Income tax department conducts raids on Bitcoin exchanges
14 December 2017
The income tax department on Wednesday conducted raids on illegal Bitcoin exchanges operating across the country to secure information about transactions, parties involved and bank accounts used.
The survey, carried out for the first time across nine Bitcoin exchanges in the country, including those in Mumbai, Pune, Bengaluru, Delhi, Hyderabad and Gurugram, was part of the authority's broader efforts to profile and scrutinise assessees who pose a risk of tax evasion, reports quoting Income Tax sources said.
The surveys, under section 133A of the Income Tax Act, are being conducted for "gathering evidence for establishing the identity of investors and traders, transaction undertaken by them, identity of counter-parties, related bank accounts used, among others", the officials said.
The I-T Department's move comes at a time when the unregulated cryptocurrency rose 1,000 per cent in a month, and showed no signs of letting in.
Bitcoin has seen a whopping 1,500 per cent surge in its value in less than a year and analysts say the cryptocurrency's blazing gains are just the start and that it will rise as much as 20-fold.
A Business Today report said the I-T team conducting raids on one of the Bitcoin exchanges, Coinsecure, in Bangalore took control of computers, servers and detained all staff, including the founder and CTO Benson Samuel.
The income tax officials have reportedly sought information on the records maintained by the exchanges and earlier reports suggested that some tax evaders may be parking illicit money in Bitcoin.
According to the report, the virtual currency has recorded monthly trades of an estimated to be between Rs5,000 crore and Rs10,000 crore with an average 50,000 people registering everyday on Bitcoin exchanges.
They said that the sleuths detected a number of high-net worth individuals (HNWIs) and customer IDs in these databases and prima facie about 2-2.5 million such entities have been traced.
Entries of HNIs suggest that they were trading on these exchanges.
"Out of these, about 8-10 lakh entities would be active for transactions. However, the operations are still on and final findings will emerge later," a senior official was quoted as saying.
The operations were supervised by income tax investigation wing in Bengaluru as the officials have worked on these cases for long and have conducted similar searches in 2013.
Bitcoin, widely believed to have been invented by a person or a group named Satoshi Nakamoto, can be mined by anybody who has computing skills, though mining it is becoming difficult by the day.
It's a finite virtual commodity with only 21 million Bitcoins existing, of which around 17 million have already been mined. It's not controlled by any country but is accepted in Japan as legal tender while in Switzerland it can be used to pay taxes and in Canada futures trading in BTC has been permitted now.
Because there is no country or regulator controlling it, the prices are volatile and can rise or fall up to 40 per cent at the slightest of good or bad news. And since there is neither a licensing, nor regulation, miscreants can always fool gullible investors and dupe them of their funds.
Exchanges have tied up with companies to facilitate payments of phone bills, DTH bills or even transfer of funds from abroad using BTC.
The RBI has clearly stated it's not a legal currency, it has no backing of assets behind it and has warned against it.
Reports say about 40 Bitcoin and crypto-currency exchanges are trading BTC and other currencies such as Ethereum at up to Rs100 crore a day. Investors are going by past returns, without realising the risks ahead.