Global cryptocurrency exchange Binance has been fined Rs 18.82 crore by the Financial Intelligence Unit of India (FIU-IND), marking the highest penalty ever imposed on a crypto entity for non-compliance with anti-money laundering laws.
In December 2023, the Finance Ministry's intelligence unit, responsible for overseeing virtual digital assets (VDA) trade, issued a show cause notice to Binance and eight other global exchanges. The notice was due to their operations in India not complying with applicable laws.
Following written and oral submissions from Binance, the FIU-IND Director found the charges against Binance substantiated. On June 19, 2024, the Director FIU-IND, exercising powers under Section 13 of the Prevention of Money Laundering Act (PMLA), imposed a penalty of Rs 18.82 crore on Binance.
Binance is the world’s largest crypto exchange by 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), constituting 25% of the global volume.
Before its ban in January 2024, Binance accounted for nearly 90% of the estimated $4 billion in crypto holdings by Indian nationals. The platform's market dominance was partly due to its non-compliance with tax laws, allowing investors to trade without paying the 1% tax deducted at source (TDS) required on registered exchanges.
The FIU's Rs 18.82 crore penalty, imposed as a VDA registrar, is just one aspect of the regulatory scrutiny Binance faces. The Income Tax department will further examine the tax implications, impacting all investors who illegally traded on the platform over the past two years.
