Delhi HC Rejects Bail Plea of Accused in ₹50 Lakh Crypto Fraud Case

The Delhi High Court on Monday dismissed the bail application of Umesh Verma, a businessman accused of orchestrating a large-scale cryptocurrency investment scam that allegedly duped over 50 individuals of nearly ₹50 lakh.

Justice Girish Kathpalia, who presided over the matter, observed that cryptocurrency-related frauds carry serious economic consequences, as they convert legal tender into unregulated and untraceable digital assets, thereby undermining the nation’s financial stability.

Case Background

Verma, who runs the Dubai-based Pluto Exchange, was arrested in December 2020 following a complaint lodged with the Economic Offences Wing (EOW) of the Delhi Police. The complaint was filed by Joginder Kumar, who alleged that he had invested ₹5 lakh in a crypto scheme operated by Verma, enticed by promises of 20–30% monthly returns. Eventually, Kumar discovered that dozens of other individuals had also fallen victim to similar assurances, with the collective investment exceeding ₹50 lakh.

According to the complaint, when returns ceased, Verma failed to refund the invested amounts.

Accused’s Defense

In his bail application, Verma contended that he had no intention to cheat and claimed that the venture was legitimate when initiated. He blamed sudden policy shifts and the government’s derecognition of cryptocurrencies for the failure of his business. Verma also argued that he had resolved most claims made by the investors.

Prosecution’s Argument

However, counsel for the complainant, Archit Kaushik, along with EOW’s Additional Public Prosecutor Ritesh Kumar Bahri, opposed the bail. They asserted that Verma continued soliciting investments even after digital currencies were derecognised by Indian authorities, which signified clear criminal intent. They further informed the court that 61 individuals had been allegedly defrauded, including 38 from outside Delhi, and emphasized that Verma posed a flight risk.

Court’s Observations

Agreeing with the prosecution, the court stated, “Unlike conventional crimes, financial offences are executed through intricate planning and sophistication. The use of cryptocurrency in such cases severely impacts the national economy by turning recognised legal tender into dark, untraceable funds.”

The court also highlighted Verma’s criminal history, noting his involvement in at least 13 other similar fraud cases. “There is prima facie evidence that the accused deceived 61 investors by promising high returns and kept luring people even after cryptocurrency was no longer recognised,” the court said while rejecting bail.

Legal Landscape on Cryptocurrency in India

In April 2018, the Reserve Bank of India prohibited banks and financial institutions from offering services to businesses dealing in cryptocurrencies. However, this ban was overturned by the Supreme Court in March 2020, citing it as disproportionate and infringing on the right to trade under Article 19(1)(g) of the Constitution.

Despite the introduction of the Cryptocurrency and Regulation of Official Digital Currency Bill in 2021, it is yet to be enacted. Meanwhile, regulatory actions have intensified. The 2022 Union Budget imposed a 30% tax on income from crypto assets and a 1% TDS on transactions above ₹50,000.

In 2023, the Finance Ministry included cryptocurrencies under the Prevention of Money Laundering Act (PMLA). The Supreme Court, however, voiced concern over the absence of a robust legal mechanism and a dedicated enforcement body to investigate digital asset frauds, urging the Centre to enact a comprehensive law to safeguard investors.

Earlier this year, the Delhi High Court also sought responses from the RBI and SEBI on a petition demanding clear regulatory guidelines for virtual digital assets, in an effort to protect consumers and promote transparency in the evolving crypto ecosystem.