The Indian authorities have identified a violation of tax laws by the cryptocurrency exchange WazirX, owned by Binance. This is stated in a press release.
Indian cryptocurrency exchange WazirX is under investigation by authorities for allegedly violating the country's tax laws. According to the Goods and Services Tax (GST) Mumbai East Commissionerate for the Mumbai area, the exchange faces a total penalty of Rs 49.2 (over $6 million) for not taxing operations with WRX, WazirX's native token.
The authorities also turned their attention to other exchanges. According to The Economic Times, CoinDCX, Unocoin, Coinswitch Kuber, and BuyUCoin were the targets of the investigation.
“The above case is part of a campaign against tax evasion. [...] The CGST Department will cover all cryptocurrency exchanges that fall into the Mumbai zone, and will also intensify this work in the coming days," the press release says.
According to CoinDesk, WazirX cited the lack of clarity in the regulation and stated that it is "paying tens of crores in GST every month in good faith."
“There was ambiguity in the interpretation of one of the components, which led to a different calculation of the value added tax paid. We have voluntarily paid an additional GST. There was no and there is no intention to evade paying taxes,” the company said.
As a reminder, Binance acquired the Indian cryptocurrency exchange in November 2019.
In June 2021, the Indian Ministry of Finance's Enforcement Office announced an investigation into WazirX for aiding money laundering. Later, the media clarified that the authorities are investigating the activities of "illegal" betting apps owned by Chinese citizens.
It is reported that during the investigation, the suspects laundered about $7.9 million. Indian rupees were first converted to tether (USDT) and later withdrawn to Binance.
In total, during the investigation, WazirX received $123 million worth of cryptocurrency from Binance accounts. Then, the $196 million worth of crypto was sent back to Binance.
Recall too that the Reserve Bank of India (RBI) imposed a ban on cryptocurrency transactions by individuals and exchanges. In March 2021, the Supreme Court of India struck down the controversial ban that the RBI had put in place.
However, in November, there was another talk of the government's intention to ban most private currencies. This caused panic in the local market, which led to a short-term local drop in the price of bitcoin by 15%.
In December, the media reported that the authorities would still regulate digital assets instead of banning them.
"The government does not consider cryptocurrencies to be legal tender and will take all measures to stop the use of cryptoassets to fund illegal activities or as part of a payment system," Indian Finance Minister Anurag Singh Thakur said during a speech in the upper house of parliament.
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