Cryptocurrency worth $1.2 million that was seized from a Ponzi scheme by Indian police can’t be accessed and returned to bewildered investors because Indian banking laws prohibit the handling of virtual currencies.
According to a report in the Times of India, police in the city of Pune had hired the now-defunct crypto exchange Koinex to communicate with the bank and convert the seized bitcoin into rupees.
The cryptocurrency laws in India, however, forbid entities regulated by the country’s Reserve Bank from the sale or purchase of digital assets and required Koinex’s partner bank to freeze its account.
Supreme Court Petition
Both the police and Koinex have now petitioned the country’s Supreme Court to challenge the Reserve Bank ruling. The Times, however, reported that the Reserve Bank denies instructing Koinex’s bank to freeze its account.
India’s government has tried to ban the trade and use of cryptocurrencies outright to protect consumers from the “various risks associated in dealing with such virtual currencies”. This must seem a bitter irony for those invested in the ponzi scheme from which the bitcoins were seized, whose best interests are clearly not being protected.
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