India: Former Legislator in Bitcoin Extortion Case Declared Proclaimed Offender


An Indian court declared former Member of the Legislative Assembly (MLA) Nalin Kotadiya a proclaimed offender in connection with a Bitcoin (BTC) extortion case amounting to $1.3 million.

Judge PG Tamakuwala declared Kotadiya a proclaimed offender or “absconder” under Section 82 of the Code of Criminal Procedure with reference to an application filed by the Criminal Investigation Department (CID). Kotadiya “remained untraceable,” even after a warrant was issued for his arrest. The CID initatiated proceedings again, seeking that the court should declare him a proclaimed offender.
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Crypto Startup Files Petition Against India's Central Bank Ban


An Indian startup planning to launch a crypto exchange has filed a complaint against the Reserve Bank of India's (RBI) decision to bar banks from engaging with crypto services.

Kali Digital Ecosystems filed a writ petition with the High Court of Delhi on Tuesday against the RBI, the Ministry of Finance and the Goods and Services Tax Council (GST Council) seeking «an appropriate writ, order or direction quashing the circular» which it describes as «arbitrary and unconstitutional.»

The company initially planned to launch its crypto exchange, CoinRecoil, in August 2018, and said in the petition that it has «undertaken substantial investment in this regard.» However, the company now says it will be unable to operate due to the restrictions on banking services imposed by the RBI earlier this month, as previously reported.

The petition reads:

«On account of the Impugned Circular, the Petitioner will not be able to avail banking services to operate the cryptocurrency exchange 'CoinRecoil.' Such banking services are imperative for the business of the Petitioner. Consequently, the business of the Petitioner is stillborn on account of the Impugned Circular.»

Kali Digital Ecosystems specifically states that RBI's move violates the firm's constitutional right to practice any profession, trade or business.

It also argues that RBI's decision constitutes discrimination under the Constitution, because it gives crypto services «differential treatment» without justification.

This lack of justification, the company contends, stems from the failure of RBI to adequately define the scope of the term «cryptocurrency.» Because of this ambiguity, the term has sometimes been wrongly applied to rewards programs, like airline miles.

Likewise, the company adds that the GST Council has created «uncertainty» by neglecting to put forth crypto-specific tax laws, and is «adversely affecting» its business as a result. It appeals to the court to correct this by directing the Council to «frame appropriate regulation on cryptocurrencies.»

RBI's circular was preceeded by two warnings on cryptocurrencies, issued in 2013 and 2017 respectively. Despite its strict stance on cryptocurrencies, the Bank revealed in the circular that it is exploring the idea of issuing its own digital currency.

Police Officers Charged in $1.3 Million Bitcoin Extortion Scheme


The Crime Investigation Department (CID) in the Indian state of Gujurat has accused 10 police officers of kidnapping, attempted extortion and corruption after they allegedly abducted a businessman and forced him to hand over 200 bitcoins.

Gujurat's CID branch filed a First Information Report — the initial step in conducting a police inquiry in India — against 10 officials and a civilian «fixer» on Sunday, the Times of India reported. The accused include nine constables and a local town's police inspector, whose name is reportedly Anant Patel.

The police officials are accused of kidnapping local residents Shailesh Bhatt, Kirit Paladiya and a driver referred to as Mahipal, taking them to a farmhouse, beating them and forcing them to transfer the bitcoins, according to a separate report from the Ahmedabad Mirror. The amount involved is equal to roughly $1.3 million at current prices.

The Mirror further reported that Bhatt was forced to pay another third party to retrieve his bitcoins.

However, director-general of police Ashish Bhatia said an initial probe could not verify that the 200 bitcoins were actually transferred from Bhatt to Patel, and police would examine both citizens' wallets for proof, according to the Times.

He added:

«In his application, Shailesh Bhatt had mentioned the transfer of 200 Bitcoins worth Rs 12 crore ($1.8 million) from the digital wallet of his business partner, Kirit Paladiya. Another Rs 32 crore ($5 million) were allegedly paid for their release from a farmhouse. Later, Rs 78.5 lakh ($121,000) were allegedly paid to get the Bitcoins back. All these transactions mentioned in the application could not be proven.»

A Special Investigative Team is being formed to fully investigate the matter, Bhatia said. So far three of the constables have been arrested, and the remaining six, as well as Patel, are on the run, according to News18.com.