Binance Challenges Indian Regulator Over $86M Tax Show Cause Notice

India’s Directorate General of Goods and Service Tax Intelligence (DGGI) issued Binance, the leading crypto exchange, an $86 million tax show cause notice last week. The latest information shared by an individual familiar with the matter confirms that Binance has challenged the notice, given its claim of adherence to “relevant domestic legislation.”

A show cause notice is a formal document that requests an explanation for why legal action should not be taken against an accused entity. Courts use these notices/orders when the presiding judge(s) needs further information before deciding whether or not the alleged entity will face disciplinary action.

Binance vs. India

After its investigation, the DGGI noted in the show cause notice that Binance collected fees from Indian customers while evading taxes from July 2017 to March 2024. A news media revealed that the crypto exchange earned over $476 million in transaction fees and moved them to Nest Services Limited, a Seychelles-based Binance Group Company.

While challenging the order, a Binance spokesperson stated:

“We are fully cooperating with the Indian authorities to address any concerns. We would like to clarify that Binance is, and has always been, committed to adhering to relevant domestic legislations applicable to us.”

In May 2024, Binance secured regulatory approval from India’s Financial Intelligence Unit (FIU) to offer digital assets to local investors. A month later, the FIU fined the crypto exchange $2.2 million for alleged violations of the country’s anti-money laundering (AML) guidelines. The aforementioned informant disclosed that Binance’s latest case against the DGGI is independent of the existing issue against the FIU.

Binance Faces More Regulatory Battles

Binance is no stranger to regulatory tussles with government authorities. In countries like the United States and Nigeria, the exchange has faced several issues with local authorities that have affected its operations.

Since last year, Binance and its co-founder Changpeng Zhao (CZ) have faced criminal charges in the U.S. In June, a U.S. court presiding over the case dismissed most of these charges. Last week, one of the country’s financial agencies lightened the charges.

On the other hand, the crypto exchange faces tax evasion charges in Nigeria, and one of its top executives has been in the government’s custody for months.