Korea’s Incheon City Takes Steps to Boost Blockchain Startup Growth

According to India’s Finance Ministry, Binance and a number of other virtual asset service providers (VASPs) are not tax-compliant in India. Cases of tax evasion detectedNews of this matter emerged via written answers, published on Dec. 2, provided in response to parliamentary questions which had been put to India’s Finance Minister, Pankaj Chaudhary. The minister confirmed that a “few cases of evasion of Goods and Services Tax (GST) by cryptocurrency exchanges and investors” had been detected. The document goes on to list 17 crypto entities who are currently being investigated on that basis, with Binance being the most well-known among them. Notable Indian exchanges listed include WazirX, CoinDCX and CoinSwitch. Chaudhary included details of cases booked against these exchanges. In Binance’s case, it was required to pay 722 crore Indian rupees, which amounts to around $85.2 million. While Binance doesn’t appear to have incurred penalties, in the case of WazirX, the exchange had an assessed tax shortfall of 40.51 crore Indian rupees ($4.78 million), but after fees and interest, it was provided with a demand for 49.19 crore Indian rupees ($5.8 million). CoinDCX and CoinSwitch were also assessed with a demand for 20.86 crore Indian rupees ($2.46 million) and 19.38 crore Indian rupees ($2.28 million), inclusive of penalties and interest. In the case of WazirX, CoinDCX and CoinSwitch, the exchanges have had to pay an additional 21%, 24% and 37% respectively in fees and interest over and above their original tax liabilities.Photo by Naveed Ahmed on UnsplashPrevious tax and regulatory issuesTo date, the Finance Ministry has recovered 122.3 crore rupees ($14.4 million) as part of these investigations. Binance has as yet not paid the funds demanded by the authorities. It emerged in August that India’s Directorate General of Goods and Services Tax Intelligence (DGGI) had imposed an $86 million tax demand on the company, with Binance contesting the assessment. The global crypto exchange platform had previously paid a $2.5 million fine for having engaged with Indian customers despite not having been approved by the authorities to trade within the country. After a number of months during which it didn’t trade within the Indian market, in August Binance regularized its standing and gained approval to trade. In a request for comment on the matter from Cointelegraph, a Binance representative stated: “We continue to work closely with regulatory authorities and attend necessary hearings to address any concerns and questions. Binance remains responsive and cooperative and is committed to addressing all necessary tax inquiries.” The company recently hired UK-based accounting and business advisory firm Grant Thornton to assist with accounting, tax and audit preparedness. In the case of WazirX, a spokesperson said that “GST law on cryptocurrencies was not clear in India,” and that on this basis, the company found itself being assessed for non-payment of the applicable taxes.

