The CoinDCX case has raised serious concerns over investigative procedures after a Thane court granted bail to the company’s founders, citing lapses in verification and legal compliance. The case, linked to an alleged ₹71.6 lakh fraud, highlighted issues such as failure to verify identities, bypassing procedural safeguards, and lack of evidence linking the accused to financial transactions. Legal experts have pointed to the need for improved handling of cyber and financial crimes. The developments have triggered scrutiny of policing standards, accountability mechanisms, and the broader impact on investor confidence in India’s digital economy.
Thane police are in soup in a high-profile case involving CoinDCX directors, a suspicious probe exposes cops in court
Thane Police face scrutiny after a botched probe into a ₹71.6 lakh crypto fraud led to the wrongful arrest of CoinDCX founders. A court granted bail, highlighting procedural lapses, lack of verification, and failure to follow legal safeguards.
In a major embarrassment for the Thane Police, the Mumbra police unit has come under fire for what legal experts are calling a “spectacularly botched” investigation into a ₹71.6 lakh cryptocurrency fraud. The arrest of CoinDCX co-founders Sumit Gupta and Neeraj Khandelwal — whisked away from Bengaluru in a high-profile raid — has collapsed within 48 hours, with a local court granting them bail and questioning the very basis of the police action.
Arrest without verification
The drama began when a Kausa-based insurance advisor claimed he was duped by “CoinDCX representatives.” Without verifying whether the culprits were actual employees or sophisticated impersonators, a Mumbra police team flew to Bengaluru to apprehend the tech executives. This “arrest-first, think-later” approach has since been exposed as a massive procedural failure.
To view the FIR copy – Click here
BNSS norms bypassed
A primary lapse identified by legal analysts was the Mumbra police’s decision to bypass Section 35(3) of the Bharatiya Nagarik Suraksha Sanhita (BNSS). Under established Supreme Court guidelines, police are mandated to issue a “Notice of Appearance” in cases where the alleged offence carries a sentence of less than seven years, rather than making an immediate arrest. The Mumbra cops skipped this crucial step, opting for a cinematic multi-state operation instead.
To view the case-related documents – Click here
Complainant never met the founders
The case further crumbled when the complainant’s own affidavit revealed he had never actually met the real founders. The “Sumit” and “Neeraj” he interacted with in Mumbra were scammers using the founders’ names — a fact the police failed to verify via basic tower location records or travel history, which would have proven the founders were not even in the city at the time. Financial experts also pointed out that the defrauded money landed in private third-party bank accounts with no connection to CoinDCX’s corporate coffers.
Also Read: Central Sanskrit University B.Ed Approval Row Reaches PMO.
A pattern of behaviour?
Legal experts say this was done deliberately. This case was a copy of a similar case registered by the Nallasopara police last year. Even though that case was overturned in a day, the Mumbra police are believed to have received good “mileage” from the high-profile action.
Court pulls up cops
The court’s sharp rebuke centred on the fact that CoinDCX had already flagged over 1,200 fake websites and filed a writ in the Delhi High Court against these very scammers. By arresting the founders instead of the predators, the Mumbra police targeted the entity that was actively reporting the crime. Judicial Magistrate Nilesh Rathod, while granting bail on a surety of ₹50,000, observed that with the complainant already recovering funds from another accused person, the custody of the tech founders was entirely unwarranted.
Senior officers in the dock?
This botched operation has now raised serious questions about the training of local police units in handling complex cyber-corporate crimes. While the actual scammers remain at large, the Mumbra police are left red-faced, facing internal scrutiny for a premature and procedurally hollow investigation that has harmed the local investment climate. It will be interesting to see if any action is taken against the errant cops — if not, it can be inferred that the operation happened with the “full knowledge and backing” of senior officers.
Readers’ Appeal
Readers with relevant information or inputs related to this case are encouraged to come forward and assist the investigation. They may contact Unmesh Gujarathi directly on 9322755098 to share credible details, documents, or leads in the larger public interest.
Editorial Note:
This article is based on publicly available FIR records, court case references, and reports published by multiple media organisations. The information is presented in the context of ongoing investigations and public interest reporting. Sprouts News does not make any judicial determination regarding the individuals mentioned and does not intend to defame any person or organisation. Any individual seeking clarification or wishing to provide an official response may contact the editorial team with verifiable documentation. The information is presented for journalistic and informational purposes.
