Kripto currency case full affidavit copy

IN THE HIGH COURT OF JUDICATURE AT MADRAS
(SPECIAL ORIGINAL JURISDICTION)
W.P. No. of 2021
AYYAA
S/o. S.M.Subramanian,
1/64, IOB Colony, Maharaja Nagar,
Palayamkottai, Tirunelveli -627011.
….Petitioner
VS.
1. Finance secretary
No:15, Safdarjung Road, New Delhi.
2. Cabinet secretary
Secretariat Building, New Delhi.
3. Broadcasting and Information Technocolgy
Ministry of Information & Broadcasting,
Room No 552, A wing Shastri Bhawan New Delhi-110001.
…. Respondent

AFFIDAVIT
I, Ayyaa S/o. S.M.Subramanian, aged about 41 years and residing at 1/64, IOB Colony, Maharaja Nagar, Palayamkottai, Tirunelveli District, formerly called as PITCHUMANI late on changed my name as AYYAA through gazette notification, has now temporarily come down to Chennai, do hereby solemnly affirm and sincerely state as follows.
1. I am the Petitioner herein as such I am well acquainted with the facts and circumstances of the case.
2. I submit that I am giving an undertaking to pay the cost if this Hon’ble Court finds that the petition is intended for personal gain or oblique motive. Further I submit that I have filed this petition out of my own funds. I submit that to my knowledge, no Public Interest Litigation (PIL) arising on the same issue has been filed anywhere and all the events referred to in the present affidavit have been aware by me after thorough inspection on the field and accordingly I have got complete and personal knowledge about the risks which are being faced by the public at large. I am an Advocate by profession and I am an income tax assesse by having a PAN No. FXIPP8846M and My Aadhar Card No. 8934 1963 0831. I am a person being self-employed by doing real estate business and apart from that I am a social and environment activist.
3. It is submitted that crypto currency is the digital trading phenomenon throughout the country. The crypto currency trading seeks appropriate regulatory authority to control all the transactions in a secured mode for the citizens of India. But till today Indian Financial Department has not concluded and set up the rules for regulating the crypto currency trading.
4. It is submitted “digital currencies represent a technology for settling peer to peer payments without trusted third parties and may involve a non-sovereign currency”. Two risks were noted in the report and they were consumer protection and operational risks. Crypto currency as a type of unregulated digital money, issued and controlled by its developers and used and accepted by the members of a specific virtual community.
5. It is further submitted that in the event of crypto currency trading media source in the country, prominence the advertisements in the subject of the crypto currency trading mutually in the news papers, television and through the social media in the large extent without having any rules and regulations for the crypto currency trading in the country under the government policies. On the 1st page of news paper itself several media sources of our country publishing the advertisements for the unsecured crypto currency trading companies.
6. It is submitted that the above factors clearly shows that media sources in the country fairly supporting the under rated and unregulated crypto currency trading companies and their agents , only for the purpose of their own development, misleading, misguiding, giving false information or exploit the public to the large extent in the country. On 24.12.2013, a Press Release was issued by RBI cautioning the users, holders and traders of virtual currencies about the potential financial, operational, legal and customer protection and 7 security related risks that they are exposing themselves to. The Press Release noted that the creation, trading or usage of VCs, as a medium of payment is not authorized by any central bank or monetary authority and hence may pose several risks narrated in the Press Release. Virtual currencies such as bitcoin, while representing a great opportunity for financial innovation, have attracted the attention of various criminal groups, and may pose a 10 risk for TF (Terrorist Financing).
7. It is submitted that there are no suitable rules and regulations in the event of this crypto currency trading in the entire country, which is directing towards zero security in the investments by the citizens of India, who are taking part in the crypto currency trading. Therefore the crypto currency trading is the concrete course to the economical crumple to the large extent of the people in the country, due to the inadequate development for the crypto currency trading in the whole country.
8. It is submitted that there have been several media reports of the usage of VCs, including Bitcoins, for illicit and illegal activities in several jurisdictions. The absence of information of counterparties in such peer-to-peer anonymous/pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws. The Reserve Bank has also stated that it is presently examining the issues associated with the usage, holding and trading of crypto currency under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations
9. It is humbly submitted that there have been a process called Crypto Mining in that the users were been rewarded Bitcoins by solving a puzzle and thereby the users have been entitled to deposit money inorder to claim the bitcoins which they have been rewarded. It is stated that the process of crypto mining leads the attackers to easily access the user information which leads to theft of personal information’s of the users.
10. It is submitted that the report of the Inter-Disciplinary Committee was submitted on 25.07.2017 and it contained certain recommendations which are as follows:
