CoinDCX CEO Slams WazirX Allegations: User Funds Safe and Compliant in India

A fiery clash between two of India’s leading cryptocurrency exchanges, CoinDCX and WazirX, has thrown the spotlight on user fund safety and regulatory compliance. With accusations flying and trust on the line, CoinDCX CEO Sumit Gupta has fired back at claims that user crypto was ever held abroad, denying any wrongdoing and pointing to a deeper mess in India’s crypto landscape.

• Main Conflict: WazirX alleges CoinDCX held user funds in a non-FIU-registered Lithuanian entity until February 2025; CoinDCX calls this nonsense.
• CoinDCX Defense: Gupta insists all funds are with Neblio Technologies, a fully compliant Indian entity under FIU oversight.
• WazirX Backstory: A $234.9 million hack and legal battles in Singapore cast doubt on WazirX’s motives for the accusation.

The Accusation: WazirX Throws a Punch

The drama kicked off with a bombshell from WazirX, filed in an affidavit to the Singapore High Court. They claimed that CoinDCX, one of India’s biggest crypto exchanges, had stashed user cryptocurrency with an entity in Lithuania that wasn’t registered with India’s Financial Intelligence Unit (FIU) until as recently as February 2025. For the uninitiated, the FIU is India’s financial watchdog, enforcing strict anti-money laundering (AML) and counter-terrorism financing (CTF) rules. Think of it as a driver’s license for crypto exchanges—without it, you’re not legally on the road, and non-compliance can mean fines, shutdowns, or a complete loss of user trust in an industry already battered by scams and volatility.

If WazirX’s claim held water, it would paint CoinDCX as reckless, potentially exposing user funds to a foreign jurisdiction with questionable oversight. It’s a serious charge, especially in a market like India where regulatory scrutiny is tighter than a vice grip. But is there truth to it, or is this just mudslinging from a competitor with its own skeletons in the closet?

CoinDCX’s Counterpunch: Gupta Sets the Record Straight

Sumit Gupta, CEO of CoinDCX, didn’t waste time clapping back, categorically denying the allegations with a statement that cuts through the noise, as reported by Bitcoinist.

“All Indian users’ INR and crypto assets on @CoinDCX have always been, and continue to be held by Neblio Technologies, our FIU-IND registered entity, fully compliant with all Indian laws.”

Gupta went on to explain that a Terms of Use update in February 2025, which formally named Neblio Technologies as the contracting party, wasn’t about moving funds—it was a transparency play to make clear who’s handling user assets. He didn’t stop there, taking a sharp jab at WazirX’s own failures while positioning CoinDCX as a standard-bearer for user safety.

“We did this proactively so that CoinDCX users never face challenges like those seen during the WazirX episode. This approach safeguards users’ interests and we hope other Indian exchanges adopt the same standard.”

But let’s not take Gupta’s word as gospel just yet. Even if funds were never in Lithuania, why was CoinDCX even flirting with third-party entities abroad for global expansion, as Gupta himself admitted? Optics matter in a trust-starved industry, and even the whisper of offshore dealings can spook users. While I’m inclined to believe CoinDCX over a clearly desperate WazirX, the lack of public proof-of-reserves or third-party audits from CoinDCX leaves a nagging gap. If you’re going to preach transparency, back it up with hard evidence—show us the receipts, as discussed in community forums like Reddit.

WazirX’s Fall from Grace: A $234.9 Million Disaster

Let’s talk about the “WazirX episode” Gupta referenced with the subtlety of a sledgehammer. Roughly a year ago, in July 2024, WazirX suffered a catastrophic hack that bled out $234.9 million—nearly half its reserves. The breach targeted a multi-signature wallet, supposed to be a fortress, draining a mix of Ethereum, Shiba Inu, and other tokens. Over 200,000 users were left high and dry, accounts frozen, unable to withdraw a single rupee or satoshi. Social media lit up with raw anger: traders missing out on market rallies, everyday investors losing life savings they’d bet on crypto as a way out, as detailed in reports by The Hindu.

The aftermath was uglier than a bear market. WazirX halted deposits and withdrawals for weeks, rolling out a half-baked recovery plan that felt like tossing a paper towel at a flood. They’ve recouped a sliver of funds through white-hat hackers and bounties, but most users are still out of pocket. Meanwhile, their parent company, Zettai PTE LTD, dragged the mess to the Singapore High Court, pleading for a restructuring plan—basically a timeout to sort their financial wreckage. The court shot it down on June 4, 2025, with another hearing set for July 15. Against this backdrop, WazirX accusing CoinDCX of mishandling funds feels like a street magician’s cheap trick. Are they genuinely worried about industry standards, or just hoping we’ll forget their own epic collapse? Let’s not be naive—this reeks of deflection from a glass house already shattered, with further context available on Wikipedia.

