Indian police arrest CoinDCX co-founders in alleged fraud case

Indian police have arrested CoinDCX co-founders Sumit Gupta and Neeraj Khandelwal in connection with an alleged investment fraud case being probed by Thane Police, with local media reporting they were remanded to custody until March 23.

The case stems from a First Information Report filed by a 42-year-old insurance consultant who said he lost about 71.6 lakh rupees (US$85,000) after being promised high returns and franchise rights linked to CoinDCX between August 2025 and February 2026.

CoinDCX, India’s largest cryptocurrency exchange by valuation, denied wrongdoing and said the alleged fraud involved impersonators using a copycat website rather than its platform, adding that it has reported over 1,212 fake sites between April 1, 2024, and January 5, 2026.

The arrests follow a July 2025 case in which Bengaluru police arrested a CoinDCX software engineer linked to a US$44 million hack of the exchange.

🔗 Source: The Block

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CoinDCX faces mounting legal and security challenges

The arrest of the CoinDCX co-founders follows a July 2025 case in which Bengaluru police arrested a CoinDCX software engineer linked to a US$44 million hack of the exchange.
CoinDCX has also reported an ongoing impersonation issue. Between April 1, 2024, and January 5, 2026, it recorded more than 1,212 fake websites, adding to day-to-day security strain.

High-profile arrests could chill Indias crypto investment climate

The detention of executives at a major Indian cryptocurrency exchange increases pressure on Indias digital asset sector. Law enforcement attention appears to be growing.
The arrests, together with CoinDCX reports of widespread copycat sites, may weaken consumer confidence in security across Indias crypto market.
Venture capital firms may become more cautious, which could slow funding for other Indian crypto startups. Some could take on reputational risk through association.