Punit Agarwal: From Leading Vitalik Buterin's $1B Crypto Relief Fund to Simplifying Global Crypto Taxes with KoinX

Leading the Charge: The Crypto Relief Fund

Punit's path took a significant turn during the severe COVID-19 crisis in India. Responding to a call for help tweeted by Polygon co-founder Sandeep Nailwal, Punit initially offered ground support in his city, Bhubaneswar. This quickly escalated when Sandeep asked him to lead the newly formed Crypto Relief initiative. What started as a planned 10-day effort transformed into a major operation.

The fund gained rapid traction, raising millions within days, including a significant personal contribution of 600 Ether from Vitalik Buterin. The fund acted swiftly, deploying capital effectively. For instance, they funded ACT Grants with $1 million on day two to bring oxygen concentrators to India and matched the Indian government's effort by procuring an additional 1,000 oxygen cylinders from Kuwait, transported via Indian Navy ships.

"We also decided to match 1000 cylinders and we said that, hey, we will all top up with and another 1000 cylinders and let this you can you please allow the Indian Navy to bring the cylinders for use." 

Witnessing this impactful work, Vitalik Buterin made a staggering donation – $1 billion worth of Shiba Inu (SHIB) tokens at the time of transfer. Punit recounts the disbelief and the careful process of verifying the enormous sum on Etherscan.

Managing such a large, volatile donation required immense responsibility. The fund held about 10% of SHIB's circulating supply and carefully managed its liquidation to avoid crashing the market and harming retail investors. Engaging Wintermute as a market maker, they liquidated the 50 trillion SHIB tokens over four months, ultimately receiving approximately $464 million in USDC.

This $500M impact fund, initially structured as a private company in the UAE under Sandeep Nailwal's personal responsibility, has since undergone restructuring with the help of a Big Four firm to establish a proper foundation. Punit led the fund as CEO for about a year (April 2021-April 2022) and served as Director subsequently. The fund disbursed significant amounts (around $170 million mentioned in the dossier ) and achieved monumental feats, including funding 165 million vaccination syringes in partnership with UNICEF and India's Ministry of Health, effectively aiding the vaccination of a population larger than that of the world's sixth most populous country. It also funded the lab that first detected the Omicron variant in India.

Even today, the fund continues its work, holding over $200 million in USDC and focusing on building a virology network for pandemic preparedness and scaling innovative healthcare solutions in remote areas.

From Relief to Regulation: The Birth of KoinX

Punit's intense one-and-a-half-year involvement with Crypto Relief provided invaluable lessons. Dealing with regulators across different countries (UAE, US, India) gave him a profound appreciation for the genuine concerns and complexities faced by policymakers.

"It hit me hard that the concerns that they have are actually genuine. And they have a hard job... I realized that their concerns are genuine and these needs to be addressed." 

He realized that for crypto to achieve mass adoption (moving from ~2% global exposure to 5% or 10%), clear regulations and compliance frameworks were essential. This understanding, coupled with the announcement in February 2022 that India would tax crypto, steered him towards his next venture.

Punit personally experienced the nightmare of calculating crypto taxes. Attempting to calculate taxes on his relatively small portfolio with around 600 transactions proved nearly impossible, even with his CA's help. The complexities were manifold:

• Valuation: Determining the cost basis for crypto-to-crypto swaps (e.g., Ether to Matic) requires tracking acquisition prices across multiple points in time and applying methods like FIFO.

• Tracking: Following fund movements across different exchanges and wallets is manual and error-prone.

• Derivatives: Futures and options introduce further complexity with margin, borrowing, and funding rates.

• Pricing: The 24/7 nature of crypto markets makes choosing a consistent price point difficult.

• Categorization: Different transaction types (swaps, airdrops, interest, expenses) require separate reporting under varying tax treatments (capital gains, other income) across most jurisdictions.

• Reporting: Converting diverse exchange report formats into specific government-prescribed forms is tedious.

