Initial reports from the Economic Times on Saturday indicated that Gupta and Khandelwal had been arrested by the Thane Police on allegations of criminal breach of trust, citing local officials. However, other local media outlets, including Entrackr, subsequently reported that the founders were called in for questioning by the police rather than being formally arrested, creating a divergence in early accounts of the unfolding situation. This distinction is crucial, as being questioned typically implies cooperation with an ongoing investigation, whereas an arrest signifies a formal detention on suspicion of a crime. CoinDCX itself later clarified the situation through official statements, strongly refuting any direct involvement of its founders or the exchange in the alleged fraudulent activities.

The core of the case revolves around a fraudulent website that allegedly mimicked the legitimate CoinDCX platform, designed to lure unsuspecting investors into a scam. The complaint was filed by a 42-year-old insurance consultant who claims to have suffered significant financial losses, approximately 71 lakh Indian rupees (roughly equivalent to $75,000 USD), after being enticed to invest through this fake site. According to an earlier report by the Times of India, the complainant detailed how they were drawn into what appeared to be a lucrative investment opportunity, only to discover later that they had interacted with a deceptive platform entirely separate from the genuine CoinDCX exchange. This individual’s harrowing experience underscores the increasing sophistication of cybercriminals targeting digital asset investors.

In a comprehensive statement released on X (formerly Twitter), CoinDCX categorically denied the allegations, stating that the First Information Report (FIR) filed against its founders was "false and filed as a conspiracy." The company elaborated that the alleged fraud was orchestrated by impersonators who posed as CoinDCX founders and employees, actively diverting funds to third-party accounts that, according to the exchange, have no legitimate connection to CoinDCX or its operational infrastructure. This defense positions CoinDCX and its leadership as victims of a broader criminal enterprise rather than perpetrators. The exchange emphasized its commitment to transparency and its proactive stance in cooperating fully with the relevant law enforcement authorities to uncover the truth behind these fraudulent activities.

The company further highlighted the escalating menace of brand impersonation and cyber fraud within India’s burgeoning digital finance sector. CoinDCX stressed its ongoing efforts in user education and awareness campaigns, recognizing that an informed user base is the first line of defense against such scams. These initiatives aim to equip users with the knowledge and tools to identify and avoid fraudulent websites, phishing attempts, and other social engineering tactics employed by cybercriminals.

To underscore the scale of the challenge, CoinDCX revealed that it had proactively reported an alarming number of impersonating websites. Between April 1, 2024, and January 5, 2026, the exchange identified and reported more than 1,212 websites that were deceptively mimicking its coindcx.com domain. This statistic vividly illustrates the widespread nature of phishing and impersonation attacks that have increasingly plagued Indian crypto users, making it difficult for even vigilant individuals to distinguish between genuine and fraudulent platforms. The sheer volume of fake sites points to an organized effort by criminal groups to exploit the growing interest in cryptocurrency investments in India.

This specific case involving CoinDCX’s founders emerges amid a broader and alarming surge in online investment scams across India. Data compiled by the Ministry of Home Affairs, cited in Insights IAS, indicates that investment scams alone accounted for a staggering 76% of all financial losses due to cybercrime in 2025. This statistic underscores a national crisis in digital security, where individuals are increasingly falling prey to various forms of online fraud, ranging from fake investment schemes to identity theft. Globally, the Web3 ecosystem as a whole faced significant financial repercussions, losing approximately $3.95 billion to a myriad of hacks and exploits throughout 2025, according to security analyses. These global figures highlight the inherent vulnerabilities within the decentralized finance space and the continuous battle against sophisticated cyber threats.

Founded in 2018 and headquartered in Mumbai, CoinDCX has established itself as one of India’s most prominent and well-known cryptocurrency trading platforms. Its rapid growth and significant market presence led to a valuation of approximately $2.45 billion following a substantial investment from Coinbase Ventures in October 2025. This investment marked a significant milestone, solidifying CoinDCX’s position as a key player in the Indian crypto landscape and signaling international confidence in its potential. However, its journey has not been without its challenges. The exchange previously faced scrutiny over security concerns after a July 2025 breach, in which attackers reportedly stole roughly $44 million from an internal operational account. While the company asserted at the time that customer assets remained unaffected, this incident still made CoinDCX one of that month’s largest hacking victims by reported losses, raising questions about internal security protocols. The current allegations, even if linked to impersonation, reignite concerns about user trust and the overall security environment surrounding digital asset exchanges in India.

The ongoing investigation into the CoinDCX founders’ alleged involvement, or lack thereof, in the impersonation scam will be a critical test for both the exchange and Indian law enforcement. It serves as a stark reminder of the sophisticated tactics employed by cybercriminals to exploit the nascent and often less regulated cryptocurrency market. For users, the incident reinforces the paramount importance of extreme vigilance, urging them to verify the authenticity of platforms, exercise caution with unsolicited investment offers, and remain skeptical of promises of unusually high returns. For the crypto industry, it underscores the need for robust security measures, continuous user education, and proactive collaboration with authorities to combat the pervasive threat of fraud and protect the integrity of the digital asset ecosystem. As the case unfolds, the clarity on whether the founders were indeed arrested or merely questioned will be crucial in shaping public perception and the broader narrative surrounding the security of crypto investments in India.