Delhi HC denies bail to crypto fraud accused

Complainanalleged that Verma lured him into investing ₹5 lakh in cryptocurrency, promising monthly returns of 20–30%. Kumar later discovered that dozens of others had also invested, together contributing nearly ₹50 lakh. When returns stopped, Verma allegedly failed to repay the money

The Delhi high court on Monday denied bail to a businessman accused of duping over 50 people of nearly ₹50 lakh through fraudulent cryptocurrency investments, observing that such dealings have a “profound impact on the economy by dissolving legitimate currency into dark, unknown, untraceable money”.

New virtual money concept, Gold Bitcoins ( btc ) is Digital crypto-currency use blockchain Technology for (Getty Images/iStockphoto)

Justice Girish Kathpalia made the remarks while hearing the bail plea of Umesh Verma, owner of Dubai-based Pluto Exchange, who was arrested in December 2020 in a cheating case registered by the Economic Offences Wing (EOW).

The case was filed by Joginder Kumar, who alleged that Verma lured him into investing ₹5 lakh in cryptocurrency, promising monthly returns of 20–30%. Kumar later discovered that dozens of others had also invested, together contributing nearly ₹50 lakh. When returns stopped, Verma allegedly failed to repay the money.

Verma argued that he had no intent to defraud investors, claiming there was no illegality when he started the business and that he “fell into deep pockets” after the government suddenly derecognised cryptocurrency. He also claimed to have settled most investor claims.

However, the complainant’s counsel Archit Kaushik and EOW’s additional public prosecutor Ritesh Kumar Bahri opposed the bail plea, submitting that Verma continued to solicit investments even after the derecognition of crypto. They argued that he defrauded 61 people, including 38 from other states, and posed a flight risk.

Agreeing with their submission, the court said: “Economic offences, unlike conventional bodily offences, are committed with elaborate planning and expertise. Especially, dealing in cryptocurrency has profound implications on the economy of our country by way of dissolution of recognised money into the dark unknown and untraceable money.”

The court also noted Verma’s antecedents, observing he had been named in at least 13 other similar cases. “The accused prima facie seems to have duped 61 investors by promising high returns, and continued misleading people even after the derecognition of cryptocurrency,” the bench said.

In April 2018, the Reserve Bank of India (RBI) had barred banks and financial institutions from servicing entities dealing in cryptocurrencies, but the Supreme Court struck down the ban in March 2020, calling it “disproportionate” and violative of the right to trade under Article 19(1)(g).

Though the Centre introduced a draft Cryptocurrency and Regulation of Official Digital Currency Bill in 2021, its passage has been delayed. Meanwhile, in 2022, the Union budget imposed a 30% tax on income from crypto transactions and a 1% TDS on annual transfers exceeding ₹50,000.

In 2023, the Finance Ministry brought crypto assets under the Prevention of Money Laundering Act. However, the Supreme Court expressed displeasure over the lack of a dedicated legal framework or federal agency to investigate crypto-related offences. It noted that several investors were being duped in complex schemes and urged the Centre to enact a law to regulate digital currencies.

Earlier this year, the Delhi high court also sought responses from RBI and SEBI on a plea seeking a comprehensive regulatory policy to protect investors in virtual digital assets.