Indian authorities have fallen prey to their own anti-cryptocurrency regulations as a Bitcoin scam has caused over one million dollars ($1.1 million) to stay trapped in a State Bank of India bank account.
As known, cryptocurrencies are not legalized in India, and while exchange platforms are legal, the government has made it extremely difficult for them to survive in a hostile environment. Last year, the Reserve Bank of India (RBI) banned institutions from dealing, sending, or accepting any form of cryptocurrency. Naturally, the overarching ban caused several exchange platforms and fledgling cryptocurrency-related businesses to call it quits.
Bitcoin scam gives the law the taste of its own medicine
However, little did the government know that they would soon be getting a taste of their own medicine. Pune, a city in the western state of India, seized over one million dollars worth cryptocurrency from a bogus Bitcoin investment platform called GainBitcoin. Upon seeking help from a local cryptocurrency trading platform, Koinex, to exchange the cryptocurrency to its equivalent Indian Rupees, it was realized that the funds in trading venue’s bank account, Discidium Internet, have been rendered immovable following RBI’s directive.
Senior inspector of cyber police, Jairam Paygude, remarks that the Central bank of India is not in a position to transfer the amount to State bank’s treasury account as confiscated funds continue to remain frozen in the account of Discidium Internet. Meanwhile, Discidium Internet is urging RBI to instruct the central bank to unfreeze the assets.
Now, it seems that the seized amount is hanging by a thread as the authorities have no idea how to deal with the situation and have turned to the session’s court directive for a possible solution.
About GainBitcoin scam
To offer a little background about the ambiguous case, GainBitcoin was a fraudulent scheme run by Amit Bhardwaj, who is also the founder of a blockchain startup Amaze Mining. One of the early believers in Bitcoin and its capabilities, Bhardwaj, led the scheme along with eight others and went on to deceive its victims to the tune of over three hundred million dollars ($300 million).
The fraud was uncovered by the Pune police last year following which, two hundred and forty-four Bitcoin were confiscated. Unfortunately, the case currently remains unsolvable as RBI’s impulsive lawmaking initiatives have backfired on the system.