Binance Returns to India, Still Has to Pay $86M in Taxes – Will It Comply?

• Binance has announced its return to Indian markets, but authorities have issued a $87M tax demand under the Goods and Services Tax.
• The US Western District Court of Washington has filed a new class action lawsuit against Binance for violating money laundering regulations.
• Richard Teng (Binance CEO) said the exchange has prevented $2.4B in fraud attempts, potentially saving 1.2M users from becoming scam victims.

Most Indian AML agencies greenlit Binance to restore its activities in the country. But while the exchange returns to India, it still has to pay $86M in taxes.

This regulatory issue goes way back.

In December 2023, the Indian Ministry of Finance's Financial Intelligence Unit noticed several exchanges (Binance among them) operating illegally in the country.

While Binance paid $2.25M for violating India's anti-money-laundering (AML) laws, the authorities aren't done with the exchange.

Adding to its woes, the US Western District Court of Washington has filed a class action lawsuit against Binance over money laundering allegations.

Binance's recent announcement about preventing $2.4B in fraud attempts in 2024 might not be enough to exonerate the exchange.

Let's discuss what happened and what this means for Binance and crypto.

Back to India but Still Paying Taxes - Binance Is in Trouble

On India's 78th Independence Day, Binance announced its return to India. With a caveat - it still has to pay the authorities $86M in taxes.

However, Richard Teng claimed the company is fully determined to play by the rules and comply with all the tax reporting requirements.

Our registration with the FIU-IND marks an important milestone in Binance's journey. Recognizing the vitality and potential of the Indian VDA market, this alignment with Indian regulations allows us to tailor our services for Indian users.Richard Teng, Binance CEO

The exchange also promised to create a Financial Crimes Compliance Unit. Its goal is to fight crypto-related crimes and collaborate seamlessly with the authorities.

However, Binance has received another hit. This time from the US Western District Court of Washington in the form of a new class action lawsuit.

The lawsuit claims that Binance has allowed bad actors to launder stolen crypto under Changpeng Zhao's leadership, ignoring AML laws. The plaintiffs attribute Binance's ascent to the world's largest crypto exchange to this deliberate evasion of AML regulations.

Will this impact Binance's return to India, and what do experts have to say?

Binance's Return to India Is a Mixed Bag, Experts Say

Saravan Pandian (CEO of local crypto exchange KoinBX) and Shahzad Nathani (head of operations for blockchain platform Shardeum) praise Binance's return to India.

More market collaboration, competition, and local investor confidence are the main potential advantages of Binance's move.

But not everyone is equally thrilled. Aravind Chandrasekaran, the OnMeta ex-product lead, sees a potential downside to Binance's return.

The bad part is that Binance is a hotbed for gray area activities because of their lax rules, especially regarding the prevention of money laundering in India.Aravind Chandrasekaran, OnMeta ex-product lead

Moreover, the Indian government is still working on its crypto laws, which could negatively impact Binance. The government recently implemented a 30% tax on crypto holdings and transfersand a 1% TDS for every crypto trade.

Binance users who have previously evaded tax liabilities might not be cleared after all. If the exchange shares transaction data, the Indian government might start sending payment notices.

Meanwhile, Binance Is Actively Fighting Fraud Attempts

According to an X Post by Richard Teng,Binance has prevented $2.4B in potential fraud attempts in the first seven months of 2024.

In the first 7 months of 2024, #Binance prevented $2.4B in potential user losses.

How? A hybrid approach of AI & manual reviews allows us to detect suspicious transactions and take quick action to protect users.

Always user-focused! More details here. ...

- Richard Teng (@_RichardTeng) August 20, 2024

Over $1.1B involved suspicious withdrawal attempts. Criminals tried to move away illicit funds, but Binance's automated system flagged the operations successfully.

Under new leadership, Binance seems to have turned things around. But will this last, and will the exchange mend its ways?

That remains to be seen, but the new US lawsuit, tax demand in India, and a Venezuelan ban are more pressing matters.

References

• Binance resumes services in India after seven-month regulatory ban (Yahoo Finance)
• Binance's return to India comes with $86M tax demand (Cointelegraph)
• Binance Claims to Have Prevented Users $2.4 Billion in Fraud Attempts (Cryptonews)

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