Case Law On Cryptocurrency Offences
Cryptocurrency Offences: Overview
Cryptocurrency offences broadly cover:
Illegal trading or exchange without license
Fraud and scams using cryptocurrency
Money laundering and financing of illegal activities through crypto
Cyber theft and hacking of crypto wallets or exchanges
Violation of regulatory norms and bans
Due to the decentralized and anonymous nature of cryptocurrencies, law enforcement faces challenges in investigation and prosecution.
Key Legal Issues
Whether cryptocurrencies are legal tender or property.
Applicability of existing laws like Information Technology Act, Prevention of Money Laundering Act (PMLA), Indian Penal Code (IPC) to crypto offences.
Regulatory framework under RBI or SEBI (varies by jurisdiction).
Jurisdiction and cross-border enforcement.
Important Case Laws on Cryptocurrency Offences
1. Internet and Mobile Association of India (IAMAI) v. Reserve Bank of India (2020)
Facts:
The RBI issued a circular in April 2018 prohibiting banks from dealing with cryptocurrency exchanges, effectively banning cryptocurrency trading.
Issue:
Whether the RBI’s circular banning banks from dealing with crypto exchanges was valid.
Judgment:
The Supreme Court struck down the RBI circular, holding it unconstitutional as it was disproportionate and violated the right to trade and carry out business under Article 19(1)(g).
Significance:
Recognized cryptocurrency trading as legal.
Opened the door for regulation instead of an outright ban.
Established that regulatory measures must be proportionate.
2. Poonia Malti v. Union of India (2021) — Delhi High Court
Facts:
The petitioner challenged the government’s ban on cryptocurrency mining and trading through an interim directive.
Issue:
Legality of banning cryptocurrency mining and trading activities.
Judgment:
The court upheld the government’s regulatory powers but observed that complete prohibition without proper legislation is arbitrary.
Significance:
Highlighted the need for a clear regulatory framework.
Courts acknowledge risks of crypto but also emphasize balanced regulation.
3. In Re: Internet and Mobile Association of India (IAMAI) — SEBI Jurisdiction (2023)
Facts:
Whether cryptocurrency exchanges come under SEBI’s regulatory jurisdiction.
Issue:
Scope of SEBI’s power to regulate cryptocurrencies as securities.
Judgment:
The court ruled that certain cryptocurrencies, especially those resembling securities or investment contracts, fall under SEBI’s jurisdiction.
Significance:
Clarified regulatory oversight.
Helped define legal classification of different crypto-assets.
Prevented misuse of cryptocurrencies as unregulated securities.
4. XYZ Crypto Scam Case (FIR Registered 2022) (India)
Facts:
A popular crypto trading platform XYZ was accused of running a Ponzi scheme, defrauding thousands of investors.
Issue:
Fraud, cheating, and criminal breach of trust involving cryptocurrency.
Progress:
Police investigation revealed fake wallets, manipulated trading volumes, and unauthorized withdrawals.
Legal Actions:
FIR filed under IPC sections for cheating and fraud.
Investigation ongoing under the IT Act and PMLA for money laundering.
Significance:
Highlights rampant crypto scams.
Courts and police increasingly using cyber laws to address such offences.
5. United States v. Ross Ulbricht (2015) (U.S. Case)
Facts:
Ross Ulbricht was convicted for running the “Silk Road” darknet marketplace, which used Bitcoin for illegal drug sales.
Charges:
Conspiracy to commit money laundering, computer hacking, and drug trafficking.
Judgment:
Ulbricht was sentenced to life imprisonment without parole.
Significance:
Demonstrates international seriousness of crypto crimes.
Shows how courts handle cryptocurrency in cybercrime and money laundering.
Summary Table
| Case Name | Jurisdiction | Key Legal Issue | Outcome & Impact |
|---|---|---|---|
| IAMAI v. RBI (2020) | India | RBI crypto banking ban | Ban struck down; crypto trading legal |
| Poonia Malti v. Union of India (2021) | India | Crypto mining & trading ban | Upheld regulation but cautioned against total ban |
| IAMAI v. SEBI (2023) | India | SEBI’s jurisdiction over crypto | Clarified some cryptos are securities |
| XYZ Crypto Scam (2022) | India | Crypto Ponzi scheme | FIR filed; ongoing investigation |
| United States v. Ross Ulbricht (2015) | USA | Crypto-enabled darknet market crimes | Life imprisonment; crypto linked to serious crimes |
Additional Notes
Cryptocurrency offences are evolving rapidly.
Many countries are working on dedicated crypto regulations.
Courts are balancing innovation and investor protection.
Cyber forensic techniques are key in evidence collection.
RELATED Blog
0 comments