Lien on Bank Account from P2P Crypto Trade — How to Get the Freeze Lifted

One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.

Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.

TL;DR: A police lien on your bank account after a P2P crypto transaction is an investigative freeze under Section 106 BNSS, not a final seizure. You can challenge it before the jurisdictional Magistrate by showing the transaction was legitimate and you had no knowledge of any underlying offence. Quick documentation and a well-drafted application often get the freeze lifted within weeks.

Ravi Kumar, a software professional from Pune, checked his Bank of Baroda app on the morning of 15 August 2025. His salary account showed a debit hold. The message from the bank was brief: a lien of ₹80,000 had been marked on the orders of the Belagavi City Police, Karnataka. The amount matched exactly a P2P trade he had completed on Binance on 5 October 2024 — he had sold USDT to a buyer and received ₹80,000 in his bank account. He had never faced anything like this before. He immediately sent an email to the police station with screenshots of the Binance transaction, the buyer’s ID, and the bank credit entry. No response. Ten days passed. The bank kept saying the freeze would remain until the police gave a written release order. Ravi’s EMIs and rent were due. That’s when he approached the Chamber of Advocate Sudhir Rao. Advocate Sudhir Rao’s office first identified the exact FIR and the investigating officer through a Right to Information query and direct communication with the police station. It turned out the buyer in the P2P trade was being investigated for a cyber fraud where cheated funds had been routed through multiple accounts, including Ravi’s. Ravi had no clue. Advocate Sudhir Rao and his office moved an application under Section 106 BNSS before the Magistrate in Belagavi, arguing the lien was disproportionate — Ravi was a bonafide seller of crypto, not an accomplice. The application was backed by a detailed statement, the Binance trade ID, the blockchain transaction hash, and the bank statement showing the credit. Within three weeks, the court directed the police to lift the lien, and the account was fully restored. The specialised handling of the procedural steps under BNSS made a decisive difference.

Key Facts of the Case

• The account holder received ₹80,000 from a P2P USDT sale on Binance in October 2024.
• The buyer in that trade later became an accused in a cyber fraud FIR registered in Belagavi district, Karnataka.
• The police, during investigation, placed a lien on the seller’s bank account under Section 106 BNSS (criminal investigation powers).
• The account holder had no prior knowledge of the buyer’s alleged fraud and had conducted a straightforward crypto sale.
• He had preserved full proof of the trade — transaction ID, blockchain hash, chat logs on Binance, and bank statement.
• Initial emails to the police station yielded no reply, and the bank refused to lift the lien without police approval.
• The lien was challenged before the Magistrate under the statutory procedure, resulting in a direction to release the frozen amount.

The Direct Legal Answer

A police lien on your bank account under Section 106 BNSS is an investigatory freeze — it does not mean the money is permanently gone. The police can attach suspected proceeds of crime during investigation. But if you can demonstrate you are a bonafide recipient who had no role in the offence, the Magistrate can order the freeze to be released. The key is to file a representation or an application before the jurisdictional Magistrate, annexing all transaction proofs and explaining your lack of mens rea. If the police refuse to act, you can then escalate to the High Court under Section 528 BNSS, though the Magistrate route usually resolves it faster.

Advice in Such Cases

Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is 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.

Never ignore a lien notice. Time is critical. Collect every evidence immediately — screenshots of the trade, all chats, the bank credit entry, and any communication with the buyer. Do not delete anything.

File a formal application to the investigating officer with all proofs and mark a copy to the Superintendent of Police. If that yields no result within a week, move the Magistrate without delay. This type of matter requires an advocate familiar with the procedural interplay between Section 106 BNSS, the criminal investigation manual, and the cyber cell SOPs. General practitioners often miss the specific timelines and the right drafting needed to convince the court that the freeze is unwarranted.

Applicable Sections of Law

• Section 106 BNSS: Empowers police to seize or freeze property suspected to be involved in the commission of an offence during investigation.
• Section 528 BNSS: Inherent powers of the High Court to quash proceedings or pass orders to secure the ends of justice — can be invoked if the Magistrate’s order is unreasonable.
• Section 318 BNS: If the underlying FIR is for cheating, this section prescribes the punishment.
• Article 226, Constitution of India: Writ jurisdiction of the High Court for violation of fundamental rights — a direct remedy if the freeze is arbitrary and no FIR links you to the crime.

