LI Network
Published on: January 20, 2024 at 14:44 IST
The Supreme Court, on has requested the Union to clarify its stance regarding cryptocurrency issues arising in various states.
The directive was issued by the Bench of Justices Surya Kant and K.V. Vishwanathan while providing interim protection from arrest to the petitioner, Ganesh Shiv Kumar Sagar, who faced charges under multiple sections of the Indian Penal Code, including Section 420 (Cheating), in connection with a cryptocurrency fraud case filed in the State of Jharkhand.
Earlier, on September 21, 2023, the Attorney General of India informed the Court that the matter required careful consideration, taking into account both domestic and international perspectives. It was assured that due deliberations would occur within two to three months, and the Court would be promptly informed of the outcome.
In the current order, the Court has granted a four-week period to the Union to present its position on cryptocurrency matters. The learned Additional Solicitor General of India was given this timeframe to file an appropriate affidavit addressing the Union’s standpoint on crypto-related issues across different states.
The Court’s decision comes against the backdrop of a cryptocurrency scam involving the petitioner, who had previously been granted bail in a case filed in Bihar. The petitioner faces accusations of deceiving innocent investors into participating in a fraudulent exchange, enticing them to sell cryptocurrency. Allegedly, the petitioner, as the director of ‘Bitsolives’ and distributor of ‘Bux Coin,’ orchestrated a sham exchange named ‘Cash Finex,’ which disappeared after luring investors into selling their cryptocurrency.
Notably, the Supreme Court has been handling a series of cases related to cryptocurrency scams. In December of the previous year, the Court transferred cases linked to the ‘GainBitcoin Ponzi Scheme’ to the Central Bureau of Investigation (CBI) and shifted the trial to the CBI Court in Rouse Avenue, New Delhi.
Senior advocates representing the petitioner argued that the legal status of Bitcoin remained uncertain and urged the appointment of an expert agency to investigate the matter due to its novel technical complexities. They emphasized that the government had not clearly defined Bitcoin as legal or illegal.
In March 2023, the Ministry of Finance had categorized cryptocurrency exchanges as “persons carrying on designated businesses or professions” under the Prevention of Money Laundering Act. This meant that crypto exchanges fell under the classification of ‘reporting entities,’ obliging them to comply with norms similar to banks and financial institutions regarding client identity verification and record maintenance.
Recalling the significant 2020 judgment, the Supreme Court had lifted restrictions imposed by the Reserve Bank of India on regulated entities dealing with virtual currencies. The Court set aside the RBI’s circular, allowing regulated entities to provide banking services to those involved in cryptocurrency trading.
The case in question is titled GANESH SHIV KUMAR SAGAR vs. UNION OF INDIA.
