Karnataka High Court quashes criminal case against founders of Bitcoin company, Unocoin for setting up Bitcoin ATM

The Karnataka High Court recently quashed and set aside a criminal case registered against founders of Bitcoin company, Unocoin for setting up a Bitcoin ATM in Bengaluru in 2018 (BV Harish v. State of Karnataka). .Justice HP Sandesh set aside the case registered against BV Harish and Sathvik Vishwanath who were charged by the Cybercrime police on October 23, 2018..The decision came as a consequence of the Supreme Court judgment in Internet and Mobile Association of India vs Reserve Bank of India, wherein the apex court had set aside a circular issued by Reserve Bank of India (RBI) on April 6, 2018 with regard to prohibition of virtual currencies.The accused were arrested by the police, on the basis of that circular. .The said circular had imposed restrictions on regulated entities such as banks and non-banking finance companies (NBFCs) from dealing with virtual currencies and from providing services to crypto businesses..The accused were arrested by the police, on the basis of a circular issued by the Reserve Bank of India (RBI) dated April 6, 2018. The said circular had imposed restrictions on regulated entities such as banks and non-banking finance companies (NBFCs) from dealing with virtual currencies and from providing services to crypto businesses..Advocates Jaideep Reddy and Cyril Prasad Pais, appearing for the accused relied on the judgment passed by the Supreme Court in the case of Internet and Mobile Association of India vs Reserve Bank of India, wherein the apex court had set aside the circular with regard to prohibition of virtual currencies. .This argument, per se, was not contested by the public prosecutor, appearing for the State. .The Court, therefore, accepted this contention stating that when proceedings against the petitioners were initiated on the the strength of the circular, the same is liable to be quashed since the circular itself has been set aside. ."Looking into the principles laid down by the Hon'ble Apex court in Internet and Mobile Association of India's case, referred (supra) wherein the Hon'ble apex court has categorically held that the circular dated April 6, 2018 issued by the Reserve Bank of India is liable to be set aside. IN the case on hand also, proceedings have been initiated against the petitioners based on the circular dated April 6, 2018 and when the very circular dated April 6, 2018, issued by the Reserve Bank of India is set aside by the Hon'ble Apex court and when the proceedings initiated against these petitioners on the strength of Annexure-B (RBI Circular), the very proceedings initiated against these petitioners is liable to be set aside," the Court held. .It, therefore, allowed the petition and quashed the FIR and chargesheet. .[Read order here]