Bitcoin in India: ban and raids

Statement of the Reserve Bank of India (RBI) which was made on Tuesday has forced several Indian bitcoin exchanges have halted trading.

The Bank advised consumers and investors to steer clear of Bitcoin, citing on risks associated with digital currencies. It is lack of regulation, security issues and room for speculation. The RBI also pointed out that Indian Bitcoin exchanges are operating without regulatory approval.

As a result, some of the Bitcoin operators in India have suspended trading indefinitely. Representatives of the trading platform INRBTC said RBI’s warning states parties involved in digital currency transactions could be subject to unintentional breaches of anti-money laundering legislation and counter-terrorism laws. «The only option left now is suspend the services until further arrangements can be made», he added.

Representatives of another operator, buysellbitco.in, informed that it is suspending buy and sell operations until it can outline a clearer framework with which to work. «This is being done to protect the interest of our customers and in no way is a reflection of bitcoin’s true potential or price».

Many other Bitcoin services in India have suspended trading also. However, it did not save the exchange services from the attention of law enforcement. According to the Daily News and Analytics India, on Thursday the Enforcement Directorate (ED) was conducted the first official raid in office of buysellbitco.in. During the preliminary investigation, the ED found that it is in clear violation of Foreign Exchange Management Act (FEMA). Here’s what said one of the officials of the law enforcement agencies of India:

«We have found that through the website 400 persons have recorded 1,000 transactions that amount to a few crores of rupees. We are gathering the data of the transactions, name of the people who have transacted in the virtual currency from Gupta’s server that is hired in the US. At present, we believe that this is a violation of foreign exchange regulations of the country. If we are able to establish money laundering aspect then he can be arrested».

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