The Orissa High Court recently declared that Cryptocurrency dealings are not illegal under the Indian law. The decision was taken by the High Court after a case accusing individuals of committing fraud by conducting a Ponzi scheme came to light.

Justice Sasikanta Mishra clarified that cryptocurrency is not considered as money under the Prize Chits and Money Circulation Schemes (Banning) Act or as a deposit under the Odisha Protection of Interests of Depositors Act, thus determining that simple cryptocurrency are not offenses under these laws. Cryptocurrency is a digital or virtual form of currency that uses cryptography for security. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies operate on decentralized networks based on blockchain technology—a distributed ledger that records all transactions across a network of computers. 

The Orissa High Court in India has delivered a landmark ruling clarifying the legal status of cryptocurrency transactions under Indian law. This significant decision arose from a case involving two individuals accused of defrauding people through a Ponzi scheme or multi-level marketing (MLM) scheme. 

The main legal issue was whether these activities fell under the offenses outlined in the Prize Chits and Money Circulation Schemes (Banning) Act and the Odisha Protection of Interests of Depositors Act (OPID). Justice Sasikanta Mishra, who presided over the single-judge bench, ruled: “Cryptocurrency is not money within the meaning of Prize Chits and Money Circulation Schemes (Banning) Act and the investment made by the general public in cryptocurrency cannot partake the nature of deposit within the meaning of OPID Act “. She added: “Mere dealing in cryptocurrency cannot be treated as illegal in any manner. Hence, it cannot be treated as offence under the OPID Act”. 

The people accused were allegedly targeting private individuals and then baiting them into investing into a cryptocurrency known as ‘Yes World Token’. The people were lured into investing by creating trust wallets and then promising them substantial returns. The accused told the participants to sign up additional members, who were then promised additional bonuses or interest payments that increased with the number of new people that were recruited. 

Regarding the IPC offenses, the Court stated that the accused only attempted to persuade the public to trade in the cryptocurrency STA Token without any fraudulent intent to induce property transfer. There was no manipulation of investments, which remained in individual Trust Wallets. Consequently, no deceptive practices typical of Ponzi schemes were evident, and the charge under Section 420 of the IPC did not hold. Additionally, there was no evidence of forgery, manipulation of documents, records, or any deceitful interference by the petitioners. While the accused may have earned commission or bonuses from the company, this alone cannot be considered dishonest earnings. The judge further said, “Thus, the offence under section 420 does not appear, prima facie, to be made out. There is no evidence that any documents, records etc. were forged, manipulated, manufactured etc. so as to attract the offences under section 467/468/471 of IPC.” 

Therefore, the Court concluded that the detention of the accused was unjustified and granted their bail applications under specified terms and conditions.