchange recently reported identifying over 1,212 fake websites mimicking its interface between April 2024 and January 2026. Data presented by the legal team indicates that they have been cooperating with cyber cells to takedown these entities, suggesting the complainant may have fallen victim to one of these external impersonation rings.
Regulatory and Legal Context
The arrest of high-profile founders for what appears to be third-party fraud underscores the extreme regulatory ambiguity currently defining the Indian market. Unlike the United States, where courts often separate platform liability from user error, seen when a California court dismisses a Coinbase user challenge regarding tax summons, Indian enforcement agencies frequently target platform operators first to secure liquidity for victims.
We suspect this aggressive posture is partially a reaction to the sheer volume of crypto-related fraud reports flooding local police stations. Without a dedicated regulatory framework or a specialized digital asset tribunal, local police forces are often left to adjudicate complex technical disputes using blunt instruments like the BNS code. This creates a precarious operating environment where legitimate exchanges bear the reputational and legal risk for scams operated by third parties using their brand equity.
This incident also parallels prior enforcement patterns, such as the GainBitcoin investigation, where the line between operator negligence and external criminality was frequently blurred during initial proceedings. While global platforms like Hyperliquid open policy advocacy centers to shape legislation proactively, Indian exchanges are largely forced to react to enforcement actions after the fact, operating in a defensive crouch that hampers broader institutional adoption.
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Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Daniel Frances is a technical writer and Web3 educator specializing in macroeconomics and DeFi mechanics. A crypto native since 2017, Daniel leverages his background in on-chain analytics to author evidence-based reports and deep-dive guides. He holds certifications from The Blockchain Council, and is dedicated to providing “information gain” that cuts through market hype to find real-world blockchain utility.
