Supreme Court asks Centre 'Is Bitcoin illegal or not?' during GainBitcoin scam hearing

Amid speculations over the legitimacy of cryptocurrency-Bitcoin, on February 25 the Supreme Court questioned the Centre to clear its stance on whether the same is legal. In the long-pending case of the alleged GainBitcoin scam, the Apex Court was hearing the petition by Ajay Bhardwaj seeking to quash the case against him while the bench emphasised the GoI's take on cryptocurrency is required to be unclouded.

A division bench comprising Justice DY Chandrachud and Justice Surya Kant asked the Additional Solicitor General Aishwarya Bhati to clarify the doubt while hearing a petition by an accused in the GainBitcoin scam. 

"Is it illegal or not. You have to make your stand clear," the bench told the ASG while they agreed to throw light on the subject. 

Further, the Court listed the matter for a hearing after four weeks while interim protection and restraint from the arrest of the petitioner are said to continue.

"Is bitcoin legal or not?": Supreme Court asks Centre

The Supreme Court's query holds relevance as Finance Minister Nirmala Sitharaman, on February 11, said the government has sovereign right to tax profit made from cryptocurrency transactions, and the decision on banning or not banning will be taken based on feedback from consultations.

Replying to the general discussion on Union Budget, Sithraman had said, "I am not going to legalise it or ban it at this stage. Banning or not banning will come subsequently, when consultations give me input".

Speaking about the profit emanating from virtual transactions in cryptocurrencies, she stated, "(Whether it is) legitimate or illegitimate, it is a different question, but I will tax because it is a sovereign right to tax". 

Pertinently, the Finance Ministry had cleared the stance while answering questions regarding the Union Budget 2022. It had said, "Digital currency will be backed by RBI which will never be the default. Money will be of RBI but the nature will be digital. Digital rupee issued by RBI will be a legal tender. Rest all aren't legal tender, will not, will never become legal tender."

Facts of GainBitcoin scam case

The petitioner and alleged mastermind in the scam, Ajay Bhardwaj, along with his brother Amit Bhardwaj are accused of operating schemes and have defrauded more than 8,000 people across the country to the tune of Rs 20,000 crore. As per reports, Bhardwaj founded a slew of entities and an MLM scheme (multi-level marketing) that promised 10% monthly redemption on bitcoin investments. Allegedly, they have cheated

In relation to fraudulent and misrepresentation of companies' promised returns, nearly 28 FIRs have been lodged against Bhardwaj across the country. The other accused in the scam are- Vivek Bhardwaj, mother Bimla Devi, father Mahendra Kumar and others. 

In 2018, the GainBitcoin scam came to be known as one of the biggest Bitcoin scams.