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

Mr. Sameer, a resident of Nagpur, entered into a verbal agreement with his close friend, Mr. Rohan. The deal was straightforward: Sameer would transfer 2,000 USDT (a type of cryptocurrency) to Rohan’s digital wallet, and in return, Rohan would immediately transfer the equivalent value in Indian Rupees (INR) to Sameer’s bank account. Trusting his friend, Sameer completed the crypto transfer. However, it has been over a month, and Rohan has not paid the promised amount. He has started making excuses and is now avoiding Sameer’s calls entirely. Sameer has all the digital proof of the transaction, including chat logs and the blockchain transaction ID, and is now wondering what legal recourse he has.

Advice in such cases 💡

When a friendly deal involving cryptocurrency turns sour, it can be distressing. However, from a legal standpoint, this is not just a friendly misunderstanding; it constitutes a clear breach of a verbal contract. Furthermore, if there was a dishonest intention from the beginning, it could amount to a criminal offense like cheating or criminal breach of trust. The first formal step should always be to send a legal notice through a lawyer, as this often prompts the other party to settle the matter without lengthy court proceedings.

Applicable Sections of Law ⚖️

In such a scenario, both civil and criminal remedies are available under Indian law. It’s crucial to understand which laws apply, especially with the implementation of new legislation:

• Criminal Law: The actions of the friend could fall under the purview of the Bharatiya Nyaya Sanhita, 2023 (BNS).
  • Section 316 of BNS (Criminal Breach of Trust): This applies if the friend was entrusted with the cryptocurrency with a clear direction to provide INR in return and dishonestly misappropriated it.
  • Section 318 of BNS (Cheating): This applies if the friend had a dishonest intention to deceive from the very beginning of the deal, inducing you to transfer the crypto.
• Civil Law: A civil case can be filed for the recovery of the money owed.
  • Indian Contract Act, 1872: A verbal agreement, when supported by actions (like the crypto transfer) and evidence (like chats), is a valid and enforceable contract. The failure to pay is a breach of this contract.
  • Code of Civil Procedure, 1908: A suit for recovery of money can be filed in the appropriate civil court based on the breach of contract.

If you are the complainant 👨‍⚖️

If you are the one who has been wronged, you are the complainant. You need to act systematically to build a strong case.

• Gather All Evidence: Compile every piece of evidence you have. This includes chat screenshots (WhatsApp, Telegram), the blockchain transaction ID (TxID), wallet addresses, and your bank statements showing that the promised INR was never credited.
• Send a Legal Notice: Hire a lawyer to draft and send a formal legal notice to the defaulter. The notice should clearly state the facts of the case, the amount owed, and a deadline (usually 15 days) for payment, failing which you will initiate legal proceedings.
• File a Complaint: If the legal notice is ignored, you can proceed with legal action. You can either file a criminal complaint with the police or file a private complaint before a Magistrate under Section 175 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). Simultaneously, you can also file a civil suit for the recovery of your money.

If you are the victim 😟

As a victim of such a fraud, it’s important to act swiftly and not feel helpless. Secure all your digital evidence immediately by taking screenshots and backing up chats, as the other party might delete them. Document every communication that happens after the default. Do not engage in threats or illegal means to recover your money, as this could weaken your legal position. Approach a legal expert to understand your rights and the best course of action tailored to your specific situation.

How the police behave in such cases 👮

Police response to crypto-related financial disputes can be mixed. Some police stations may be hesitant to register a First Information Report (FIR), viewing the matter as a civil dispute (a simple failure to pay). They might need to be convinced that the elements of a criminal offense like cheating or criminal breach of trust are present. It is advisable to have a lawyer accompany you or to submit a well-drafted written complaint that clearly outlines the criminal aspect of the case. In many cities, the Cyber Crime Cell is better equipped to handle such cases and may be the appropriate authority to approach.

FAQs people normally have 🤔

• Are cryptocurrency transactions legal for filing a case in India?
  While cryptocurrency is not legal tender in India, holding and trading it is not illegal. The transaction you made was part of a contract. The failure to uphold that contract is the legal issue, and it is fully actionable under Indian law.
• Is a verbal agreement made with a friend legally binding?
  Yes, under the Indian Contract Act, 1872, a verbal agreement is as valid as a written one, provided its terms can be established through evidence like conduct, chat messages, transaction records, or witnesses.
• Where can I file the case?
  You can typically file a criminal complaint or a civil suit in the jurisdiction where the transaction took place (where you sent the crypto from), where the money was supposed to be received, or where the accused resides.

What evidence is required? 📄

To build a strong case, the following evidence is crucial:

• Screenshots of all chat conversations where the deal was discussed and agreed upon.
• The unique blockchain transaction ID (TxID) which serves as irrefutable proof of the crypto transfer.
• The public wallet addresses of both the sender and the receiver.
• Your bank account statements for the period showing that the corresponding INR amount was never credited.
• Call logs or recordings if the deal was discussed over the phone.
• Details of any third person who was aware of or witnessed the agreement.

How long will the investigation take? ⏳

The duration of legal proceedings varies significantly. A police investigation and subsequent criminal trial can take several months to years, depending on the complexity and cooperation from the accused. A civil suit for the recovery of money is generally a longer process and can take a few years to reach a final judgment. Sending a legal notice is often the fastest way to achieve a resolution, as it may lead to a settlement.

Advocate Sudhir Rao, Supreme Court of India