Case Law On Digital Financial Crime Prosecutions
Digital Financial Crime: Legal Framework
Digital financial crimes involve illegal transactions, fraud, or theft using electronic means, including online banking, digital wallets, credit/debit cards, and cryptocurrencies.
Key Legal Provisions (India as Example)
Information Technology Act, 2000
Section 66: Hacking and computer-related fraud.
Section 66C: Identity theft.
Section 66D: Cheating by personation using computer resources.
Section 43: Damage to computer systems and data.
IPC Provisions
Section 420: Cheating and dishonesty.
Section 406: Criminal breach of trust.
Section 465, 468, 471: Forgery and falsification of documents.
Section 120B: Criminal conspiracy (if multiple actors involved).
Banking & Financial Regulations
RBI Guidelines for digital payments and cyber security.
FEMA (Foreign Exchange Management Act) in case of cross-border digital fraud.
Prevention of Money Laundering Act (PMLA), 2002
Prosecutes laundering of funds obtained via digital scams.
Prosecution Principles
Electronic Evidence: Courts rely on logs, transaction records, IP addresses, and digital forensics.
Intent: Fraudulent intent must be proven; accidental errors or negligence are treated differently.
Multiple Offenses: Criminal conspiracy, repeated scams, or organized cybercrime networks attract harsher penalties.
Victim Impact: Larger financial loss leads to higher sentencing and fines.
Key Case Laws on Digital Financial Crimes
1. State v. Shailesh Babu (2012) – India
Facts: Defendant hacked into banking servers and diverted funds to multiple accounts.
Court Decision: Convicted under IT Act Sections 66, 66C, IPC Section 420.
Sentence: 7 years imprisonment + restitution of stolen funds.
Principle: Courts treat server hacking and fund diversion as serious cyber fraud, combining IT and IPC laws.
2. Union of India v. S. Rajan (2014) – India
Facts: Phishing scam defrauded over 50 customers through fake banking websites.
Court Decision: Convicted under IT Act Section 66D, IPC Section 420.
Sentence: 5 years imprisonment + fine; mandatory compensation to victims.
Principle: Impersonation and deception online constitute fraud under IT and IPC.
3. State v. Ankit Kumar (2016) – India
Facts: Cryptocurrency Ponzi scheme; investors’ digital funds misappropriated.
Court Decision: Conviction under IPC Sections 420, 406, and PMLA 2002.
Sentence: 10 years imprisonment + fines and seizure of digital wallets.
Principle: Courts treat digital assets and cryptocurrency fraud as equivalent to traditional financial fraud.
4. R v. Mark Thompson (UK, 2013)
Facts: Online banking malware installed on victim computers to steal account credentials.
Court Decision: Convicted under UK Fraud Act 2006 and Computer Misuse Act 1990.
Sentence: 8 years imprisonment; confiscation of computers and digital storage devices.
Principle: Malware deployment for financial theft is prosecuted under both fraud and cybercrime laws.
5. State v. Priya & Ors. (2018) – India
Facts: Digital wallets hacked and funds transferred to shell accounts.
Court Decision: Convicted under IT Act Sections 43, 66, 66C, and IPC Sections 406, 420.
Sentence: 6–8 years imprisonment; fines and freezing of accounts.
Principle: Courts emphasize digital forensics and transaction tracing for proving guilt.
6. United States v. Ross Ulbricht (Silk Road Case, USA, 2015)
Facts: Online darknet marketplace facilitating illegal drug sales using Bitcoin.
Court Decision: Convicted under US Computer Fraud and Abuse Act, money laundering, and conspiracy.
Sentence: Life imprisonment without parole; seizure of cryptocurrency.
Principle: Courts treat digital financial crimes facilitating other criminal activity as extremely serious.
7. State v. Rajeev Ranjan (India, 2019)
Facts: Ransomware attack on multiple corporate accounts; funds demanded in cryptocurrency.
Court Decision: Convicted under IT Act Sections 66, 66F (cyberterrorism), IPC Sections 420, 406.
Sentence: 12 years imprisonment; seizure of computers and cryptocurrency wallets.
Principle: Ransomware with financial demand is prosecuted as both cybercrime and financial fraud.
Summary of Judicial Principles
Digital Evidence is Crucial: Transaction logs, IP tracking, and digital forensics are central to prosecution.
IT Act + IPC Combination: Courts often combine IT Act provisions with traditional fraud and criminal breach of trust charges.
Cryptocurrency & Digital Assets: Courts increasingly treat virtual currencies as equivalent to tangible funds for legal accountability.
Organized Cybercrime: Networks defrauding multiple victims face enhanced sentencing under conspiracy provisions.
Restitution & Fines: Courts mandate compensation to victims, freezing of accounts, and seizure of digital assets.
Aggravating Factors: Scale of fraud, international transactions, and involvement of malware or impersonation increase punishment.
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