coindcx: CoinDCX raises $135 million, doubling valuation to $2.15 billion

Synopsis

The round also saw existing investors B Capital, Coinbase Ventures, Polychain Capital, and Cadenza Capital Management increase their investments in the crypto exchange.

CoinDCX cofounders (from left) Neeraj Khandelwal and Sumit Gupta. Illustration: Rahul AwasthiMumbai: Crypto trading exchange CoinDCX has raised $135.9 million (about Rs 1,000 crore) from investors led by Pantera Capital and Steadview Capital, doubling its valuation to $2.15 billion in less than a year to become the most valued crypto trading platform in India.

The funding comes in the backdrop of crypto exchanges facing newly introduced taxation rules in India. CoinDCX and its peers, like WazirX and CoinSwitch Kuber, have seen their volumes plummet to new lows this month due to restricted access to modes of depositing money for users.

According to the company, Pantera Capital and Steadview Capital infused about half of the funds in the latest round, which also saw participation from Kingsway Capital, DraperDragon, Republic, and Kindred Ventures.
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The round also saw existing investors B Capital, Coinbase Ventures, Polychain Capital, and Cadenza Capital Management increase their investments in the crypto exchange.

CoinDCX
In July 2021, CoinDCX had raised funds from Coinbase Ventures and B Capital at a $1.1 billion valuation, which catapulted it into the unicorn club of privately held startups valued at $1 billion or more.

CoinDCX, founded in 2018 by Sumit Gupta and Neeraj Khandelwal, helps people buy and sell crypto tokens. It also offers other crypto-based financial products such as lending.

“These investors have been pretty much deep into the crypto space and they have seen it grow in other geographies,” Gupta, who is also the CEO of CoinDCX, told ET, in an exclusive chat while talking about the continued bullishness of VCs to invest in exchanges despite the uncertainties.

“High-quality investors don’t think of volume to judge how fast the business is growing, they take a bet on who is building the industry in the right direction,” he said. “Even though the volumes are at lower levels than in the past, in the long term, it doesn’t really matter. What matters is how we are making crypto mainstream…”

The trading exchange will use the funds to increase its headcount to over 1,000 by the end of next year from 400 now. It plans to hire across functions, including engineering, product and compliance.

Gupta said the company will invest in education and build an innovation centre to develop products in the web3 space. The company also has a corporate venture arm, DCX Venture, which has backed multiple startups in the web3 space, including Ethereum Push Notification Service most recently.

CoinDCX’s user base has grown to 12 million registered users from 3.5 million in August last year.

Looming uncertainty
Over the last two weeks, the National Payment Corporation of India (NPCI) has distanced itself from crypto exchanges, while mobile payment wallet Mobikwik has cut off access to users, ET had reported on April 9.

On April 12, ET reported that volumes on multiple crypto exchanges hit a six-month low.

“Unified Payments Interface (UPI) is not available… but it is the easiest way for people to deposit money to make crypto transactions… We are trying hard to bring back UPI access,” Gupta said. “ We are engaged in discussions with the NPCI and relevant stakeholders on understanding the challenges and how we can solve them,” he said.

Also Read: Regulatory heat forces Coinbase to halt UPI payments in just three days

In March, the industry had made a representation to the finance ministry to consider reducing the proposed 1% tax deducted at source to 0.01%, saying it would likely wipe out a bulk of trading volumes on the exchanges.

“A lower TDS threshold is definitely important because then people will actually be able to trade without worrying about the capital being locked,” he said. “ So it’s obvious that that will be a big boost to the trading revenues and also revenues for the government. But as of now, I think there’s still time till June for us and discussions are happening…”

CoinDCX will also invest heavily in education initiatives, including building more vernacular content and scaling the DCXLearn platform. It recently partnered with crypto-native trade surveillance and market integrity companies such as Solidus Labs and Coinfirm to strengthen its anti-money laundering protection and to provide precise and holistic detection and reporting into suspicious activities.
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Updated: 04/19/2022 — 09:00