Cryptocurrency fraud: Delhi Court orders Police to lodge FIR against Bitcoin seller


New Delhi: A Delhi court has directed the Moti Nagar Police to register a FIR on the complaint of a Bitcoin seller after bank accounts to which funds were transferred by the accused for Bitcoin purchase were frozen and the transactions marked as illegal (Hitesh Bhatia vs. Mr. Kumar Vivekanand), reported Bar and Bench.

The court ordered the investigation on a complaint by a person dealing with the sale and purchase of bitcoins through the online cryptocurrency exchange “Binance”.

As per reported Bar and Bench, the court noted that while cryptocurrency has not been prohibited in India as on today, such virtual currency transactions would still have to comply with general laws such as “PMLA, IPC, FERA, NDPS Act, Tax laws, and RBI regulations regarding KYC (know your customer), CFT (Combating of funding of terrorism) and AML (Anti-money laundering requirements).”

“It is the responsibility of such an intermediary as “BINANCE” to ensure adequate safeguards against activities such as ‘mixing’, and other random cryptocurrency exchanges, which change the identity of bitcoins being held by a virtual wallet, making tracing of any illegal proceeds and any bitcoins, purchased through it, extremely difficult”, the order stated.

“Opportunistic activities, aimed at exploiting the lack of legal regulation, with utter disregard to the identity of parties, sources and destination of funds, and illegal purposes e.g. terrorism, narcotics, illegal arms, cross-border illegal transactions for which it may be used, still do not enjoy any route for legal and regulatory escape”, the Court said.

The Magistrate expressed that the possibility of irregularities committed by the complainant or with his connivance or consent cannot be ruled out either.

“There is a possibility that the complainant was unaware of these designs of the accused, and fell into his trap, thereby suffering wrongful loss. At the same time, it seems that the complainant has not disclosed the complete facts before this Court, and therefore, the possibility of his consent/ connivance in the entire gamut of activities, cannot be ruled out at this stage”, he observed.