Central Crime Branch officials raided an ATM kiosk run by cryptocurrency exchange Unocoin in a mall in Bangalore, reports the Bangalore Mirror. The police said the kiosk was installed and operating without any license. Harish BV, co-founder and chief financial and compliance Officer, was also arrested and Rs 1.7 lakh in cash, 2 laptops, 5 debit cards, a passport and other documents were seized from him. According to a Times of India report, Harish BV has been sent to police custody for 7 days, and more arrests are likely to follow.
MediaNama has reached out to Unocoin, and will update this when we hear from them.
Additional Commissioner of Police (Crime) of Bangalore police Alok Kumar told Bangalore Mirror that Unocoin did not have license from RBI, SEBI or any other agency to carry out the cryptocurrency transactions. Additionally, he said the firm did not have a license from the Bangalore municipal corporation BBMP (Bruhat Bengaluru Mahanagara Palike) to run the kiosk.
A case of cheating was filed, and charges under the IT Act were also pressed against Harish BV.
Unocoin’s ATM kiosk
Unocoin launched its ATM kiosk in a Bangalore mall last week. The ATM accepted cash deposits from KYC verified customers into their Unocoin accounts by entering a User ID and an OTP. The amount could then be used to buy bitcoin and ethereum, the two cryptocurrencies Unocoin deals in. The kiosk also allowed withdrawals in cash from sale of their cryptocurrencies, via a reference number for withrawal of a specified amount, followed by an OTP.
Unocoin introduces its first ATM at Bangalore. These machines can be used by our KYC verified customers for deposit INR to, and withdraw INR from their Unocoin or Unodax account https://t.co/ETcqzcGpPj pic.twitter.com/5kDTCmlqJn
— Unocoin (@Unocoin) October 15, 2018
The ATM kiosk reportedly went live on Monday.
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
The kiosk effectively allowed users to trade in bitcoin, circumventing an RBI order which banned banks from providing any services to businesses dealing with virtual currencies. The RBI order scuttled the ability of crypto-exchanges to buy and sell cryptocurrencies since their bank services were cut off, almost overnight.
Unocoin had planned to launch similar kiosks in Mumbai and Delhi in “a couple of weeks.” It is unclear if it will proceed with the kiosks now.
Crackdown on cryptocurrencies
The RBI order came in in April after which crypto-exchanges in the country temporarily stalled operations. Crypto-exchanges Zebpay and Unocoin suspended (see 1 and 2) operations related to sale and purchase of cryptocurrencies such as Bitcoin. In July, the Supreme Court refused to grant an interim stay on the RBI order, after a hearing a batch of petitions challenging the circular. The SC order was the last nail in the coffin: Zebpay shut down all operations related to cryptoassets earlier this month.
The RBI reasoned that cryptocurrencies “raise concerns of consumer protection, market integrity and money laundering, among others.” Both the Finance Ministry and the Finance Minister Arun Jaitley have expressed that cryptocurrencies are illegal tender on separate occasions. The Income Tax department has also had its eyes on cryptoexchanges and has scrutinized their operations.