(i) A very visible and clear warning should be issued through public media informing the general public that the Government does not consider crypto-currencies such as bitcoins as either coins or currencies. These are neither a legally valid medium of exchange nor a desirable way to store value. The Government also does not consider it desirable for people to use or invest in something which has no real underlying asset value.
(ii) A very visible and clear warning should be issued, through public media, advising all those who have been offering to buy or sell these currencies, or offering a platform to exchange these currencies, to stop this forthwith.
(iii) Those who have bought these currencies in good faith and are holding these should be advised to offload these in any jurisdiction where it is not illegal to do so.
(iv) All consumer protection and enforcement agencies should be advised to take action against all those who, despite these warnings, indulge in buying/selling or offering platform for trading of these currencies, since the presumption would be that it is being done with illegal, fraudulent or tax evading intent.
(v) If the Government agrees with the above recommendations, a committee should be constituted with members from DEA, RBI, SEBI, DoR, DoLA, Consumer Affairs, and MeitY, to suggest whether any further actions, including legislative changes, are required to make possession, trade and use of crypto-currencies expressly illegal and punishable.
(vi) Finally, it is clarified that none of the above recommendations are meant to restrict the use of blockchain technology for purposes other than that of creating or trading in crypto-currencies.
11. It is submitted that The Government of India, Ministry of Finance also issued a statement on 29.12.2017 cautioning the users, holders and traders of Crypto currency that they are not recognized as legal tender and that the investors should avoid participating in them. There is no established framework for recourse to customer problems/disputes resolution as payments by crypto-currencies take place on a peer-to-peer basis without an authorized central agency which regulates such payments. Fast paced innovations such as virtual currencies have brought risks and concerns about data security and consumer protection on one hand and far reaching potential impact on the effectiveness of monetary policy itself on the other hand
12. It is submitted that The Bank for International Settlements (BIS) has recently warned that the emergence of crypto-currencies has become a combination of a bubble, a Ponzi scheme and an environmental disaster, and calls for policy responses (BIS, 2018). The Financial Action Task Force (FATF) has also observed that crypto assets are being used for money laundering and terrorist financing. A globally coordinated approach is necessary to prevent abuses and to strictly limit interconnections with regulated financial institutions.
(i) Virtual currencies do not satisfy the criteria such as store of value, medium of payment and unit of account, required for being acknowledged as currency.
(ii) Virtual currency exchanges do not have any formal or structured mechanism for handling consumer disputes/ grievances.
(iii) Virtual currencies are capable of being used for illegal activities due to their anonymity/pseudo-anonymity.
(iv) Increased use of virtual currencies would eventually erode the monetary stability of the Indian currency and the credit system.
• Crypto currencies today do not do a good job at fulfilling the main functions of money.
• They may be favoured by some for ideological, technological or monetary policy reasons.
• The block chain technology they use does have some important advantages in controlling fraud and maintaining privacy.
• But they also open up avenues for tax evasion and criminal activity.
13. It is submitted that the RBI cautions users of Virtual Currencies against Risks The Reserve Bank of India has today cautioned the users, holders and traders of Virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to. The Reserve Bank has mentioned that it has been looking at the developments relating to certain electronic records claimed to be “Decentralized Digital Currency” or “Virtual Currency” (VCs), such as, Bitcoins, litecoins, bbqcoins, dogecoins etc., their usage or trading in the country and the various media reports in this regard.
14. The creation, trading or usages of VCs including Bitcoins, as a medium for payment are not authorized by any central bank or monetary authority. No regulatory approvals, registration or authorization is stated to have been obtained by the entities concerned for carrying on such activities. As such, they may pose several risks to their users, including the following:
• VCs being in digital form are stored in digital/electronic media that are called electronic wallets. Therefore, they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack etc. Since they are not created by or traded through any authorized central registry or agency, the loss of the e-wallet could result in the permanent loss of the VCs held in them. • Payments by VCs, such as Bitcoins, take place on a peer-to-peer basis without an authorized central agency which regulates such payments. As such, there is no established framework for recourse to customer problems / disputes / charge backs etc.
• There is no underlying or backing of any asset for VCs. As such, their value seems to be a matter of speculation. Huge volatility in the value of VCs has been noticed in the recent past. Thus, the users are exposed to potential losses on account of such volatility in value.