Punishment and Penalties

For the predicate offence of cheating under Section 318 BNS, the punishment is imprisonment up to three years, or a fine, or both. The offence is non-cognizable (the police cannot arrest without a warrant) but can become cognizable if coupled with criminal conspiracy or forgery. It is bailable and compoundable with the permission of the court. The lien itself is not a punishment — it is a provisional measure during investigation. If, however, you are later found guilty of the offence, the frozen amount could be forfeited as part of the sentence.

Jurisdiction — Where to File the Case

The Magistrate having territorial jurisdiction over the area where the police station that registered the FIR is located — here, Belagavi district — is the right forum to challenge the lien or to seek release of the account. For a High Court writ petition under Article 226, you can approach the Karnataka High Court (Dharwad Bench if the cause of action is in Belagavi). If your own residence is in another state, you can still file the application through a local advocate on record. Pecuniary limits do not restrict criminal proceedings, but the value of the frozen amount can influence the court’s approach.

What if Police Refuse to File FIR?

This situation is different — here the police already have an FIR, and you are the person affected by the investigation. If the police refuse to accept your representation to lift the lien, you can:

• Send a formal complaint to the Superintendent of Police of the district under Section 173(4) BNSS, highlighting the inaction and the bonafide nature of the transaction.
• File a petition before the Magistrate under Section 175(3) BNSS read with Section 106, seeking a direction to the police to release the account.
• If the Magistrate dismisses the application, approach the High Court under Article 226 or Section 528 BNSS.

Rights of the Accused

Even if you are not formally an accused yet, the freeze suggests you are under investigation. Know your rights:

• Right to remain silent and against self-incrimination under Article 20(3) of the Constitution.
• Right to be represented by a lawyer of your choice and to be present during any questioning.
• Right to be produced before a Magistrate within 24 hours if arrested.
• Right to obtain a copy of the FIR and to know the grounds of the investigation against you.
• Right to seek anticipatory bail if there is apprehension of arrest.

Bail Provisions

The cheating offence under Section 318 BNS is bailable. Therefore, if you are named as an accused later, you are entitled to bail as a matter of right before the police station itself. However, if the FIR includes sections that make the offence non-bailable, you can apply for anticipatory bail under Section 482 BNSS before the Sessions Court or High Court. Regular bail, if taken into custody, is under Section 480 BNSS. The court typically imposes conditions like not tampering with evidence, cooperating with the investigation, and not leaving the country. In lien cases, the bail strategy often overlaps with showing that you are a victim, not an offender.

Quashing of FIR / Case

If the FIR directly names you or the investigation shows your involvement only as a receiver of funds, you can seek to quash the FIR under Section 528 BNSS in the High Court. The grounds would be that the allegations, even taken at face value, do not constitute an offence against you because you had no fraudulent intent and were merely a P2P trader. Quashing is a potent remedy when the police proceed mechanically. However, if you are only a party whose account is frozen and not an FIR-named accused, a simple release application under Section 106 BNSS before the Magistrate is the cleaner and quicker path.

If You Are the Victim

• Treat the freeze as a serious legal action — do not assume it will resolve on its own.
• Preserve every digital proof immediately: Binance trade ID, blockchain hash, bank statement, email correspondence.
• Approach the investigating officer in person if possible and submit a written representation with all documents.
• If no response, move the jurisdictional Magistrate under Section 106 BNSS for release of the lien.
• If you face threats of arrest, secure anticipatory bail preemptively.

Documents You Must Keep Ready

• Aadhaar card and PAN card for identity verification.
• Bank account statement showing the credit and the lien remark.
• Binance transaction history page including trade ID, date, amount, and counterparty username.
• Blockchain transaction hash or receipt confirming the USDT transfer.
• Chat logs or messages with the buyer on the platform.
• Copy of the complaint or FIR number (if available) and the police notice.
• Email records of your communication with the police station and the bank.

What Evidence Is Required?

• Primary evidence of the trade: the P2P transaction receipt generated by Binance with all details.
• Secondary evidence: screenshots of the transaction page, the buyer’s profile, and the wallet address.
• Bank statement highlighting the exact credit entry and the lien memo date.
• Blockchain explorer link showing the movement of USDT from your wallet.
• Any communication from the buyer confirming the transaction was for crypto purchase.
• If you used a bank account to withdraw, the inward remittance certificate or NEFT/IMPS reference.
• Your own affidavit explaining the nature of the trade, your occupation, and lack of knowledge of the buyer’s fraud.