• Nomenclature: Lack of standardized terms across exchanges adds another layer of difficulty.

He concluded that manual calculation becomes unfeasible and inaccurate beyond a small number of trades, especially across multiple platforms. Recognizing that the estimated 15 million crypto investors in India at the time would face this hurdle, KoinX was founded in April 2022 to provide a necessary solution.

KoinX: Simplifying Crypto Taxes Globally

KoinX offers a platform designed to automate the complexities of crypto tax calculations and accounting for both individuals and enterprises.

Here's how it works:

• Data Aggregation: Users connect their exchange accounts (via API) and wallets (via public addresses) to fetch all transaction data.

• DeFi & NFT Support: The platform supports transactions across 100 different blockchains (including EVM chains, Tron, Solana) and automatically recognizes or allows users to easily label various DeFi activities like liquidity provision, yield farming, staking, and bridging. While aiming for full automation, Punit notes that about 95% of transactions are auto-labeled, with minimal user review needed for the remaining 5% to ensure accuracy.

• Calculation & Reporting: KoinX calculates gains/losses and generates tax reports customized to the specific laws and required forms of over 100 countries.

• Pricing: The service is priced based on the number of transactions, making it accessible. For instance, a user with 100 transactions in India might pay around $10/year, while someone with 1,000 transactions in the US might pay about $50/year.

Rapid Growth and Market Traction

KoinX has seen impressive growth since its inception:

• Funding: Raised a $1.5 million seed round in June 2022, followed by an additional $500k, totaling nearly $2 million in investment. The round saw participation from notable figures like Sandeep Nailwal (Polygon), Naveen Gupta (formerly Ripple), Siddhart Shah (ex-CleverTap Global CEO), and Utsav Somani (Offline/AngelList India Fund).

• User Base: Quickly scaled to over 500,000 users (520k as of the podcast recording).

• Global Reach: Operates in 100 countries, with India, the US, and the UK being key markets.

• Team: Grown to a team of around 40 people.

• Go-To-Market: Initial traction came from user referrals and affiliates/influencers who genuinely liked the product. Scaling was achieved through strategic partnerships with exchanges and other companies with crypto user bases.

Advocating for Fair Crypto Regulation

Punit remains vocal about the challenges posed by current crypto regulations, particularly in India. He highlights three main issues:

1. No Loss Offset: The inability to offset profits from one trade against losses from another within the same financial year means users can end up paying tax even if they had no net gain, which Punit deems fundamentally unfair.

2. High Flat Tax: The flat 30% tax on all crypto gains, with no distinction between short-term and long-term holdings and no indexation benefits, discourages long-term investment.

3. 1% TDS (Tax Deducted at Source): This 1% tax on the total transaction value (not just profit) significantly impacts liquidity and often results in users overpaying tax, requiring them to wait over a year for refunds and creating operational burdens for the government.

He contrasts this with regulations in the US and UK, which generally treat crypto as assets similar to securities, applying existing capital gains tax rules (often with long-term/short-term distinctions) and providing clearer guidelines for different transaction types like staking or mining. Notably, India is the only country with a TDS on crypto transactions.

KoinX actively engages with policymakers through the Bharat Web3 Association (formerly Bharat Virtual Digital Asset Association) to advocate for fairer regulations, presenting industry feedback to government departments like the Ministry of Finance. While changes may not be immediate, there's hope for adjustments in the coming years.

Future Outlook

KoinX continues to enhance its core tax product through new exchange partnerships, market launches, and features. A significant recent development is the launch of a comprehensive bookkeeping and accounting platform specifically for enterprises dealing in crypto. This platform aims to provide businesses, from day one, with clear financial metrics and compliance tools, covering transactions across company wallets, exchange accounts, and even fiat bank accounts (salaries, revenues, expenses).

"The idea behind us, every crypto company should be financially compliant. And you know like should have the financial matrix right on the dashboards ready for them without spending a lot of time and resources to be able to do so."