• It is reported that VCs, such as Bitcoins, are being traded on exchange platforms set up in various jurisdictions whose legal status is also unclear. Hence, the traders of VCs on such platforms are exposed to legal as well as financial risks. .
15. It is submitted that the lists of few scams related to the crypto-currency in India.
(I). The Kerala police on Monday arrested four persons from Kannur in connection with an investment fraud estimated at around Rs 100 crores, under the cover of crypto-currency.
Police said crores of rupees have been collected from thousands of investors online by a Bengaluru-based company Long Reach Technologies. PP Sadanandan, ACP, Kannur said the fraudsters had given advertisements of various schemes online to attract the investors and had also accepted payments online.
The persons arrested are PM Muhammad Riyas (31) of Alampadi, Kasaragod, C Shefeeq (30) of Manjeri, Malappuram, Wasim Munvar Ali (35) of Pavangad, Kozhikode and Muhammad Shafeeq (28) of Vandoor, Malappuram.
Police said the gang succeeded to convince the investors that they would get 2 to 5% interest daily. It was only when some of the investors felt that they were being cheated as they got neither the interest nor the money they had invested.
The investigation started four months ago as Kannur police received a complaint from Muhammad Dishad, one of the investors, regarding the fraud, said the ACP.
The police have found that around Rs 40 crore have been deposited into the bank account of Muhammad Riyas, another Rs 32 crore in the bank account of Sheeq and Rs 7 crore each into the bank accounts of Wasim Munavar Ali and Muhammad Shafeeq. Police have taken steps to freeze the bank accounts of all these people.
“As of now, only four persons have been arrested. The investigation is going on and if there are more people involved in this fraud, the police would nab them all,” said Sadanandan.
A person named Noushad of Pookkottumpadam in Malappuram was arrested by the police in connection with another crypto-currency fraud sometime back. It is respectfully submitted that t he Kerala Police arrested four people from Kannur in connection with an investment fraud estimated at around Rs 100 crores, under the cover of cryptocurrency on Monday, November 8.The arrested have been identified as PM Mohammed Riyas (31), from Alampadi in Kasaragod, Wasim Munavvar Ali (35), from Pavangad near Kozhikode, C Shafeeq (30), from Manjeri in Malappuram, and Mohammed Shafeeq (28), from Wandoor in Malappuram.The Police said the accused were running the Ponzi scheme in the name of Bengaluru-based Long Reach Technologies and lured investments from people in several districts for five schemes, according to a report by The Times of India.
They promised them huge returns of between one per cent to five per cent each day.”They could not pay investors the promised returns or the money they had invested, and later, they offered investors a cryptocurrency called Morris coin. But that also turned out to be a case of cheating. Morris Coin was found to have no exchange listings, meaning it was not possible to exchange tokens after the lock-up period of the investment. Further, it was found that the company behind Morris Coin had no offices, and the ICO website offers no information about the founders, the developers, or the aims of the project.”A large number of people have lost their money through the scheme,” Kannur ACP PP Sadanandan told TOI, adding that the scheme run by the accused operated on a money chain model. When we checked the bank accounts of the four accused, we found that they had collected Rs.100 Crore from investors . Rs 40 crore was deposited in the first accused, Riyas’ bank account, while Rs 32 crore was deposited in the second accused’s account. The first accused had transferred the money to the account of a Malappuram native, and police had earlier frozen the account which had Rs 42 crore in it,” ACP Sadanandan was quoted as saying by the TOI. The investigation started into the case four months ago on a complaint filed by a Kannur native. In his complaint, he said he had been defrauded after being made to invest Rs 2.5 lakh in the scheme .The accused had been collecting investments since 2019.
In Bengaluru police have been investigating three companies — Long Reach Global, Long Reach Technologies and Morris Trading Solutions. According to the police, these companies collected at least INR 15K each from over 11 lakh people from across the country to invest in a new cryptocurrency called Morris coin. The police have also arrested a 36-year-old man from the Malappuram district of Kerala who is the CEO of all the three entities.
Reference:-
• How Four Men Pulled Off Rs 100 Crore Cryptocurrency Fraud In Kerala’s Kannur (indiatimes.com)
• Police uncover Rs 100 crore ‘crypto-currency’ fraud in Kerala’s Kannur; four persons arrested- The New Indian Express
• Police uncover Rs 100 crore ‘crypto-currency’ fraud in Kerala’s Kannur; four persons arrested – NewsDeal
(II). It is submitted that On September, Delhi Police was investigating an alleged crypto currency exchange scam, believed to have been operated by one Pluto Exchange, which marketed itself as a crypto currency investment firm and had its office in Connaught Place. One of the complainants was asked by one of Pluto Exchange’s founders to invest in a new crypto currency that the firm had supposedly launched. The complainant was assured that he would receive 20-30% returns on his investment.
After investing about INR 5 Lakh in the scheme but not receiving any payout, the complainant tried to approach the company’s officials, only to find that the exchange’s office had shifted from India to Dubai. In the preliminary investigation, it was found that 43 complainants had invested close to INR 2 Cr in the scheme.

