The primary legal question before the Indian High Court was whether activities related to cryptocurrency dealings could be considered offenses under two specific acts: the Prize Chits and Money Circulation Schemes (Banning) Act and the Odisha Protection of Interests of Depositors Act (OPID). This question arose amid growing concerns and regulatory scrutiny over the nature and legality of cryptocurrency investments in India.

Justice Sasikanta Mishra presided over the case as part of a single-judge bench. His ruling addressed these concerns head-on, providing much-needed clarity on the legal standing of cryptocurrencies within the framework of Indian law. Justice Mishra’s decision hinged on the interpretation of key terms within the two acts in question.

He began by examining the Prize Chits and Money Circulation Schemes (Banning) Act, which primarily targets fraudulent financial schemes that promise high returns with little or no risk. Justice Mishra clarified that cryptocurrency does not fall under the definition of “money” as stipulated by this act. He emphasized that while cryptocurrencies can be used as a medium of exchange, they do not have the same legal status as traditional currency within the context of this specific legislation.

Next, Justice Mishra addressed the OPID Act, designed to protect the interests of depositors and regulate deposit-taking activities. The central issue was whether investments in cryptocurrency could be considered deposits under this act. Justice Mishra ruled that such investments do not partake in the nature of deposits as defined by the OPID Act. He pointed out that cryptocurrency investments are typically speculative and do not fit the traditional model of deposit schemes intended to safeguard depositors’ interests.

In his comprehensive ruling, Justice Mishra underscored the distinction between cryptocurrencies and conventional financial instruments. His interpretation established that current cryptocurrency activities do not contravene the regulations outlined in either the Prize Chits and Money Circulation Schemes (Banning) Act or the OPID Act.

This landmark decision by the Indian High Court thus clarifies that cryptocurrency dealings cannot be treated as illegal under these specific acts. It marks a significant moment for the cryptocurrency landscape in India, offering a legal affirmation that could influence future regulatory approaches and boost confidence among investors and stakeholders in the crypto market. Justice Mishra’s ruling serves as a foundational reference point for understanding the legal status of cryptocurrencies within the Indian judicial framework.

“The judge added that mere dealings in cryptocurrency cannot be considered illegal in any manner. Therefore, such activities cannot be classified as an offense under the OPID Act.”

The accused in this case were allegedly operating under the guise of a fictitious cryptocurrency company, enticing people to invest in a digital currency called Yes World Token. They purportedly lured private individuals into investing by creating trust wallets and promising substantial returns.

This investment approach required participants to recruit additional members, who would then be promised bonuses or interest payments that increased with the number of new recruits. The scheme appeared to follow multi-level marketing principles, raising concerns about its legality and investor protection.

Justice Sasikanta Mishra, presiding over the case, addressed these concerns by scrutinizing the actions of the accused. He emphasized that the investment method did not support allegations of cheating, as the invested amounts remained secure in the investors’ trust wallets. “Thus, the offense under section 420 does not appear, prima facie, to be made out,” the judge concluded.

He further elaborated that there was no evidence that any documents or records had been forged, manipulated, or manufactured in a manner that would attract offenses under sections 467, 468, or 471 of the Indian Penal Code (IPC).

Justice Mishra noted the absence of evidence indicating that the accused had dishonestly induced any person to deliver property to them. His thorough examination of the case found no fraudulent activities that would substantiate such charges. The judge’s findings clarified that the mere operation of a cryptocurrency investment scheme, in this instance, did not inherently constitute illegal activity under the relevant legal provisions.

This ruling thus provided a clear distinction between deceptive financial practices and legitimate, albeit unconventional, investment methods.