A fraud complaint involving ₹71.6 lakh (approximately $86,000) led to the arrest of CoinDCX co-founders Sumit Gupta and Neeraj Khandelwal, though a Thane court later granted bail after finding no prima facie case. The alleged fraud was carried out through a fake website, “coindcx.pro,” which impersonated the exchange — not through CoinDCX’s official platform.
Court: No direct link between founders and the alleged fraud
The court noted that the complainant was tricked on the impostor site, and the real exchange was not involved in the transaction. This outcome has reignited debate in India’s crypto sector: should arrests happen before investigators establish whether the named individuals are actually connected to the crime? Indian law does not treat arrest as a routine first step. Article 22 of the Constitution provides safeguards, and the Supreme Court in Arnesh Kumar v. State of Bihar warned against unnecessary arrests and casual remand.
Brand impersonation epidemic: Over 1,200 fake sites detected
Gupta stated that CoinDCX has tracked more than 1,200 fake websites impersonating the brand. These domains have no connection to the company’s systems or operations but lure users via search ads or social media. Despite being India’s first crypto unicorn (2021) and one of its largest exchanges, the case shows that law enforcement still struggles to distinguish legitimate businesses from impersonation scams.
₹100 crore Digital Suraksha Network launched post-arrest
Following the incident, CoinDCX announced a ₹100 crore (about $12 million) Digital Suraksha Network for fraud prevention and consumer awareness. The move underscores how serious brand impersonation has become. Yet the larger question remains: can India’s enforcement system adapt to blockchain technology? Without better institutional understanding of how exchanges operate, how impersonation scams work, and how digital evidence should be assessed, similar episodes may continue to damage trust, deter innovation, and push talent toward jurisdictions with more predictable legal processes.