Income Tax (IT) department scans Bitcoin exchanges

Posted on December 14, 2017

The Income Tax (IT) department of India is reported to have conducted a scan on Wednesday (13/12/2017) on all the major Bitcoin exchanges in India to detect suspected fraud in Bitcoin exchanges and transactions. Bitcoin is the world’s largest cryptocurrency unit. The survey was conducted across all the major cities like Delhi, Bengaluru, Hyderabad, Kochi and Gurugram since 6:00 AM on Wednesday. Read more on RBI

“The survey, under section 133A of the Income Tax Act, is being conducted for gathering evidence for establishing the identity of investors and traders, transaction undertaken by them, identity of counterparties, related bank accounts used, among others”, the IT department of India said.

The survey teams have for their perusal, various financial data and knowledge about the working of these exchanges. This according to the IT department, is the first major action against the Bitcoin system/network in India. The value of 1 Bitcoin recently, went over Rs. 10 lakhs. This caught the eye of the currency regulators in India and unlike the investors, they do not think that this evaluation of Bitcoin is genuine! Bitcoin is one example of cryptocurrency. The other cryptocurrencies are Feather Coin, Storjcoin X, Lisk, MaidSafeCoin, Dash, Dogecoin, Ripple, Monero, Litecoin and Ether. This scan by the IT department is expected to cause the other financial government bodies like the RBI and SEBI to prepare a framework to safeguard genuine investors and to detect fraudsters who may try to manipulate the value of cryptocurrencies like Bitcoin in an unethical or unlawful manner.

“In the wake of significant spurt in the valuation of many Virtual Currencies (VCs) and rapid growth in Initial Coin Offerings (ICOs), we reiterate the concerns”, RBI said in a statement.

The Government of India has however, not legalized any form of cryptocurrency like Bitcoin till date.

“Recommendations are being worked at. The government’s position is clear, we don’t recognise cryptocurrency as legal currency as of now”, the Finance minister, Arun Jaitley said.

The Government of India suspects that Bitcoin may actually be just another e – Ponzi scheme where the founders pay returns to their investors (usually a large group of people) using the investors’ own money or using money collected from other investors rather than paying the investors using the profits earned by the scheme. Since the cryptocurrency, Bitcoin, is adopted globally, there have been proposals in India to apply the regulations on the existing currency (Rupee) to Bitcoin as well to prevent the spread of Ponzi schemes, illicit money-pooling activities, money laundering and black money generation and circulation. Regarding, this proposal, the Union Finance Ministry, led by Mr Arun Jaitley, had constituted an Inter-Disciplinary Committee to evaluate cryptocurrencies’ status in India and worldwide and suggest suitable actions. The committee was constituted during March, this year (2017) but is yet to come to a conclusion regarding the proposal as they are just beginning to test the working of VCs in India and worldwide. Read more on Startup News