If you are stuck in such a situation, here is what to do.

Mr. Kumar recently engaged in a peer-to-peer (P2P) transaction on a cryptocurrency platform called “DigitalTrade Hub.” He sold a small amount of cryptocurrency and received Rs. 2,150 in his “Secure Digital Bank” account. About two weeks later, he received a notification from his bank stating that his account had been frozen. The reason cited was a fraud complaint filed in Gujarat, linking his account to an illicit transaction. Mr. Kumar was contacted by a cybercrime officer from Gujarat who advised him to return the Rs. 2,150 to the complainant, a Ms. Singh, to get the matter resolved and his account unblocked. Ms. Singh also contacted him, echoing the officer’s suggestion. Mr. Kumar is now in a dilemma, unsure whether returning the money is the correct and safe course of action.

Advice in such cases

If your bank account is frozen under similar circumstances, it is crucial to act cautiously and strategically. Here are the immediate steps you should consider:

• Do not immediately transfer the money back to the complainant. Doing so could be interpreted as an admission of guilt, and there is no guarantee that your account will be unblocked or that you won’t face further legal action.
• Gather all evidence related to the transaction. This includes screenshots of the P2P trade confirmation on the crypto platform, your bank statement showing the credit, and any communication you had with the buyer on the platform.
• Communicate with the investigating officer formally. Request a copy of the official notice or FIR that led to your account being frozen. All communication should ideally be in writing (e.g., via email) to maintain a record.
• Consult with a Lawyer: The very basic and important step to start is to talk to a Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in the range of Rs. 10,000 to 50,000 depending on the case. He is helping you in this situation to come out. He is an expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

These cases often involve a complex interplay of different laws. The person who lost the money is a victim of a scam, and you, the P2P seller, have become an unwitting part of the money trail. Key legal provisions include:

• Bharatiya Nyaya Sanhita (BNS), 2023: Provisions related to cheating (Section 318) and criminal misappropriation may be invoked by the police.
• Information Technology Act, 2000: Section 66D (cheating by personation using a computer resource) is highly relevant, as the original scammer likely impersonated someone or used fraudulent means to trick the complainant into sending money.
• Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023: The police have the power to freeze bank accounts under Section 104 of the BNSS if the funds are suspected to be proceeds of a crime.

If you are the complainant

If you are the one who has been defrauded and your money has been transferred to an unknown account:

• Immediately report the incident to the National Cyber Crime Reporting Portal (www.cybercrime.gov.in) or by calling the helpline number 1930. Time is critical.
• File a formal police complaint or FIR at the nearest cyber police station, providing all details of the fraudulent transaction.
• Provide the police with all evidence, such as transaction IDs, screenshots of messages from the scammer, and bank statements.
• Cooperate fully with the investigation to help them trace the money and identify the culprits.
• Consult with a Lawyer: The very basic and important step to start is to talk to a Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in the range of Rs. 10,000 to 50,000 depending on the case. He is helping you in this situation to come out. He is an expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

If you are the P2P seller whose account has been frozen without any fault of your own:

• Do not panic. Understand that you are likely a victim of a third-party fraud where a scammer used your bank account to launder money.
• Do not return any money to the complainant without a formal order from a court or a clear, written settlement facilitated by the police and your lawyer.
• Draft a detailed representation explaining your side of the story. Attach all your evidence proving the legitimacy of your P2P transaction and submit it to the investigating officer and the bank.
• Consult with a Lawyer: The very basic and important step to start is to talk to a Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in the range of Rs. 10,000 to 50,000 depending on the case. He is helping you in this situation to come out. He is an expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think. Your lawyer can file an application or a writ petition before the appropriate court to challenge the freezing of your account and seek its de-freezing.

How the police behave in such cases

The police are often under pressure to show results and recover stolen funds. In many cyber fraud cases, the money trail involves multiple accounts in a practice known as “mule accounts.” The police trace the money to the final recipient, which in P2P cases is often the unsuspecting crypto seller. Their primary approach is often to pressure this last person in the chain to return the money to the original complainant. This is seen as the quickest way to resolve the complaint, even if it doesn’t catch the actual scammer. They use their power under Section 104 of the BNSS to freeze the account to compel cooperation.

FAQs people normally have

What evidence is required?

To prove your innocence, you need to provide clear and comprehensive evidence of your legitimate transaction. This includes:

• The trade advertisement and confirmation page from the crypto exchange.
• Screenshots of the P2P transaction details, including the buyer’s username and the transaction time.
• Your bank statement showing the exact amount credited from an account that you believed belonged to the P2P buyer.
• Your KYC (Know Your Customer) documents submitted to both the bank and the crypto exchange, proving your identity.
• Any communication from the bank or police regarding the account freeze.

How long will the investigation take?

The duration of the investigation and the time your account remains frozen can vary widely. It can range from a few weeks to many months. The timeline depends on factors like the investigating officer’s efficiency, the workload of the cyber cell, and the cooperation of banks and crypto exchanges in providing information. Engaging a lawyer can often help expedite the process by filing the necessary legal applications to get the account de-frozen and presenting your case effectively to the authorities.

Advocate Sudhir Rao, Supreme Court of India