In a shocking development that raises serious questions about enforcement practices in India’s fast-growing digital finance ecosystem, Sumit Gupta and Neeraj Khandelwal, co-founders of CoinDCX, were taken into police custody in connection with a fraud complaint linked to a fake website impersonating their platform.
In a detailed statement, Mr Gupta said the two founders were taken into custody on 21 March and remained in police custody for three days before being granted bail on 24 March. He said the case arose from a fraud carried out through a website, 'coindcx.pro', which impersonated CoinDCX and was used by unidentified persons to mislead users into believing they were interacting with the official platform, though it had no connection to the company, its systems or its operations.
According to Mr Gupta, no transaction related to the alleged fraud took place on CoinDCX and no funds moved through its exchange. He added that the complainant confirmed in court that he did not know the founders and had never met them. The court, he said, found that no prima facie case was made out against them, noting that the alleged fraud was carried out by third parties impersonating the platform and that there was no direct link between the founders and the transaction in question.
Describing the experience as 'shocking' and 'deeply unsettling,' Mr Gupta said the incident underscored a gap in the current ecosystem’s ability to distinguish between legitimate businesses and impersonators exploiting their identity. He pointed to the risk that companies and their representatives could face action even when fraud is carried out independently by third parties misusing their brand. He said the incident pointed to gaps in how such cases are investigated, particularly in distinguishing between actual perpetrators and entities whose identities are misused in digital fraud.
He said the episode highlighted a broader concern for digital businesses operating at scale, where fake websites, cloned identities and impersonation are increasingly used to defraud consumers, often without any direct involvement of the legitimate platform being impersonated. He added that such incidents raise questions about how accountability is determined in cases involving digital impersonation.
CoinDCX Announces ₹100 Crore Digital Suraksha Network
Following the incident, CoinDCX announced a ₹100 crore initiative called the 'Digital Suraksha Network' (DSN), which it said is aimed at building cyber safety infrastructure for India’s digital finance ecosystem. The company said the initiative is not limited to cryptocurrency platforms but is intended to address fraud risks across all digital services.
Mr Gupta said the proposed network would include a 24x7 WhatsApp-based helpline that allows users to verify links, platforms and investment offers before carrying out transactions. The company also plans to build an open fraud intelligence API to share data on fraudulent websites and impersonation attempts in real time with law enforcement agencies, financial institutions, telecom operators and technology platforms. According to him, CoinDCX has identified over 1,200 websites impersonating its platform over the past 21 months.
The initiative also proposes capacity-building measures for law enforcement agencies, including training programmes in blockchain forensics and digital asset tracing, as well as the creation of rapid-response support systems for ongoing fraud investigations. In addition, the company said it would launch a nationwide awareness campaign, 'Caution Before Transaction,' aimed at improving consumer understanding of risks in digital finance and encouraging verification before making payments or sharing personal information.
Citing the scale of the problem, Mr Gupta said cybercrime complaints in India have risen sharply, with significant financial losses reported and a relatively small proportion of cases translating into formal investigation. He also pointed to the increasing use of technologies such as artificial intelligence in carrying out fraud, including voice cloning and deepfake-based scams, which make detection more difficult.
He added that the company would seek collaboration from banks, fin-tech firms, regulators and other stakeholders to develop common standards and shared infrastructure for cyber safety. Mr Gupta said the initiative is intended as a starting point for broader collaboration across the ecosystem, adding that fraud networks are increasingly sophisticated, cross-border and evolving rapidly, making it difficult for any single entity to address the problem in isolation.
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