FIU imposes Rs 18.82 crore penalty on crypto exchange Binance (2024)

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FIU imposes Rs 18.82 crore penalty on crypto exchange Binance

ETtechLast Updated: Jun 20, 2024, 12:12:00 PM IST

Synopsis

In May, Binance had registered with the FIU as the exchange sought to resume operations in the country after the watchdog issued show-cause notices to nine offshore exchanges operating in violation of local rules.

FIU imposes Rs 18.82 crore penalty on crypto exchange Binance (2)

Global cryptocurrency exchange Binance has been fined Rs 18.82 crore, the highest ever on any crypto entity by the Financial Intelligence Unit of India (FIU-IND) for non-compliance to anti-money laundering laws.

Back in December 2023, the intelligence unit of the Finance Ministry, which is tasked with oversight of trade in virtual digital assets (VDA), had issued a show cause notice to Binance and eight other global exchanges for their operations in India without compliance with applicable laws.

"After considering the written and oral submissions of the Binance, Director, FIU-IND, based on the material available on record, found that the charges against Binance were substantiated. Consequently, the Director FIU-IND vide order dated 19th June, 2024 in exercise of powers under Section 13 PMLA, imposed a total penalty of Rs. 18,82,00,000 (Rupees Eighteen Crore Eighty Two Lakh Only) on the Binance," the FIU said in a notice dated 19 June.

ET was the first to report in April that Binance, the world’s largest cryptocurrency exchange that was banned by the government in January, is poised to return to India by paying a penalty of about $2 million.

Binance is the world’s largest crypto exchange, in terms of both asset holdings and daily trade volume. According to CoinMarketCap, it recorded a trade volume of $11 billion in the previous 24 hours (ending 12 pm IST on Thursday), which is 25% of the global volume.

Before it was banned in January this year, Binance accounted for nearly 90% of the estimated $4-billion crypto holdings of Indian nationals. The platform’s market dominance is mainly attributed to its non-compliance with tax laws, which allowed investors to trade without paying the 1% tax deducted at source (TDS) applicable on registered exchanges.

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While the FIU has levied the Rs18.82 crore penalty in exercise of its powers as a VDA registrar, the tax angle shall still be scrutinised by the Income Tax department which will affect all investors who illegally had traded on the platform over the past two years.

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FIU imposes Rs 18.82 crore penalty on crypto exchange Binance (2024)

In May, Binance had registered with the FIU as the exchange sought to resume operations in the country after the watchdog issued show-cause notices to nine offshore exchanges operating in violation of local rules.

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