The Orissa High Court in India ruled that cryptocurrency dealings are not illegal under Indian law. This decision stemmed from a case involving individuals accused of operating a Ponzi scheme. The court clarified that while the scheme fraudulent, using cryptocurrency is lawful. This ruling separates the legality of cryptocurrency from the illegality of fraudulent activities.
Cuttack: The Orissa High Court in India recently ruled that cryptocurrency dealings are not considered illegal under Indian law. This decision came as a result of a case involving individuals accused of fraudulent activities through a Ponzi scheme.
In the ruling, Justice Sasikanta Mishra clarified that cryptocurrency does not fall under the definition of “money” as per the Prize Chits and Money Circulation Schemes (Banning) Act.
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Additionally, the court determined that cryptocurrency does not qualify as a “deposit” under the Odisha Protection of Interests of Depositors Act. Consequently, the court concluded that the mere act of cryptocurrency dealings, in itself, does not constitute an offense under these specific laws.
The central legal issue, whether cryptocurrency activities considered offenses under the Prize Chits and Money Circulation Schemes (Banning) Act and the Odisha Protection of Interests of Depositors Act (OPID).
Justice Sasikanta Mishra, who led the single-judge bench, ruled,
“Cryptocurrency is not money within the meaning of Prize Chits and Money Circulation Schemes (Banning) Act, and the investment made by the general public in cryptocurrency cannot partake the nature of deposit within the meaning of OPID Act.”
The judge further stated,
“Mere cryptocurrency dealings cannot be deemed illegal in any way and, therefore, do not constitute an offense under the OPID Act.”
In this case, the accused reportedly running a fraudulent cryptocurrency company, enticing individuals to invest in a digital currency named Yes World Token. They allegedly persuaded private investors by setting up trust wallets and promising high returns.
The investment strategy required participants to recruit new members, with bonuses or interest payments increasing as more recruits joined. This method, resembling multi-level marketing, raised legal and investor protection concerns.
Justice Mishra observed that, no evidence suggesting that the accused fraudulently induced anyone to hand over property to them. He highlighted that the investment strategy did not support claims of cheating, as the invested funds remained intact in the investors’ trust wallets.
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The judge concluded,
“Therefore, prima facie, the offence under section 420 does not appear to be made out,” .
He further explained,
“There is no evidence of any documents, records, etc. being forged, manipulated, or manufactured to invoke the offences under sections 467, 468, or 471 of the IPC.”
A cryptocurrency, a digital form of payment developed through encryption algorithms. These encryption technologies enable cryptocurrencies to serve as both a medium of exchange and a virtual ledger. To utilize cryptocurrencies, a cryptocurrency wallet is required.