Amit Bhardwaj Pulls Of $300 Mn Crypto Scam
Once a known industry leader who convinced investors about the potential of Bitcoin, the world’s leading cryptocurrency by market value, Bhardwaj, over 2017-18, convinced close to 8,000 investors to invest in a multi-level marketing scheme (MLM) or pyramid scheme, promising them 10% returns for 18 months on every investment. Being an MLM business, there were incentives for everyone provided they add more investors to the scheme. But as the pyramid gained in length, people soon realised that it was a ponzi scheme.
Having established a slew of crypto companies, namely AmazeMiners, GB Miners, GainBitcoin and CoinBank under the parent company Amaze Mining And Blockchain Research Ltd, registered in Hong Kong, Bhardwaj had a measure of credibility in the market. This was, also owing to the fact that he was a coder and had published a couple of books on cryptocurrency-related stuff. So people assumed that he knew what he was talking about. However, his caster face soon unraveled..
Divyesh Darji Of Bitconnect’s Extortion Racket
Darji, a Gujarat-based ‘teacher’, as once mentioned on his LinkedIn profile, was the Asia head of UK-based crypto company Bitconnect. Like Bhardwaj’s MLM scheme, Darji also promised huge returns to crypto investors. Bitconnect even launched its cryptocurrency called Bitconnect Coin. As earlier mentioned, altcoins or alternative cryptocurrencies are a known method of frauds by crypto scamsters.
Bitconnect was launched in India November-December 2016, just after demonetisation had been announced. The company was promoted on social media and by holding gala functions in cities across the world. Darji lured Indian investors with promises of 60% monthly interest and incentives in the form of ‘referral interest’, again very similar to Bhardwaj’s modus operandi.
However, complaints against Bitconnect and Darji started piling up with Gujarat Police in February 2018. Months later, Darji was arrested at the Delhi Airport. Further investigations revealed that Bitconnect in India was being used as a channel for funnelling money from extortion rackets. Darji is estimated to have duped investors of $12.7 Bn worth value in cryptocurrencies.
These crypto scams aren’t outliers but just the notable examples of crypto scams to have emerged from India. Founders of Indian crypto exchanges and industry stakeholders have repeatedly told that scams in the domain will continue to proliferate until the Indian government comes up with concrete regulations around cryptocurrencies and blockchain technology in India.
Reference
• From Fake Coins To Ponzi Schemes: India’s Crypto Scams In Limelight (inc42.com).
(III) It is submitted that the CCB officials on Sunday unearthed a cryptocurrency scam through chain link and arrested the three persons running the racket.
The accused, Raghavendra, Nagaraju and Shivamurthy, floated FOMOEX, a company offering investment in cryptocurrency with huge returns on every investment made. The accused also held conferences in hotels to explain the business models and claimed to have branches in the U.S., Singapore, and China. They offered huge returns to those who could get more investors on chain link business modules. Hundreds of people had invested in the scheme. The accused had earlier floated a firm, ESPN Global Company, and duped many, a police officer said. They have been taken into custody for further investigation.
• Reference
• www.thehindu.com/news/cities/bangalore/cryptocurrency-scam-3-held/article37374709.ece
(IV) The court also said that as a large number of innocent investors had been duped of their hard-earned money, it was not considered appropriate to release the accuse
The Delhi High Court (HC) on dismissed the bail petition of a man accused in cryptocurrency racket stating that the economic offences corrode the fabric of democracy and are committed with total disregard to the rights and interests of the nation.
The court also said that as a large number of innocent investors had been duped of their hard-earned money, it was not considered appropriate to release the accused. The court was hearing the bail application of one Umesh Verma who was arrested in January this year for allegedly heading a racket that had swindled at least Rs 2.5 crore from some 45 people under the garb of being a cryptocurrency promoter. The 60-year-old was arrested by the Economic Offences Wing of Delhi police on arrival from Dubai where he had fled in 2018, setting up a new business altogether, after having defrauded people in India.
• Reference
• Cryptocurrency scam accused to remain in jail- The New Indian Express
Crypto scammers steal over Rs 3.7 crore in cryptocurrency by using Google Ads to fool people. Scammers are using Google Ads to fool people into opening trick websites and stealing their cryptocurrency holdings. A new report by Check Point Research (CPR) sounds the alarm against such ads, highlighting that hundreds of thousands of dollars worth of cryptocurrency has been taken from victims within this past weekend.
CPR shares screenshots of such ads being run on Google search. It mentions that the Google Ads by scammers redirect people to phishing websites that imitate popular crypto wallets. The bogus website then attempts to trick visitors into sharing their wallet passphrase and private key. Once the scammers get the credentials, they siphon off the holdings in that particular crypto wallet.
As per CPR, multiple scamming groups are involved in the practice. It states that the scammers bid for cryptocurrency wallet-related keywords on Google Ads. This allows them to make their fake website appear right on top of the Google search results for those terms. The “Ads” marker is there for distinction but many users can easily be fooled into clicking on the wrong link for the website.
• Reference
• Crypto scammers steal over Rs 3.7 crore in cryptocurrency by using Google Ads to fool people (msn.com)
Another big fraud of digital currencies happened in India recently. Vivek Bhardwaj and Amit were accused of theft of approximately $300 million USD. Two thousand investors invested this money. The figures are just estimations because original databases were destroyed by the accused.
The Bhardwaj brothers founded Gain Bitcoin and stole the invested money. Many agents were involved in this fraud, and they received a high percentage of commission. The company is also accused of purportedly owning a gold mine in Africa. However, Amit admitted to returning the amount to the investors, but it was not allowed by the police.

