Cryptocurrency Cannot Be Used As Shield Against Criminal Liability For Fraud: Orissa HC [Read Judgment]

Orissa: The Orissa High Court has dismissed petitions filed by accused persons seeking to quash criminal proceedings against them in a cryptocurrency investment fraud case, holding that even a legally permissible business activity may attract criminal liability if it is employed as a cloak for fraudulent conduct, and that technological complexity cannot become a shield against criminal accountability.

Justice Dr. Sanjeeb K. Panigrahi pronounced the judgment on May 15, 2026, in CRLMC No. 5199 of 2025 along with connected matters, rejecting the petitioners’ contention that they were merely agents promoting cryptocurrency investments and that investors had knowingly assumed market risks.

On November 26, 2024, a written complaint was lodged at Jhirpani Police Station, Rourkela, alleging that the petitioners had fraudulently withdrawn Rs. 13,540 from the bank account of the complainant by creating an account named MVC (My Victory Club) on July 28, 2023. The FIR alleged that the petitioners had created a fake entity called Digi Mudra Pvt. Ltd. and that money was being deposited through their Google Pay and PhonePe numbers.

The petitioners were booked for offences under Sections 419, 420, 465, 467, 471, 120B and 34 of the IPC and Sections 66C and 66D of the Information Technology (Amendment) Act, 2008. A chargesheet was filed following investigation. The petitioners approached the High Court seeking quashing of the proceedings under Section 528 of the Bharatiya Nagarik Suraksha Sanhita.

Counsel for the petitioners submitted that they were merely agents of the company engaged in promotion of cryptocurrency as per the directions of their superior authorities, and that investors were aware of the market risks. It was argued that losses suffered were attributable to the volatility of the market and to the policies of the company officials, and that the petitioners’ role was limited to promotion of cryptocurrency investment.

The petitioners further argued that cryptocurrency, having been recognized as a virtual digital asset, cannot be the basis for criminal prosecution, placing reliance on the Supreme Court’s judgment in Internet Mobile Association of India v. Reserve Bank of India, AIR 2021 SC 2720. They also relied on the Madras High Court’s decision in Rhutikumari v. Zanmai Labs Pvt. Ltd. and the Bombay High Court’s decision in Zanmai Labs Pvt. Ltd. v. Bitcipher Labs LLP. It was submitted that dishonest intention at the time of inducement is the sine qua non to attract offences under Sections 415 and 420 of the IPC, and in the absence of such intention, the proceedings deserved to be quashed.

Counsel for the State opposed the petitions, submitting that the power to quash under Section 528 of the BNSS is extraordinary and must be exercised sparingly. She contended that the petitioners were active participants in a well-orchestrated financial fraud — they floated a fake company called Digi Mudra Connect Pvt. Ltd., created a non-existent digital coin named SIITO, made false promises of its listing on major cryptocurrency exchanges including BINANCE, and induced investors to deposit money. The State submitted that more than Rs. 5 crore had been collected from multiple districts and that Umesh Kumar Ramani had earned a commission of Rs. 1.5 crore and had acquired assets directly linked to the misappropriated funds. The victims, from economically disadvantaged communities, had been kept in the hope of getting double returns.

The court held that at the stage of quashing, it was not expected to weigh the sufficiency of evidence for conviction; rather, the inquiry was confined to examining whether the allegations, taken at face value and accepted in their entirety, prima facie disclose the essential ingredients of the alleged offences.

The court accepted the proposition that not every failed commercial transaction constitutes cheating, and that criminal law cannot be permitted to degenerate into a coercive instrument for enforcement of purely civil claims. However, it held that the distinction between a civil wrong and a criminal offence lies not in the nature of the transaction alone but in the intention that animates it. A transaction ostensibly commercial in appearance may nevertheless assume criminal colour if the representation inducing it was tainted with deception from its inception.

The court held that the present case prima facie travelled substantially beyond the realm of a mere failed investment venture. The allegations disclosed deliberate and systematic inducement, projection of false representations, creation of fictitious entities, circulation of assurances regarding unrealistic and exorbitant returns, and collection of funds through digital payment channels linked with the petitioners. The prosecution alleged that a fake entity was floated, a non-existent digital coin was propagated, and assurances were extended regarding its proposed listing on internationally recognised cryptocurrency exchanges. Such allegations, if substantiated, would unmistakably transcend civil liability and enter the province of criminal culpability founded upon deceit and dishonest inducement.

On the question of cryptocurrency, the court held that the legality or permissibility of cryptocurrency transactions in the abstract was not the crucial issue. The allegations concerned the use of the facade of cryptocurrency trading as an instrumentality for perpetrating deception. Even a legally permissible business activity may attract criminal liability if employed as a cloak for fraudulent conduct. “The law does not extend immunity to deceit merely because the medium through which such deceit is practised is not itself prohibited. In order to hold otherwise would amount to elevating the form over substance and permitting technological complexity to become a shield against criminal accountability,” the court held.

The court further held that economic offences stand on a distinct footing and must be viewed with greater seriousness, as they corrode public confidence in the integrity of financial systems and undermine collective faith in commercial dealings. Courts exercising inherent jurisdiction are expected to adopt greater circumspection before interdicting prosecutions involving allegations of large-scale financial deception at the threshold itself.

Regarding the petitioners’ defence that they were merely subordinate agents acting under instructions, the court held that this raised disputed questions of fact incapable of adjudication within the narrow confines of Section 528 of the BNSS. Whether the petitioners acted innocently, were passive intermediaries, or were active participants in the alleged conspiracy, were all matters dependent upon appreciation of evidence and requiring examination of financial transactions, electronic records and witness testimonies, which could only be undertaken during trial.

The court dismissed the petitions, holding that the allegations prima facie disclosed the commission of cognizable offences necessitating adjudication upon evidence and that the prosecution could not be characterised as manifestly frivolous, inherently absurd, or legally untenable so as to justify judicial interdiction.

Case Details

• Case Title: Umesh Kumar Ramani and Another v. State of Odisha and Another
• Case Numbers: CRLMC No. 5199 of 2025 with connected CRLMC Nos. 5449 of 2025, 5476 of 2025 and 153 of 2026
• Court: High Court of Orissa at Cuttack
• Judge: Dr. Justice Sanjeeb K. Panigrahi
• Dates of Hearing: March 20, 2026 and May 12, 2026
• Date of Judgment: May 15, 2026
• Petitioners’ Advocate: Mr. Soumya Ranjan Das
• State’s Advocate: Ms. Sarita Moharana, Additional Standing Counsel

[Read Judgment]