How the Police Behave in Such Cases

Cyber fraud investigations often involve multiple accounts and quick asset freezes. The police typically place a lien as a first response, sometimes without deep scrutiny, just to secure the trail of money. They may ask you to appear in person and produce all documents. Expect initial suspicion — they are trained to see you as a potential money mule. Police officers may take time to verify your explanation because they have to cross-check the chain of wallets. Patience and prompt cooperation with documentary proof work best. Avoid emotional pleas; stick to facts and evidence.

Timeline of Legal Process

• Lien notice to bank: immediate upon police order.
• Representation to investigating officer: typically 7–10 days to get a response, or none.
• Application before Magistrate: hearing usually fixed within 2 weeks; order can take another week.
• If police comply with the magistrate’s direction, lien lifting by bank within 3–5 working days.
• If the matter escalates to High Court, a notice motion may take 4–6 weeks for a final order.
• Investigation of the main FIR may continue for 60–90 days unless extended.

How Long Will the Investigation Take?

Investigation of the predicate cyber fraud case can take 60 to 90 days from the date of the FIR, depending on the number of accounts involved and whether a chargesheet is filed. The lien, however, can be challenged and lifted independently of the main investigation timeline — the court can release the property even while the investigation is ongoing, if no nexus to the crime is established.

Understanding the Costs

The total cost of a matter like this varies significantly from one case to the next — it depends on the complexity of the dispute, the forum involved, the number of hearings, and the specific facts of your situation. There is no single fixed figure that applies to everyone.

A professional advocate can give you an accurate estimate only after reviewing all your facts and documents in a consultation.

Can the Matter Be Settled Out of Court?

This is difficult because the lien is a police action, not a private dispute. If the underlying offence is compoundable, the complainant can compound the matter, but the lien is an interim measure taken by the State. However, if the investigation concludes that the funds in your account are not tainted, the police themselves will issue a release order. Mediation or Lok Adalat has no direct role here. In some cases, if you are inadvertently named as an accused, a compromise with the original complainant coupled with a quashing petition may resolve the entire FIR.

Common Mistakes People Make

• Waiting too long to act, hoping the bank will sort it out — the freeze remains indefinitely until a court or police order lifts it.
• Deleting transaction records or chat histories thinking they are incriminating; they are actually your best defence.
• Sending a single email to the police and assuming the job is done — follow up with multiple communications and physical copies.
• Speaking to the investigating officer informally without counsel present, inadvertently creating suspicion.
• Posting the whole ordeal on social media before legal steps are taken, which can prejudice the investigation.
• Engaging an advocate who does not regularly handle cyber crime or BNSS-based asset freeze matters. The procedural routes under Section 106 BNSS and the evidentiary standards for digital transactions demand experience with the specific manual of the cyber cell — general practitioners may file a wrong petition and cause delays.

FAQs People Normally Have

Can I get my entire account unfrozen, or only the lien amount? The lien usually applies only to the disputed amount, not the whole account. Your bank balance above ₹80,000 should be accessible. If the entire account is frozen, that is more serious and requires immediate legal action.

Will I be arrested in such a case? Not necessarily. Merely receiving funds in a P2P trade does not make you an offender unless the police believe you knowingly facilitated the fraud. With good documentation, you can avoid arrest. Anticipatory bail is available.

What if the police do not respond to the Magistrate’s order? File a contempt petition or approach the High Court. Courts do not take non-compliance lightly, and a stern direction usually gets the job done.

Is crypto trading illegal in India? No. Trading and holding crypto is not illegal, though it lacks specific regulation. A legitimate P2P trade does not become illegal just because the counterparty later turns out to be a fraudster.

How long does the entire process take? From representation to unfreezing, anywhere between 3 weeks and 3 months, depending on the police cooperation and court schedules.

This article is general legal information, not legal advice. Consult a qualified advocate about your specific situation.

Advocate Sudhir Rao, Supreme Court of India

Facing a similar matter? Speak to a criminal advocate in Delhi — Advocate Sudhir Rao appears in bail, trial and appellate matters before the Delhi District Courts, the Delhi High Court and the Supreme Court of India.