Binance CEO Richard Teng recently disclosed that the exchange experienced a surge in both inflows and trading volumes amidst market turmoil on August 5th. Despite the macroeconomic uncertainties and the market downturn, Binance managed to attract a net inflow of $1.2 billion in just 24 hours, as reported by DefiLlama’s CEX Transparency metrics.
Data from DeFillama indicated that Binance’s inflows had surpassed $2 billion by the time of the announcement, a figure significantly greater than that of its closest competitor, Bybit, by a factor of five. With Binance being the largest cryptocurrency exchange in terms of trading volume and controlling around half of the market share, the substantial inflow of funds can be seen as a vote of confidence from investors in the platform.
On August 5th, both traditional stock markets and the cryptocurrency market experienced notable declines, triggered by a surge in the value of the Japanese yen leading to the unwinding of carry trades. This sudden market shift resulted in significant losses for investors holding large amounts of cryptocurrencies like Bitcoin and Ethereum.
Indian Tax Troubles
While Binance has been performing strongly in the markets, it is currently facing tax issues in India. The Directorate General of Goods and Service Tax Intelligence (DGGI) in India has demanded a payment of 722 crore Indian rupees (equivalent to $86 million) from Binance for unpaid Goods and Services Tax (GST). The reports suggest that Binance earned 4,000 crore Indian rupees (over $400 million) from its Indian clientele, with the funds being deposited into Nest Services Limited, a Binance Group entity situated in Seychelles.
Tax authorities in India went as far as sending notices to Binance offices in Seychelles, the Cayman Islands, and Switzerland. Initially, these notices were overlooked, but Binance has since engaged a local attorney to handle the tax concerns. This case marks the first instance where Indian tax authorities have formally targeted a cryptocurrency firm with such stringent actions.
While Binance continues to attract significant funds and maintain its market dominance, the challenges posed by tax authorities in India underline the importance of compliance and regulation in the cryptocurrency industry. Investors and exchanges alike must navigate through a complex landscape of legal and regulatory challenges to ensure the long-term sustainability and growth of the digital asset market.