CRIMINAL CRYPTO CAPITALI$M
Indian Authorities Crack Down on Six Crypto Exchanges on Suspicion of Tax EvasionTanvir Zafar
Mon, January 3, 2022
Up to six cryptocurrency exchanges have come under the spotlight of India’s Directorate General of Goods and Services Tax Intelligence (DGGI) on the suspicion of tax evasion.
According to sources privy to the investigations, the DGGI is looking into the operations of some of the country’s biggest crypto service providers, including BTC and ETH trading exchanges like Coinswitch Kuber, BuyUCoin, CoinDCX, and UnoCoin.
The sources also revealed that the crackdown on the crypto traders has so far uncovered tax evasion to the tune of about Rs 70 crore, which is equivalent to $6.2 million.
WazirX First to be Investigated
Late last year, the Central Goods and Services Tax (CGST) Mumbai Zone, revealed in a tweet that its officers had detected massive Goods and Services Tax (GST) evasion perpetrated by one of India’s premier crypto service providers, WazirX.
In the tweet, CGST revealed that it had recovered Rs 49.2 crore, which is about $4.3 million, in cash, as GST, interest, and penalties, from Zanmai Labs, the parent company of WazirX
Authorities also stated that WazirX, which records almost $43B in trading volume annually, had also launched its own digital currency, the WRX, which can be used alongside the Rupee to carry out transactions on the platform but had failed to pay any GST on it.
WazirX collects commissions on every crypto transaction on its platform from both the buyer and the seller. Transactions using WRX, attract a commission of 0.1%, while transactions carried out using the rupee attract a commission of 0.2%.
However, DGGI investigators claim that the platform only paid out GST on commissions earned from rupee transactions but not from WRX transactions. Both the rupee and WRX transactions attract a GST of 18%.
But reacting to the raid on their offices, a representative of Zanmai Labs blamed India’s ambiguous tax regime for the ensuing confusion.
In a press release, the crypto exchange said:
We voluntarily paid additional GST in order to be cooperative and compliant. There was and is no intention to evade tax. That being said, we strongly believe that regulatory clarity is the need of the hour for the Indian crypto industry.
DGGI Warns of Further Action Against Crypto Service Providers
Chainanalysis’ Global Crypto Adoption Index puts India second in a list of 154 countries where crypto use is most prevalent, and the DGGI has hinted that it is not done with investigations into India’s booming crypto space, alluding that more raids were in the offing. Officials say that future crackdowns will include Non-Fungible Token (NFT) platforms and coin launches.
Speaking to the ANI news agency, a DGGI official said:
They are providing facilitation intermediary services for buying and selling of crypto coins. These services attract a GST rate of duty of 18% which all of them have been evading.
This article was originally posted on FX Empire
According to sources privy to the investigations, the DGGI is looking into the operations of some of the country’s biggest crypto service providers, including BTC and ETH trading exchanges like Coinswitch Kuber, BuyUCoin, CoinDCX, and UnoCoin.
The sources also revealed that the crackdown on the crypto traders has so far uncovered tax evasion to the tune of about Rs 70 crore, which is equivalent to $6.2 million.
WazirX First to be Investigated
Late last year, the Central Goods and Services Tax (CGST) Mumbai Zone, revealed in a tweet that its officers had detected massive Goods and Services Tax (GST) evasion perpetrated by one of India’s premier crypto service providers, WazirX.
In the tweet, CGST revealed that it had recovered Rs 49.2 crore, which is about $4.3 million, in cash, as GST, interest, and penalties, from Zanmai Labs, the parent company of WazirX
Authorities also stated that WazirX, which records almost $43B in trading volume annually, had also launched its own digital currency, the WRX, which can be used alongside the Rupee to carry out transactions on the platform but had failed to pay any GST on it.
WazirX collects commissions on every crypto transaction on its platform from both the buyer and the seller. Transactions using WRX, attract a commission of 0.1%, while transactions carried out using the rupee attract a commission of 0.2%.
However, DGGI investigators claim that the platform only paid out GST on commissions earned from rupee transactions but not from WRX transactions. Both the rupee and WRX transactions attract a GST of 18%.
But reacting to the raid on their offices, a representative of Zanmai Labs blamed India’s ambiguous tax regime for the ensuing confusion.
In a press release, the crypto exchange said:
We voluntarily paid additional GST in order to be cooperative and compliant. There was and is no intention to evade tax. That being said, we strongly believe that regulatory clarity is the need of the hour for the Indian crypto industry.
DGGI Warns of Further Action Against Crypto Service Providers
Chainanalysis’ Global Crypto Adoption Index puts India second in a list of 154 countries where crypto use is most prevalent, and the DGGI has hinted that it is not done with investigations into India’s booming crypto space, alluding that more raids were in the offing. Officials say that future crackdowns will include Non-Fungible Token (NFT) platforms and coin launches.
Speaking to the ANI news agency, a DGGI official said:
They are providing facilitation intermediary services for buying and selling of crypto coins. These services attract a GST rate of duty of 18% which all of them have been evading.
This article was originally posted on FX Empire
Event-Betting Platform Polymarket to Pay $1.4 Million U.S. Fine
Ben Bain
Mon, January 3, 2022
(Bloomberg) -- Polymarket, an online platform for betting on politics, economic indicators and other real-world events, will pay $1.4 million to settle U.S. regulators’ allegations it offered illegal trading and must “wind down” contracts people use to wager.
The firm, whose popularity surged during the pandemic, has been running an unregistered platform that lets people bet on the outcome of events since around June 2020, the Commodity Futures Trading Commission said in a statement Monday. Polymarket didn’t admit or deny wrongdoing in the settlement.
“All derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or ‘DeFi’ space,” Vincent McGonagle, the CFTC’s acting director of enforcement, said in the statement. The commission said that Polymarket received a “reduced” penalty for cooperating with the investigation.
Polymarket, operated by New York-based Blockratize Inc., said in a statement that in the wake of the settlement it will prematurely wind down three betting markets set to expire after Jan. 14 and refund people’s money. The company didn’t say how it planned to change its business to ensure it was complying with CFTC rules.
“An announcement on the future of Polymarket will be released in the coming days,” the firm said. “We are thrilled to put this settlement behind us, and are prepared and excited for the next chapter.”
For its part, the CFTC also didn’t specify the process for Polymarket listing new contracts that comply with its rules. Getting approval for binary options like the ones that the regulator says the firm was offering can be a lengthy and complicated process.
Instead of U.S. dollars, customers who want to make trades on Polymarket have to use USD Coin, a stablecoin backed by Coinbase Global Inc. The platform doesn’t take custody of money or digital tokens, and just displays existing markets live on the Ethereum blockchain.
According to the order settling the allegations, Polymarket must certify to the CFTC by no later than Jan. 24 that it has wound down all of its non-compliant contracts, and must make funds available for redemption by those who had bet in the market.
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