India’s tax authorities have launched a sweeping investigation into more than 400 wealthy cryptocurrency traders suspected of hiding their assets on Binance to evade taxes.
The traders allegedly failed to disclose gains from digital asset trading between 2022 and 2025, amounting to an estimated $42 million (₹350 crore) in unpaid taxes.
The investigation, coordinated across major cities including Gujarat, Maharashtra, and Delhi, represents one of the most extensive crackdowns on crypto tax evasion in the country’s history.
🚨 BREAKING: 🇮🇳 Indian Tax Dept targets 400+ wealthy individuals for hiding crypto profits on offshore Binance wallets.
– CBDT orders probe reports by Oct 17
– Traders failed to disclose digital assets held abroad
– Binance’s FIU registration helped authorities trace hidden
Authorities intensify crackdown on hidden crypto gains
According to reports from the Economic Times, the probe targets traders who used Binance’s peer-to-peer (P2P) trading features to bypass mandatory Know Your Customer (KYC) checks and reporting requirements.
These users are suspected of transferring cryptocurrencies outside regulated exchanges to conceal profits from authorities.
The tax department has directed regional offices to submit detailed progress reports by 17 October 2025 to prevent further evasion.
The coordinated effort reflects India’s growing scrutiny of digital asset trading, which has surged despite strict taxation and compliance requirements.
The traders in question reportedly shifted their holdings across multiple wallets and exchanges to obscure the source of funds, making it difficult for authorities to trace transactions.
Binance’s compliance record under renewed focus
Binance’s operations in India have already faced regulatory turbulence.
The exchange was banned in 2023 after failing to comply with the country’s Money Laundering Act, but it re-entered the market in 2024 after paying a $2.25 million penalty and registering with the Financial Intelligence Unit (FIU).
The ongoing probe has once again placed the exchange under the spotlight, with Binance now reportedly cooperating with Indian authorities by sharing user transaction data to assist in identifying the 400 suspected traders.
This collaboration marks a significant shift for the company, which has been under global scrutiny for its compliance practices.
By sharing information with Indian regulators, Binance aims to rebuild trust in a market that remains crucial for its international footprint.
India’s strict crypto tax framework
India enforces one of the world’s most rigid tax structures on digital assets. A flat 30% tax applies to all crypto gains, alongside a 1% Tax Deducted at Source (TDS) on transactions exceeding ₹10,000.
For high-income individuals, surcharges and a 4% cess can increase the total tax liability to around 42.7%.
Non-compliance carries severe financial and legal consequences.
As per crypto investment platform Mudrex, taxpayers face a 1% monthly interest on unpaid dues, along with penalties ranging between ₹1,000 and ₹5,000 for delayed filings.
In more serious cases, the authorities can invoke the Black Money (Undisclosed Foreign Income and Assets) Act, which allows penalties of up to 300% of the tax amount and even criminal prosecution.
Despite these measures, many traders continue to explore loopholes in the system.
The use of international exchanges and decentralised trading methods remains one of the primary challenges for Indian regulators, who are working to align enforcement with the rapidly evolving global crypto ecosystem.
Growing coordination between regulators and exchanges
The ongoing probe signals tighter cooperation between financial regulators and cryptocurrency platforms.
Binance’s assistance in the case marks a turning point in how exchanges are expected to operate under India’s compliance regime.
It also demonstrates the government’s growing ability to trace blockchain transactions and link them to real-world identities.
As crypto adoption in India continues to rise, the case could set a precedent for stricter enforcement of digital asset taxation.
The outcome of the investigation may influence future regulation, pushing exchanges to adopt even more stringent KYC and anti-money laundering measures to remain operational in the Indian market.
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