The stolen money was not only invested in Gain Bitcoin, but Shell Company was also involved in fraud. Sanchit, the owner of the Shell Company is in police custody. Five more people were involved in this fraud. Police will arrest them soon.
India is facing many scams related to crypto-currencies from the past year. The Indian government is making more laws and rules to control this situation. Most of the stolen digital currency is Bitcoin, and their number is undefined because of destroyed databases by the culprits. Indian cybercrime department should be given the training to solve such issues and to do the proper investigation.
Recently Indian police have failed to get information, and it could not recover destroyed data due to lack of knowledge. Gain Bitcoins, GB Miner, and GB 21 destroyed their databases when investors started complaining about the withdrawals. However Indian police are gathering data from emails that showed the investments were made to Bhardwaj`s company. Police are trying to recover the databases. Amit Bhardwaj and his allies will be arrested soon.
• Reference:-
• Cryptocurrency Scam in India, a Blow to Crypto World | Cryptopolitan
Srikrishna Ramesh revealed more details about how he attacked different cryptocurrency platforms. He used encrypted data to demand payment in advance from the owners to unblock the sites and attack them. He also commented that he hacked government portals such as Karnataka and many other bitcoin platforms.
For that year, Srikrishna Ramesh stole over 120,000 Bitcoins, which was $72 million from the Bitfinex platform. On August 2, 2016, the hackers breached the security system of various platforms. He made over 2,070 transactions, and none were authorized by the owners, thus affecting the platforms.
After this unpleasant event, Bitfinex platform released a statement about the hack. The platform restructured its security measures so that it would not happen again. The company also announced that it would be offering a 5 percent reward if someone gave some information about what happened.

