Binance Owes India $85 Million in Unpaid Taxes as Authorities Uncover Major Evasion

Indian Authorities Uncover Massive GST Evasion in Cryptocurrency Sector

India's government has dicovered widespread tax evasion among cryptocurrency exchanges, with Binance and WazirX identified as major offenders.

A total of $97 million in unpaid Goods and Services Tax (GST) liabilities has been revealed, highlighting deeper issues within the crypto industry.

Binance Owes $85 Million in Unpaid Taxes

The most significant case involves Binance, which reportedly avoided paying $85 million in GST through its subsidiary, M/s Nest Services Limited.

Despite earlier assurances of compliance, Binance's Indian operations show ongoing regulatory issues.

This revelation follows Binance’s announcement in August 2024 about its registration in India, which came after a $2.5 million fine for prior violations.

Minister of State for Finance Pankaj Chaudhary disclosed during a parliamentary session on 2 December that 17 Virtual Digital Asset Service Providers were investigated for the collective $97 million in unpaid taxes.

The 17 crypto exchanges identified for tax evasion. (Source: Ministry of Finance, Government of India)

WazirX and Other Firms Settle Some Dues

WazirX owes $4.8 million in unpaid taxes, while CoinDCX and CoinSwitch Kuber owe $1.9 million and $1.7 million, respectively.

These firms have partially paid their dues, but Binance and Hyperux Technologies remain under scrutiny for non-compliance.

WazirX’s issues extend beyond taxes. A $235 million hack in July 2024 disrupted its operations, forcing withdrawal suspensions that remain in place.

In a statement on X (formerly Twitter), WazirX said,

“We will continue to pursue legal actions to reclaim illiquid and stolen assets actively, ensuring they are secured for Creditors’ benefit.”

Indian Government's Broader Crackdown on Tax Evasion

The GST evasion cases are part of a larger regulatory clampdown on India’s cryptocurrency sector.

The Ministry of Finance reported that 47 Virtual Digital Asset Service Providers are now registered, an increase of 19 from last year.

However, heightened scrutiny on GST compliance and consumer security persists.

Binance Faces Mounting Global Challenges

Binance’s troubles are not limited to India.

The exchange recently faced criticism for listing questionable Solana-based meme coins like The AI Prophecy (ACT) and Peanut the Squirrel (PNUT), with accusations of enabling pump-and-dump schemes.

Globally, Binance continues to deal with challenges, including a whistleblower lawsuit in the UK by former employee Amrita Srivastava, alleging wrongful termination after exposing bribery.

It also faces bans and fines, including a $10 billion settlement with US regulators and a ban in the Philippines for operating without a licence.

Earlier this week, Cambodia blocked access to the websites of 16 crypto exchanges, including Binance, due to their lack of licenses from the Securities and Exchange Regulator of Cambodia (SERC).

Despite Binance's partnerships in the country and efforts to support regulatory development, its website is now inaccessible, though its mobile app remains available.

WazirX Hack Suspect Arrested

While Binance faces regulatory setbacks, Indian authorities have made progress on the WazirX hack investigation.

Police in New Delhi recently arrested a suspect linked to the $235 million theft, though the primary culprit remains at large.

The hack, which WazirX suspects involved North Korean operatives, has further strained its user and regulatory relationships.

Past remarks by Binance co-founder Changpeng Zhao have resurfaced, with critics interpreting his 2022 comment, “I can disable the Indian outfit's wallets,” as foreshadowing WazirX’s ongoing troubles.