India’s Financial Intelligence Unit (FIU) imposed a fine of $2.25 million (roughly Rs. 18.8 million) on Binance. The financial watchdog announced the development on Thursday, June 20. India claimed that the crypto exchange, touted as the world’s largest, did not comply with the Prevention of Money Laundering Act, 2002 (PMLA), which is required for crypto companies to comply with in order to continue their operations in the country.
Indian FIU explains well on Binance
According to an official statement shared by the exchange, India has issued a notice questioning Binance for providing its services to Indian citizens without complying with PMLA laws.
“A notice dated December 28, 2023 was issued to Binance pursuant to Section 13 of the Act, compelling Binance to demonstrate why appropriate action should not be taken against it for neglect of duty under the Act, despite its status as an entity required to report its operations as virtual digital asset service providers,” the FIU said in a statement.
Binance reportedly received written and verbal communications about FIU’s concerns. The FIU said the allegations regarding Binance’s violation of India’s legal requirements to operate here were substantiated.
“Consequently, Director FIU-IND vide order dated June 19, 2024 in exercise of powers under Section 13 of PMLA, imposed a total penalty of Rs. 18,82,00,000 (Rupees Eighteen Million Eighty Two Lakhs only),” the finance authority pointed out.
The US-based stock exchange has been directed to ensure that it diligently complies with India’s PMLA Act as soon as possible. Binance has not yet responded to the development.
India’s crypto circuit is reacting
Speaking to Gadgets360, members of India’s crypto circle asked other Web3 players in the country to see this punishment of Binance as a lesson in the consequences companies could face if they don’t follow the law.
“This significant fine is a clear indication of increasing oversight and regulation in the digital asset space. Being informed and aware of such developments is key to successfully navigating this evolving landscape,” Shivam Thakral, CEO of BuyUcoin told Gadgets360. “I believe regulations are becoming more organized for cryptocurrency exchanges, globally. The need for compliance is critical to protecting users and operating in a fearless environment.”
Indian crypto stakeholders realize that the nation has the potential to become a leader in the Web3 space due to its large pool of developers. Therefore, they believe that compliance with legal requirements is important to make the crypto sector, which is otherwise known for being risky and volatile, safer for the investing community.
“According to a research report, India is one of the leading countries in terms of ownership of digital assets. In such a large digital asset market, it is imperative to implement a regulatory framework to protect user assets and provide a business-friendly environment,” Manhar Garegrat, Head of India and Global Partnerships, Liminal Custody told Gadgets360.
Binance claimed to have registered with FIU in India last month. The exchange did not want to lose the opportunity to bring the Indian crypto community together on its platform.
The crypto exchange has already had run-ins with US and Nigerian authorities for allegedly not following their respective rules to oversee the crypto sector.
