Unocoin founder arrested for running Bitcoin trading kiosk

Cryptocurrency firm Unocoin’s co-founder Harish BV has been arrested by sleuths from the central crime branch for running an alleged illegal Bitcoin trading kiosk, which was operated via a teller or ATM machine.

According to reports, crime branch officials said that they had arrested Harish because the ATM kiosk was set up without proper permissions. A report in The Times of India claims that officials had seized the said teller machine, two laptops, few debit and credit cards and a cryptocurrency device along with Rs 1.8 lakh.

Cryptocurreny trading firms in India came under heavy fire after Union Finance Minister Arun Jaitley’s Budget speech, in which he said that cryptocurrencies cannot be accepted as legal tender in India. 

Shortly after Jaitley’s speech, banking regulator the Reserve Bank of India issued a directive on 6 April, asking banks to cut off ties with any cryptocurrency trading firm in the country. The RBI had given banks a three-month deadline.

In response to the RBI’s diktat, several cryptocurrency traders and companies filed cases with top courts in the country, stating that the directive blocked their freedom of doing business in India.

On 17 April, the operator of exchange CoinRecoil, Kali Digital had moved the Delhi High Court followed by a group of traders filing a writ petition with the apex court on 14 May. 

All the cases have been moved to the Supreme Court for hearing. 

Incidentally, a media report had also claimed that the government had set up a panel to study the new currency format so that they can be allowed to operate in India with certain conditions.

However, nothing has come to light yet.

The aftermath of the RBI ban

In September, arguably India’s largest cryptocurrency trading firm Zebpay had said that it was shutting down its cryptocurrency exchange business due to the RBI’s restrictions on cryptocurrencies. 

Harish’s arrest comes just after Zebpay had ceased operating. TechCircle had earlier spoken to analysts and experts seeking to determine the effect of the RBI directive on these companies. According to them, in order to continue running their businesses, these companies had to shift their entire operations outside India.

However, Unocoin’s other founder Sathvik Vishwanath said that his company was not indulging in any illegal activity. He told TOI that Jaitley’s statement doesn’t make Bitcoins or cryptocurrencies illegal in India. 

His extended argument seems to be that though the currency cannot be accepted as legal tender, the government has not disallowed citizens from buying cryptocurrencies and hence the ATM kiosk by extension should also be legal.

Cryptocurrency companies in India have been trying to go mainstream by forming different partnerships. Unocoin had previously also entered into arrangements which could raise a controversy as laws are still not clear.

Just after Jaitley’s Budget speech, the company ran a promotional campaign with Café Coffee Day in March to bring people to their app or exchange by offering Rs 200 in gift coupons.

TechCircle at that time asked Unocoin’s vice president of sales and alliance business, Naveen CT, to explain the strategy behind the campaign.

According to Naveen, the company was trying to increase the access points of cryptocurrencies in the country and at the same time expand its user base. 

He was also of the view that this would give the company a first-mover advantage in a market that is certainly and rapidly progressing towards cryptocurrencies.