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Indian cryptocurrencies entrepreneurs arrested in Bitcoin ATM scandal

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Flag of IndiaTwo prominent members of the Indian cryptocurrency scene have been arrested over a scandal involving an allegedly unauthorised cryptocurrency ATM.

Harish BV, who co-founded the cryptocurrency Unocoin in the Indian city of Bengaluru, also known as Bangalore, is accused of having run the Bitcoin kiosk without obtaining the necessary permissions.

In an additional development, one of Unocoin’s other co-founders – Sathvik Vishwanath – was taken into custody by the local police force’s Central Crime Branch after he was accused of either erasing or editing evidence.

According to industry media, this evidence is believed to include customer information and internet transaction trails.

The kiosk had been located on a major thoroughfare called Old Airport Road in the city, and photographs of it were widely available across the internet.

The case has a peculiar dimension in that the founders were willing to share lots of public details about the kiosk, despite it allegedly not having the right permissions.

Earlier this month, an official statement from Unocoin said that “the implementation of [its] Kiosk” was ready.

“The first Kiosk is being deployed in Bangalore to be followed by Mumbai and Delhi in a couple of weeks”, the statement said.

“Unocoin encourages its users to trade Crypto assets with INR by keeping into consideration the recent hurdles faced by Unocoin and its users to deal with Crypto assets.”

However, the pair now stand accused of breaking a number of different laws.

They are accused of contravening IT Act section 66, which relates to computer-themed offences.

They are also accused of breaking several sections of the IPC law, and the accusations here include everything from cheating and criminal conspiracy to forgery.

According to the Bangalore Mirror, local police believe the pair had failed to secure appropriate licenses from a whole host of different relevant institutions.

“They did not have any licence from RBI, Sebi or any other agency to carry out the bitcoin transaction. They were running it without obtaining any trade license from the BBMP”, said Alok Kumar, who is the additional commissioner for crime at the Bengaluru police.”

“We asked the operator about the bitcoin (sp) rates and to which he said there was no fixed rate and it would vary from customer to customer. The RBI has stated that bitcoin cannot be used as legal tender”, Kumar added.

Police said that only the kiosk had been raided. The offices of Unocoin, which are also located in Bengaluru, are not believed to have been raided.

India is a major global economy with a tech-focused workforce, but it has developed a significant problem with cryptocurrency fraud.

Police in the country are regularly investigating financial crimes with a forex element. Back in June of this year, for example, police arrested four people in Mumbai in connection with a serious case of alleged forex fraud believed to be worth the equivalent of over £40 million.

The following month saw another arrest in Mumbai. This time, three brothers stood accused of scamming investors using apps and websites.