Finance Ministry says Rs.95.86 crore recovered from 11 cryptocurrency exchanges. Supreme Court directs Bitcoin scam accused to provide passwords to ED

Has the Finance Ministry broken the back of illegal cryptocurrency exchanges?

March 28, 2022

11 crypto exchanges including CoinDCX, CoinSwtich evaded taxes upto Rs 95.86 crore

Finance Ministry on Monday informed Parliament that Rs.95.86 crore has been recovered from 11 cryptocurrency exchanges for evasion of Goods and Services Tax (GST). The total amount includes penalties and interest. Zanmai Labs (WAZIRX), Coin DCX, CoinSwitch Kuber, Buy Ucoin, UnoCoin and Flitpay were among the exchanges that were involved in GST evasion cases. In another development Supreme Court of India directed an accused caught in a Bitcoin trading scam to provide his passwords to Enforcement Directorate (ED).

According to Finance Ministry, other cryptocurrency exchanges booked for tax evasion were Zeb IT Services, Secure Bitcoin Traders, Giottus Technologies, Awlencan Innovations India (Zebpay), and Discidium Internet Labs, according to the Finance Ministry. In a written reply to Lok Sabha, Minister of State for Finance Pankaj Chaudhary said 11 cases of evasion of GST by cryptocurrency exchanges have been detected by Central GST formations. Evasion of Rs.81.54 crore was detected and Rs.95.86 crore was recovered (including interest and penalty), he said.

As per the reply, Rs.49.18 crore was recovered from Zanmai Labs (WAZIRX), Rs.17.1 crore from Coin DCX, and Rs.16.07 crore from CoinSwitch Kuber.

Meanwhile, in another development, the Supreme Court asked a crypto-currency scam accused Ajay Bhardwaj to disclose the username and password of his Bitcoin wallet to the Enforcement Directorate and cooperate with the investigation in the money laundering case against him. A bench of Justices D Y Chandrachud and Surya Kant said that subject to Ajay Bhardwaj, accused of running a “multi-level marketing scheme” of Bitcoin making full disclosure, his interim protection granted by the court will continue.

The bench noted in its order, “An application for cancellation of bail has been filed by the respondents. Additional Solicitor General Aishwarya Bhati appearing for ED has filed a status report. ED has submitted that the brother of the petitioner has died and Petitioner (Bhardwaj) is in possession of the username and password of crypto wallets which must be disclosed to the investigating officer”.

On February 25, Supreme Court had asked the Centre to make its stand clear on whether cryptocurrency trade involving Bitcoin or any other such currencies is legal in India or not. The top court was dealing with a case related to the quashing of multiple FIRs registered against Bhardwaj and others for allegedly duping investors across India by inducing them to trade in Bitcoin and assuring them high returns.

47 cases have been registered against the accused Bhardwaj for duping people across the country and the issue involves a trade of 87,000 Bitcoin worth Rs.20,000 crore. The charges against Bhardwaj is that he along with other co-accused, who are mostly his family members, had induced investors to invest

in Bitcoin through a “multi-level marketing scheme” on false promises of securing to the investors a 10 percent assured monthly returns for 18 months is the total of 180 percent profit.

The probe agency also said that to escape from inevitable punishment under the law, Bhardwaj and other co-accused persons collectively, in a dishonest manner and with the deliberate intention of destroying all the evidence shut down the fake ‘GainBitcoin‘ website through which investors made the investment.

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