News
The Indian High Court finds that cryptocurrency operations are not illegal
2024-06-14 03:02:53 ET
An Indian high court has ruled that trading in cryptocurrencies is not illegal. The ruling came in relation to a case involving a crypto Ponzi scheme.
According to a local report
Justice Sasikanta Mishra of the Orissa High Court said cryptocurrency is not considered money under Indian law.
A suspected Ponzi scheme
The ruling concerns a case involving two people suspected of
implementing a Ponzi scheme
. The scheme revolved around a fake cryptocurrency called Yes World Token.
By targeting individuals, the scam promised investors profitable returns on investments. Like any Ponzi scheme, users were incentivized to add more members.
They would be rewarded with interest or bonuses proportional to the number of new members recruited.
With this multi-level marketing (MLM) approach, the scheme has managed to create a large network of users.
The duo would have created trust wallets, not to be confused with the
popular cryptocurrency
wallets bearing the same name.
Interestingly, the defendants were not charged. Justice Mishra noted that there was no evidence of a direct transfer of money from investors to the defendants.
Instead, all funds remained in investors’ wallets. Therefore, there was no evidence of direct financial gain or dishonest inducement.
Cryptocurrency is not money
The burning question was whether these activities were considered illegal under India’s Prize Chits and Money Circulation Schemes (Banning) Act and the Odisha Protection of Interests of Depositors (OPID) Act.
The judge ruled that “cryptocurrency is not money,” adding that “investment made by the general public in cryptocurrency cannot fall into the nature of deposit under the OPID Act.”
Therefore the sentence concluded:
Simply trading cryptocurrency cannot be considered illegal in any way. Therefore, it cannot be considered a crime under the OPID Act.
According to Mishra, the system operated on a “person-to-platform” basis. He explained:
It can only be said that the accused attempted to convince the public […] Considering the person-to-platform methodology adopted, the accused cannot be said to have defrauded anyone, especially considering the fact that any amount invested by any person remains safe in his trust wallet.
Justice Mishar’s ruling is in line with India’s current definition of cryptocurrencies. While there are no strong regulations, the nation views cryptocurrencies as “virtual digital assets.”
Digital assets cannot be used as legal tender within the jurisdiction, but they are
subject to tax obligations
such as a TDS of 1% and a capital gains tax of 30%.
India is currently working
licensing of cryptocurrency service providers
.
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