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The Enforcement Directorate views threats from virtual currency as real and extreme. Cryptocurrency use has been detected in crime and money laundering.
A recent case involves an investment of over ₹1 crore in cryptocurrency allegedly channeled through Delhi-based businessman Gagan Dhawan, who was arrested by the Enforcement Directorate in the Sterling Biotech group case on October 31.
An FIR, dated August 30, 2017, filed by the CBI says that the group acted as “a depository for receiving funds on behalf of persons, including public servants, and for further delivery to them at a place of convenience”. Such undisclosed funds were allegedly invested in real estate and other assets.
In November, Delhi Police unearthed an international racket involving drugs bought using Bitcoin via the dark web.
The Narcotics Control Bureau (NCB) says it detected three syndicates that used Bitcoin to buy banned or regulated drugs. It also led to the arrest of an NCB official who allegedly helped unlock 470 Bitcoin found during a probe into a Surat-based drug syndicate in June 2015.
In April last year, the NCB arrested an IT professional in Chennai for allegedly sourcing drugs from Europe using cryptocurrency.
Purchase channels
Virtual currencies can be bought through a banking channel, and the investor’s identity is recorded using PAN card.
But some platforms are said to offer peer-to-peer sale or purchase through various payment gateways, including cash and credit cards. “Investments can be made via hawala networks,” said an ED official.
But transfer of property for cryptocurrency, which has a speculation-driven value, can be treated as “dishonest or fraudulent” and amounts to a crime under Section 423 of the Indian Penal Code attracting a punishment of two years imprisonment, said a senior police officer.
Probe agencies say the generation and transaction of non-fiat (private) digital currencies are accompanied by exchange into a foreign currency without the government’s knowledge.
Unlike government-backed payment systems, non-fiat virtual currencies have neither “inherent value” as in the case of gold or any other precious metal or stone, nor are they backed by sovereign guarantee.
The current cryptocurrency market cap for over 1,300 options, led by Bitcoin, stands at an estimated $300 billion. Cyber law expert Pavan Duggal says “they are the present and the future. So the quicker governments wake up to the reality and start legalising them and earning revenues through appropriate taxation, the better it is going to be..”
Sandeep Goenka, co-founder of Zebpay, a Bitcoin platform that uses PAN, bank and Aadhaar details for trade said, “The Indian investor base exceeds 2 million.”
(Inputs from Piyush Pandey, Mumbai)