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Malaysia Intensifies Crackdown on Crypto Tax Evasion; Ripple’s Appeal for Smaller Fine Rejected by SEC

Algoine News
Summary:
Malaysian authorities are enforcing strict measures to prevent tax evasion in cryptocurrency trading under operation "Ops Token". With investigations in the Klang Valley area revealing significant tax revenue leakage, crypto traders have been urged to declare their assets to avoid official clampdown. Meanwhile, Ripple Labs' appeal for a reduced penalty citing a recent SEC case has been dismissed by the U.S. regulator, with SEC demanding nearly $2 billion in penalties, seeing Ripple's suggested $10 million as insufficient. Ripple's defense team labelled the penalty disproportionate and urged the court to consider an "appropriate" fine.
In an effort to curb cryptocurrency tax evasion, enforcement operations have been ramped up by Malaysian authorities. Meanwhile, Ripple's lawyers have proposed a lesser civil fine, referencing the recent case by the U.S. Securities and Exchange Commission (SEC) against Terraform Labs. The request, however, was rejected by the regulator in a response letter to Judge Torres. A special operation known as "Ops Token" was conducted by the Malaysian Inland Revenue Board (IRB) to prevent tax revenue losses from cryptocurrency trading. Local reports document how a team composed of the Royal Malaysia Police and CyberSecurity Malaysia executed raids on 10 different locations throughout the Klang Valley. The IRB discovered trading data on various digital currencies which led them to conclude that there was a significant tax revenue leakage. Traders have been warned to duly notify IRB about their crypto tax obligations to avoid further intensified actions by the federal agency. In another development, the SEC has dismissed Ripple Labs' appeal for a reduced penalty stating that their reasoning was insufficient. Ripple had referred to a recent SEC settlement with Terraform Labs in its request to limit its fine to $10 million, a relatively meager sum compared to the SEC's suggested $876.3 million civil penalty. SEC's answer to Judge Torres insisted that a comparison between the two scenarios was inappropriate. Moreover, they added that imposing a lesser penalty would not respect the objectives of civil penalty laws. SEC's penalty sum includes disgorgement and prejudgment interest tallying up to nearly $2 billion. Ripple stands accused of having sold unregistered securities by the SEC, a charge which the court has validated - but only in cases where sales were made to institutional investors. In a June 13 notice of supplemental authority lodged in the U.S. Southern District of New York, Ripple's legal team requested the court to impose an "appropriate" civil penalty for their ongoing lawsuit with the SEC. As part of their resistance to the SEC's penalty proposal, they cited the SEC's recent $4.5 billion settlement with Terraform Labs. The legal team highlighted the significant inconsistency between Ripple's suggested $10 million fine and the SEC's $2 billion penalty demand, pointing out that comparable cases frequently involved civil penalties within the 0.6% to 1.8% range of the defendant's gross revenues - and that there weren't any allegations of fraud or substantial losses suffered by institutional buyers in their case.

Published At

6/17/2024 2:38:46 PM

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