SC asks Centre to clear its stand on legality of cryptocurrency trade in India

New Delhi, February 25

The Supreme Court on Friday asked the Centre to make its stand clear on whether cryptocurrency trade involving Bitcoin or any other such currencies is legal in India or not.

A bench of Justices DY Chandrachud and Surya Kant, which was dealing with a case related to the quashing of multiple FIRs registered against one Ajay Bhardwaj and others for allegedly duping investors across India by inducing them to trade in Bitcoin and assuring them high returns, said that the accused were booked for their involvement in Bitcoin trade.

The bench told Additional Solicitor General Aishwarya Bhati, appearing for Centre and Enforcement Directorate, “We want you to tell us on affidavit whether cryptocurrency trade involving Bitcoin or any other such currencies is legal in India or not? What is the regime for Bitcoin trade at present?”

Bhati said she would file an affidavit on the legality of the cryptocurrency trade and added that the accused, who is seeking quashing of proceedings, has not been cooperating with the investigating agency after being granted bail by the court in 2019.

She said that 47 FIRs have been registered against the accused of duping people across the country and the issue involves a trade of 87,000 Bitcoin worth Rs 20,000 crore.

The bench ordered, “We direct the petitioner to appear before the investigating officer of Directorate of Enforcement within two days and thereafter cooperate with the investigation as and when called upon to do so. The investigating officer shall file a fresh status report before this court on or before four weeks, indicating the progress of the investigation and whether there has been any cooperation on the part of the accused. List after four weeks”.

The bench said the ad-interim order restraining the arrest of Bhardwaj shall continue till the next date of listing of the matter.

At the outset, Advocate Shoeb Alam, appearing for one of FIR informant Vipin Kohli, said that he has filed an application seeking cancellation of bail granted to Bhardwaj on the ground that he has not disclosed true facts of the matter to this court and concealed material in his writ petition thereby misleading this court.

The advocate said that Bhardwaj has deliberately suppressed the fact that Chief Metropolitan Magistrate (CMM), Patiala House Court through court notice had issued a proclamation requiring the appearance of the accused under section 82 of Criminal Procedure Code.

“These material facts were not disclosed to the court when the bail was granted to him. Hence, we are seeking cancellation of bail granted to the petitioner”, Alam submitted.

He said that after the grant of bail to the accused, the complainant was attacked in a hotel, which is on CCTV cameras.

The bench asked whether the grant of bail to other accused has been challenged to which the advocate replied in affirmative.

Bhati said that even the co-accused, who have also been granted bail are also not cooperating in the matter.

The bench noted in its order that a status report has been filed in July 2021 by the Assistant Director of Enforcement Directorate and Bhati has submitted that the accused has not cooperated in the course of the investigation.

It noted that there is an allegation of collection of 87,000 Bitcoins (valued at approximately Rs 20,000 crores) and prayer is being made that the ad-interim order granting an interim stay of arrest be vacated.

The bench made it clear that it is testing the petitioner Bhardwaj and asked him to cooperate in the investigation and for now, it is not vacating the protection from arrest.

The allegation against Bhardwaj is that he along with other co-accused, who are mostly his family members, had induced investors to invest in Bitcoin through a “multi-level marketing scheme” on false promises of securing to the investors a 10 per cent assured monthly returns for 18 months that is total of 180 percent profit.

It was alleged that due to the dishonest inducement, the customers invested their Bitcoins in the said business, but after making an investment they did not get the assured returns.

The FIRs also said that to escape from inevitable punishment under the law, Bhardwaj and other co-accused persons collectively, in a dishonest manner and with the deliberate intention of destroying all the evidence shut down the fake ‘gainbitcoin’ website through which investors made the investment.