New accusations about the Bitcoin scam come to light, which is why the government has reopened the case. The police arrested Srikrishna since he was also involved in selling drugs on the dark web. A young man with a lot of knowledge about technology, computers, and hacking.
• New information released about Srikrishna’s Bitcoin scam

Srikrishna Ramesh was arrested for being responsible for drug sales on the dark web.

• Ramesh used encrypted data to perform Bitcoin scams.

It is almost a year since the police arrested Srikrishna Ramesh, aka “Sriki,” a Bengaluru-born hacker. Today begins the new investigation into the attacks on one of the most important crypto platforms in the country. In 2016, Bitfinex got caught up in one of the biggest Bitcoin scam
• Police effort on the Bitcoin scam.

The police in 2020 also announced that they intercepted Srikrishna Ramesh’s 9 crores. But when the police presented evidence in court against Srikrishna, the charge sheet did not mention Bitcoin. The investigators and the CCB police created a Bitcoin account to transfer them and then present it as evidence to the court.
In January 2021, Srikrishna Ramesh was released by the CCB on bail while investigators found more evidence about the Bitcoin Scam. Again on Monday, he was arrested for drug use and is currently under more investigation.

• Reference:-

• Bitcoin scam: Police open new investigation into Srikrishna Ramesh | Cryptopolitan

16. It humbly submitted that from the above references both the country and the citizens in the country are facing lots of troubles due to illegal trading in crypto-currency. Hence government should take appropriate steps to stop the advertisement in the media throughout the country until the crypto-currency government makes proper rules and regulations.
17. I submit that I have not filed any other similar writ petition for identical relief and no such writ petitions are pending.
18. I therefore most humbly prayed that this Hon’ble Court may be pleased to pass an Order or Direction or Writ more particularly in the nature of Writ of Mandamus by directing the respondents to stop and ban the advertisements related to crypto-currency trading in all kind of media such as Digital Media, Visual Media, Social Media, Press, Radio and audio media by considering my representation dated 28.10.2021 as expeditiously as possible within the time stipulated prescribed by this Hon’ble Court and pass such any or other orders as this Hon’ble Court may deem fit and proper in the circumstances of the case and thus render justice.

Solemnly affirmed before me BEFORE ME
and signed his name in my
presence at Chennai
on the at day of October, 2021. ADVOCATE CHENNAI

IN THE HIGH COURT OF JUDICATURE AT MADRAS
(SPECIAL ORIGINAL JURISDICTION)
W.P.No. of 2021

AYYAA
…Petitioner Vs.

1. The Finance Secretary
2. The Cabimet Secretary
3. Broadcasting and
information Technology
….Respondent

AFFIDAVIT

SWARNAM J RAJAGOPALAN
M/s.1026/2009
S.LAKSHMIKANTH
M/s.1086/2009
P.SAMUEL GUNASINGH
M/s.987/2009
M.DINESH
M/s.1342/2016
R.L.DHILIPAN PANDIAN
M/s.2386/2017
S.SURYA
M/s.2262/2019
S.SATHEESH
M/s.2824/2019
COUNSEL FOR PETITIONERS
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