CoinDCX, an Indian cryptocurrency exchange backed by Coinbase, is embroiled in a fraud case involving its founders, Sumit Gupta and Neeraj Khandelwal. 

Meanwhile, the founders were questioned by authorities following allegations of their involvement in a crypto investment scam. However, CoinDCX denies the accusations and attributes the fraud to impersonators using its brand for fraudulent activities.

The controversy started after a complaint from a 42-year-old insurance consultant, who claimed to have lost around 71 lakh rupees (roughly $75,000) after investing in a fake website posing as CoinDCX. The Thane Police reportedly arrested Gupta and Khandelwal on allegations of criminal breach of trust. However, other reports suggested that the founders were merely questioned by the authorities rather than arrested.

CoinDCX responded to the claims, stating that the complaint was part of a broader scheme by fraudsters who impersonated the exchange. The company clarified that it had no connection to the fake website and assured the public that funds were diverted by external parties unrelated to the exchange.

CoinDCX’s Response to the Fraud Case

CoinDCX has emphasized that brand impersonation and cyber fraud are growing issues in India’s digital finance sector. The exchange stated that it is fully cooperating with law enforcement authorities in their investigation and stressed the importance of educating users about online fraud.

The company revealed that between April 2024 and January 2026, over 1,200 websites had impersonated its domain. This highlights the increasing risks of phishing attacks targeting crypto users in India, with CoinDCX working to combat such fraud.

A Broader Issue of Investment Scams

The case comes amid a rise in investment scams in India, which accounted for 76% of all financial losses in 2025, according to data from the Ministry of Home Affairs. Globally, Web3 platforms also faced significant losses due to hacking and exploitation, amounting to nearly $4 billion in 2025.

CoinDCX, founded in 2018, is one of India’s leading crypto exchanges, with a valuation of $2.45 billion after an investment from Coinbase Ventures in 2025. Despite the recent controversy, the platform remains committed to maintaining user security and combating fraudulent activities.