Police in India’s Bengaluru city have reportedly arrested UnoCoin co-founder Harish BV, 37, for the illegal installation and operation of a Bitcoin ATM, just days after the device was installed.
Unocoin installed the ATM kiosk last week, and observers believed the move was aimed at bypassing Reserve Bank of India’s ban that prohibits banks from transacting with crypto-related firms and businesses.
The Bitcoin and crypto ATM would have allowed users to deposit and withdraw the local fiat currency at a minimum of 1,000 rupees.
The News Minutes, a local news outlet, quoted Bengaluru’s Cyber Crime Police unit as saying that the Unocoin founder is accused of installing and operating the ATM without the express permission of the state’s government.
The police statement read in part:
“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.”
During the arrest, law enforcement agents seized several items, including a teller machine, two laptops, a mobile phone, and three credit cards. The authorities also confiscated his passport as well as cash amounting to Rs 1.8 lakh (about $2,400).
According to local media, Harish appeared before the 1st Additional Chief Metropolitan Magistrate (ACMM) Court in Bengaluru on the same day, before being taken into police custody. The police have also said that more arrests will follow.
Bitcoin not illegal in India
The Unocoin ATM was India’s first and seen as an avenue for enthusiasts to continue transacting despite the RBI ban. The central bank also declared that bitcoin and other digital currencies could not be considered as legal tender, but did not deem it illegal to own.
Unocoin co-founder Sathvik Viswanath condemned the arrest of Harish, saying that buying, selling, or holding Bitcoin is legal in India.
He added that the RBI ban only related to banks and other financial institutions and that “the legal status of Bitcoin or other cryptocurrencies in India remain unchanged.”
According to him, the arrest is nothing more than hinged on the Reserve Bank’s earlier stance on the risks of investing in crypto. He also believes the law enforcement agents’ actions could be due to the recent “negative” portrayal of the ATM in the country’s mainstream media.
Prior to the arrest, Unocoin tweeted that their machine was not fully operational as it was undergoing “final testing.” The firm also said that the adverse reporting had forced it to temporarily move the ATM from Bengaluru’s Kempfort Mall to a different location.
The bitcoin ATMs were said to comply with Know-Your-Customer (KYC) requirements and only users with verified accounts could deposit and withdraw. The company had plans to install more crypto teller machines in the cities of Mumbai and Delhi.
The Unocoin arrest and confiscations reflect the tough situation facing India’s cryptocurrency space, even as the country continues to have one of the most active communities on LocalBitcoins.
However, RBI’s ban means that exchanges are the most hit, with one of the country’s top platforms Zebpay forced to shut down.
The ATM issue in India contrasts with what is happening in Latin America, especially in Argentina where several Bitcoin automated teller machines are set to be installed.