India's Financial Intelligence Unit India has raised red flags against nine offshore Virtual Digital Assets (VDA) service providers for allegedly flouting the Prevention of Money Laundering Act (PMLA) of 2002.
The nine entities, including Binance, the world's largest cryptocurrency exchange, have been issued show cause notices under Section 13 of the PMLA, which empowers the authorities to take action for failing to comply with Section 12, which in turn deals with intentional undervaluation of transactions to evade taxes, or failure to furnish documents related to the transactions when asked.
The director of the Financial Intelligence Unit has written to the Ministry of Electronics and Information Technology, requesting that the URLs of these entities be blocked.
These nine entities were brought under the ambit of the Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework this March. Most of these entities or their subsidiaries are incorporated in tax havens such as Grand Cayman Islands, Seychelles, Switzerland, and others.
The entities under the scanner
1. Binance
- Binance Investments Co, Ltd (IIe Du Port, Mahe, Seychelles)
- Binance Holdings Limited - C/o International Corporation Services Ltd (Grand Cayman Islands)
- Binance (Switzerland)
2. Kucoin
- Mek Global Limited, c/o Vistra (Seychelles) Limited
- Phoenixfin Pte. Ltd (Singapore)
3. Huobi
- Sinohope Technology Holdings Ltd (Hong Kong)
- Huobi Global Limited (Singapore)
4. Kraken
Payward Trading Ltd - C/o SHRM Trustees (BVI) Limited (British Virgin Islands)
5. Gate.io
- Gate Technology Incorporated (Grand Cayman Islands)
6. Bittrex
- Bittrex Inc (Seattle, USA)
7. Bitstamp
- Bitstamp Europe S.A. (Luxembourg)
- Bitstamp UK Limited (London)
- Bitstamp Global Ltd (British Virgin Islands)
- Bitstamp USA, Inc (New York, USA)
8. MEXC Global
- MEXC Technology Limited (Colorado, USA)
- Mexc Global Foundation Ltd (Singapore)
- MEXC Global (Seychelles)
9. Bitfinex
- iFinex Inc (British Virgin Islands)
- BFXWW Inc.- c/o SHRM Trustees (BVI) Limited (British Virgin Islands)
VDA service providers operating in India — offshore and onshore — must be registered with the Financial Intelligence Unit as Reporting Entities and comply with PMLA provisions, including reporting, record-keeping, and other requirements, regardless of a physical presence in India. There are 31 registered VDA service providers in India.
Binance has been in the news for all the wrong reasons — recently, a US court ordered Binance and its former CEO, Changpeng Zhao, to pay $2.7 billion and $150 million, respectively, after charges were brought about by the US Commodity Futures Trading Commission. Zhao was also ordered to remain in the US after he pleaded guilty to violating US anti-money laundering laws.
Meanwhile, platforms like CoinDCX, WazirX, KoinBX, and CoinSwitch are thriving in the Indian crypto space as of now.
Sarvanan Pandian, Founder and CEO of KoinBX, said, “Choose to navigate the uncertainties in the Indian crypto landscape with secure and compliant exchanges. I encourage users to place trust in credible sources."
— With inputs from Timsy Jaipuria
First Published: Dec 28, 2023 9:38 PM IST
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