A week after virtual currency exchange company Unocoin installed India’s first Bitcoin ATM in Bengaluru's Kempfort Mall amid much fanfare, the Cyber Crime Police in Bengaluru has registered a case against Unocoin for setting up the ATM without permission and have also arrested the company's co-founder Harish BN (37).
The ATM was set up despite the Reserve Bank of India's crackdown on cryptocurrency in India.
In a statement to the media, the Cyber Crime department of the Central Crime Branch (CCB) stated, “The ATM kiosk installed by Unocoin in Bengaluru's Kempfort Mall has not taken any permission from the state government and is dealing in cryptocurrency outside the remit of the law."
The police also arrested Harish and seized several gadgets and Rs 1.79 lakh in cash from him. The materials seized included two laptops, one mobile, three credit cards, five debit cards, one passport, five company seals and one cryptocurrency device. Harish was produced in the 1st ACMM Court in Bengaluru before he was taken into police custody.
Installed by virtual currency exchange company Unocoin, the ATM in Kempfort Mall allowed customers to deposit and withdraw a minimum amount of Rs 1,000.
It was touted as India's first bitcoin ATM and was installed circumventing RBI regulations against bitcoin transaction. The RBI had ruled earlier this year in a notification – ‘Prohibition on Dealing in Virtual Currencies’ – that financial institutions associated with the RBI are not permitted to deal in cryptocurrency. The central bank had also stated that cryptocurrency is not legal tender.
Unocoin believed that it had complied with RBI rules and claimed in a statement that it is merely attempting to accommodate “newer mechanisms and solutions to reduce the hurdle facing (regulatory) hurdles by the present central governments stand.” Users of the erstwhile ATM could withdraw and deposit bitcoins but could not buy or sell them.
The ATM was not yet operational and was also moved from Bengaluru's Kempfort Mall to another location after several reports emerged in the media both criticising and hailing the installation of the ATM. Unocoin was planning to install similar ATMs in Mumbai and Delhi.
Our Machine didn't go well with few mainstream media reports who projected it under a negative light. The machine is still under final testing mode and it will be up and running in the upcoming week. The machine has been temporarily moved from its original place of installation.
— Unocoin (@Unocoin) October 20, 2018