Indian courts hold strict boundaries on code crime

India’s Delhi High Court has refused bail to Umesh Verma, a businessman accused of fraudulent 61 people through a crypto investment scheme.

The court ruled that such a scheme poses a threat to the Indian financial system by converting recognized money into untraceable digital assets.

Court Judgment: “Flight Risk” with a history of fraud

Judge Girish Kathpalia said that crypto-related crimes are not only complicated, but have serious consequences for the wider economy. Kathpalia emphasized that cryptocurrency transactions “can “melt legal money into dark, unknown, and untraceable money.”

Related: India probes cryptographic use in terrorist financing linked to Pakistan

The court described Verma as a serious flight risk, pointing to his involvement in at least 13 similar fraud cases. He also emphasized that even after the government recognized crypto investment, it did not follow the mediation agreement and did not continue to collect funds ongoing.

How the suspicious scam unfolded

Verma, the founder of the Dubai-based Pltune Exchange, was arrested in December 2020 following complaints from investor Joginder Kumar. Investors claimed he was seduced by a £5 investment with a promise of a monthly return of 20% to 30%.

An investigation by Economic Crime (EOW) later found that Verma was allegedly deceived 61 investors from multiple states. The total estimated loss was nearly $58,200, nearly £500,000, according to the exchange rate.

Prosecutors told the court that Verma continues to attract investment even after official warnings, with most victims unaware of the risks involved.

In defense, Verma argued that there was no fraudulent intention and condemned business failures over policy changes. He also said he has resolved many of the investors’ claims.

However, the court was on his side with the prosecutors and said Verma’s actions showed “Mara’s intentions” and intentionally misrepresentation. The judge said the accused will use his deep financial resources to continue misleading people despite regulatory warnings.

India’s ongoing struggle with crypto regulations

Meanwhile, India’s approach to cryptography has seen major changes. The Reserve Bank of India’s ban on crypto services in 2018 was overturned by the Supreme Court in 2020. In 2022, the federal budget introduced a 30% tax and a 1% TD on crypto profits in annual transfers of over £50,000.

Related: India has encouraged us and Bhutan to follow us when adopting a sovereign bitcoin strategy

In 2023, Crypto transactions are based on the Anti-Money Laundering Act. However, both the Supreme Court and the Delhi High Court are urging the central government to address the rise in crypto-related fraud in order to enact a comprehensive regulatory framework.