US DOJ Charges Two Russians With Mt. Gox HackTwo Russian nationals have been charged by the US Department of Justice (DOJ) for their involvement in hacking of the Japanese cryptocurrency exchange Mt. Gox, and in causing the collapse of the infamous exchange.Photo by Tingey Injury Law Firm on UnsplashCulpable for collapseThe indictment, which has been unsealed, was originally filed on June 7, and identifies the individuals as Alexey Bilyuchenko, 43, and Aleksandr Verner, 29. They are accused of not only hacking the exchange but also conspiring to launder approximately 647,000 bitcoins, which is valued at around $17.1 billion based on Bitcoin’s unit price on Friday.Additionally, Bilyuchenko has been charged with collaborating with Alexander Vinnik to operate the illicit exchange known as BTC-e between 2011 and 2017. BTC-e was shut down by U.S. law enforcement in 2017, and Vinnik was later extradited from Greece to the U.S. in 2022 on charges of running BTC-e and engaging in money laundering.Mt. Gox, which experienced a major theft, declared bankruptcy and closed its operations in 2014. Bilyuchenko and Verner played a significant role in the theft, leading to the exchange’s insolvency, according to Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. The indictment states that “in or about September 2011, [the defendants] and their co-conspirators gained and caused others to gain unauthorized access to the Mt. Gox server in Japan.”BTC-e exchange money launderingFurthermore, it is alleged that Bilyuchenko utilized his ill-gotten gains from the Mt. Gox theft to establish the BTC-e exchange, which facilitated global money laundering activities for criminals. US Attorney Ismail J. Ramsey for the Northern District of California stated that Bilyuchenko and his co-conspirators operated a digital currency exchange that enabled criminal entities, including hackers, ransomware actors, narcotics rings, and corrupt officials, to launder billions of dollars.In March, there were reports from CoinDesk about movements of BTC-e funds on the blockchain. An exchange wallet linked to BTC-e made its first transaction since 2017, transferring approximately 3,299 bitcoins to a crypto wallet in November 2022. Additionally, six years ago, the exchange wallet sent around 10,000 bitcoins to two unidentified recipients. However, the recent DOJ filing does not specify whether these recipients were Bilyuchenko and Verner.Slow processMeanwhile, the long-suffering creditors of the hacked exchange are only beginning to reach the final stages of the bankruptcy process. Japan’s bankruptcy process is incredibly slow and it’s taken the best part of ten years for it to reach the distribution phase. It became apparent in April that the bankruptcy estate was moving to distribute $4.5 billion in cash and digital assets to creditors. It’s understood that the process will be completed in October.While creditors are taking a haircut in bitcoin terms, on a US dollar basis, they are not fairing out badly given that the leading cryptocurrency has seen massive dollar price appreciation in the intervening years.

Japanese financial services company SBI Holdings has successfully established "SBI XDC Network APAC" in Japan, following through on an intended joint venture with TradeFinex, the driving force behind the XDC Network.Photo by William Warby on UnsplashJV company formationAt the end of September, the two companies outlined the starting point of an intended collaboration. Only three months later, SBI has come back with an update, a press release published on Dec. 27, to detail the progress that has been made thus far. According to that document, the companies established joint venture corporate entity SBI XDC Network APAC Co. Ltd. on Dec. 18. Among the directors of the new company is the President of BITPoint Japan, a wholly owned subsidiary crypto exchange business of SBI. Majority stakeholderSBI will be the majority stakeholder in the venture, holding 60% of the company’s shares while Dubai-based TradeFinex will be the minor partner, with a 40% shareholding. The press release outlines that the stakeholders will “work to expand the use case using the blockchain technology of the XDC Network in global economic activities centered on trade finance and cross-border payments, not just the handling of tokens.” With that, this enterprise-focused blockchain initiative aims to elevate the efficiency of trade finance. Going forward, it endeavors to broaden the applications of XDC Network's blockchain technology in global economic activities, with the emphasis remaining on trade finance and cross-border payments. The XDC Network, inaugurated in 2017, is a community-driven platform tailored explicitly for trade finance and payments. It introduces a smart contract system that streamlines global trade operations by tokenizing real-world assets (RWAs) such as bonds, trade assets and trade documents. Operating on a high-speed, secure and cost-effective blockchain, XDC Network aspires to transform the landscape of trade finance. SBI Group has been actively involved in various services related to the XDC Network, including being the first exchange in Japan to handle XDC tokens. This was made possible through a partnership with SBI VC Trade, a company within the SBI Group specializing in crypto asset exchange services. Corda platform proof of conceptLogo design has been completed for the new entity, while a website has also been launched. Not wasting any time, the new company has already initiated a proof-of-concept (PoC) experiment. The experiment involves connecting the XDC Network with the Corda platform from SBI R3 Japan and the Corda Bridge from IMPEL GLOBAL. The PoC experiment revolves around conducting fiat payments generated by business-to-business transactions in XDC via Corda and the Corda Bridge. Leveraging a hybrid blockchain with both private and public characteristics, the objective is to attempt to offer a seamless one-stop service that settles both private and public aspects simultaneously. The company claims that this approach achieves an efficient and smooth payment method for cross-border transactions, including international trade, outshining conventional fiat currency transactions.