India’s Regulatory Quagmire: A Tightrope for Crypto

Zooming out, India’s crypto scene is less a playground and more a minefield. Back in 2018, the Reserve Bank of India slapped a ban on crypto transactions, choking the industry until the Supreme Court overturned it in 2020. Since then, a punishing 30% tax on gains and a 1% tax deducted at source (TDS) on trades, rolled out in 2022, have sent users and platforms scrambling—often offshore. FIU registration isn’t just a nice-to-have; it’s a lifeline. Without it, you’re a target for regulators itching to crack down. CoinDCX’s emphasis on compliance via Neblio Technologies shows they get the stakes, but it also begs the question: if they’re so squeaky clean, why even entertain foreign entities like Lithuania for expansion? It’s a risky dance between local rules and global ambitions, and transparency isn’t just a buzzword—it’s the only way to avoid a regulatory guillotine, as explored in discussions on Quora.

Compare this to global standards, and India’s approach looks like a bear hug. The EU’s new MiCA framework aims for clarity with standardized rules, while the US wrestles with SEC and CFTC turf wars over crypto oversight. Indian exchanges like CoinDCX and WazirX face a uniquely hostile environment, where one misstep can trigger not just fines but a full-blown user exodus. And if this feud escalates, don’t be surprised if the FIU or the government doubles down with even harsher mandates—potentially accelerating a push toward decentralized finance (DeFi) as users say “screw this” to centralized risks, a sentiment echoed in updates from CoinDesk.

Bitcoin’s Bullish Backdrop: A Stark Contrast

While Indian exchanges trade barbs, Bitcoin is off doing its own thing, recently smashing an all-time high of $123,000 before easing back to $121,900—a 12% weekly jump. This surge, likely fueled by institutional adoption and macro fears like inflation, screams market optimism. Yet it’s a glaring contrast to the ground-level chaos of exchange drama. Picture this: you’ve just watched your Bitcoin stack soar to new heights, only to log into your exchange and find your funds locked in a legal or hacking quagmire. That’s the reality check here—Bitcoin’s resilience, rooted in its decentralized ethos, shines brighter than ever when centralized custodians fumble. It’s almost poetic: the king of crypto doesn’t care about your exchange’s PR war, but your ability to cash out sure does.

The Decentralized Takeaway: Trust No Middleman

As advocates for decentralization, freedom, and privacy, this spat is a neon sign flashing “self-custody or bust.” Centralized exchanges (CEXs) like CoinDCX and WazirX are the old-school banks of crypto—handy until they’re hacked, regulated into oblivion, or caught in a pissing match like this one. Self-custody, where you hold your own private keys (think of it as keeping cash in your personal safe versus a bank vault), cuts out the middleman entirely. Sure, it’s on you to secure your wallet, but isn’t that the point of Bitcoin’s revolution? No trust, just verify, a principle reinforced by statements on CoinDCX’s blog.

This mess also aligns with effective accelerationism—the idea that even painful hiccups like hacks or disputes can speed up the shift to better systems. If WazirX’s implosion and CoinDCX’s defense push even a fraction of users to decentralized exchanges (DEXs) or non-custodial wallets, that’s a win for the long game. But let’s not sugarcoat it: Indian exchanges need to step up now. Regular proof-of-reserves (a public ledger showing they’ve got the funds to back your deposits), third-party audits, and raw honesty over polished PR are non-negotiable. Until then, a healthy dose of skepticism is your best defense. Keep your keys close, folks, with further details on compliance available at Fidelity.

Before wrapping up, here are some key questions and takeaways to chew on, with straight answers to cut through the noise:

• What ignited the CoinDCX vs. WazirX feud in India’s crypto market?
  WazirX accused CoinDCX of holding user funds in a non-FIU-registered Lithuanian entity until February 2025, a claim Gupta fiercely denies, stating all assets are with the compliant Neblio Technologies in India.
• Why is FIU compliance a big deal for Indian crypto exchanges?
  FIU compliance means adhering to India’s tough AML and CTF laws, protecting users and keeping platforms legal in a market where regulators are quick to swing the hammer.
• Are WazirX’s accusations against CoinDCX legit or a smokescreen?
  With WazirX reeling from a $234.9 million hack and legal woes in Singapore, their claims smell like a mix of real concern and a desperate bid to shift focus from their own trainwreck.
• How does Bitcoin’s $123,000 peak tie into this exchange chaos?
  Bitcoin’s record high shows the market’s strength, but disputes like this expose risks at centralized exchanges that can tank user confidence, even in bullish times.
• Can Indian crypto users trust centralized platforms amid such drama?
  Trust is shaky at best; while CoinDCX pushes compliance, incidents like WazirX’s hack scream for self-custody and decentralized options to dodge reliance on any single entity.
• What must Indian exchanges do to rebuild faith in the system?
  They need to commit to regular proof-of-reserves, third-party audits, and brutal transparency—anything less is just gambling with user funds.

Gupta’s final word to the community drives home CoinDCX’s stance with a clarity we can’t ignore.

“Please don’t fall for misinformation. We remain committed, as always, to user safety, transparency, and regulatory compliance.”

The pressure is on Indian exchanges to prove they’re more than hot air. Step up with accountability, or watch users bolt to the decentralized future we’re all betting on. Next time a platform promises the moon, demand their audit report—your wallet depends on it.