Bank Account Lien Due to P2P Crypto Transaction — How to Get Your Money Released

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.

Rohan Gupta, a 29-year-old software professional from Gomti Nagar, Lucknow, had been trading cryptocurrency through a well-known P2P platform for several months. Around 18 March 2025, he sold some crypto holdings and received the corresponding UPI payment directly into his Punjab National Bank savings account. Standard stuff, or so he thought. Within three days, he noticed that two incoming credit amounts were frozen — the bank had placed a lien on both transactions without any prior notice.

When Rohan visited the branch, the manager confirmed that the hold was linked to a cyber complaint registered against the UPI sender. The bank handed him two case reference numbers and asked him to contact the cyber cell helpline to obtain the Investigating Officer's details. Only an NOC from the IO, they said, would allow the lien to be released. Rohan submitted a written application at the branch, sent emails, prepared his P2P order records, UPI screenshots and chat history — and waited. Nothing moved. A colleague suggested he speak to a lawyer who handles general civil disputes, but that approach didn't gain any traction either, since the lawyer wasn't familiar with the specific procedures followed in cyber cell freezing cases.

Rohan then approached Advocate Sudhir Rao. The matter was assessed quickly. A formal representation was drafted and addressed directly to the Investigating Officer, supported by a structured legal framework citing Rohan's status as a bona fide third-party recipient. A parallel application was prepared for the bank's nodal officer. Within a few weeks of this targeted intervention, the IO issued the NOC and the lien was removed. Rohan's funds were released without any criminal proceedings being initiated against him.

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.

Don't ignore the cyber cell communication. Contact the cyber cell using the case numbers the bank provides, note the IO's name, designation and contact details, and make sure every follow-up is in writing. Keep records of each communication carefully — you'll need them.

Compile your transaction evidence early. Your P2P order ID, UPI transaction reference numbers, chat logs with the crypto seller, and bank account statements form the backbone of your defence. Organise them chronologically before your first meeting with the advocate.

This type of matter sits at the intersection of banking law, cyber crime procedure and digital asset regulation. Frankly, procedural and evidentiary nuances — such as how to position a third-party recipient's innocence before the IO, or when to escalate to the bank's nodal officer versus approaching the court — are aspects that advocates who regularly handle cyber-related account freeze cases are far better equipped to manage than general practitioners.

Applicable Sections of Law

The following provisions are directly relevant when a bank account is frozen in connection with a cyber complaint linked to a P2P cryptocurrency transaction:

• Section 318(4) BNS (Cheating): The original complainant typically alleges that the UPI sender cheated them; the frozen funds are traced through the payment chain, sometimes reaching innocent downstream recipients like the crypto seller.
• Section 111 BNS (Organised Crime) / Section 113 BNS (Terrorist Financing): In serious cases, cyber police may invoke these where layered fund movement is suspected across multiple accounts.
• Section 61 BNSS (Seizure of Property): Permits police to direct banks to freeze or attach funds linked to an ongoing investigation without a court order at the initial stage.
• Section 6A of the Information Technology Act, 2000 read with RBI Master Directions on Cyber Fraud: Governs the procedure that banks and payment intermediaries must follow when receiving a law-enforcement freeze request, including timelines for notifying the account holder.

Punishment and Penalties

If the cyber cell ultimately determines that the account holder knowingly participated in routing fraud proceeds — which is a serious allegation — the following penalties can apply:

• Section 318(4) BNS (Cheating causing harm): Imprisonment up to three years, or fine, or both. Cognizable and bailable.
• Section 316(2) BNS (Criminal breach of trust): Imprisonment up to three years and fine. Cognizable, non-bailable in aggravated form.
• Section 111 BNS (Organised Crime — if invoked): Imprisonment not less than five years, extendable to life, along with substantial fine. Cognizable, non-bailable, non-compoundable.

Make no mistake — the vast majority of P2P crypto sellers frozen as downstream recipients are not charged at all. But knowing the statutory exposure helps you understand why the IO's NOC matters so much.

Jurisdiction — Where to File the Case

Cyber crime complaints in India are investigated by the Cyber Crime Cell of the district police where the original complainant resides or where the fraud originated. For account freeze matters, the IO is attached to that specific cyber cell. Now, before you act, understand this: if the freeze is wrongful and you need judicial intervention, you can approach the Chief Judicial Magistrate (CJM) of the district where the bank branch is located, seeking a direction to the bank to release the lien. If the police fail to act on your representation within a reasonable time, the High Court exercising writ jurisdiction under Article 226 of the Constitution is the appropriate forum. Territorial jurisdiction follows the location of the freeze-initiating cyber cell.

What if Police Refuse to File FIR?

In account freeze cases arising from P2P crypto transactions, the situation is often reversed — you're not filing an FIR but seeking relief from an existing cyber investigation. However, if you wish to lodge a complaint about wrongful freezing or harassment by the IO, and the police refuse to register it, here's what you can do:

• Submit a written complaint to the Superintendent of Police (SP) or Commissioner of Police of the concerned district under Section 173(4) BNSS.
• File a private complaint directly before the Chief Judicial Magistrate under Section 175(3) BNSS if the SP fails to act within a reasonable time.
• Approach the High Court by filing a writ petition under Article 226 of the Constitution seeking directions to the police to investigate your complaint fairly and to the bank to release the wrongful lien.
• Document every refusal in writing — email or written acknowledgment — so that there is a paper trail for escalation.

Rights of the Accused

Even if the cyber police treat you as a suspect in a fund-layering investigation, you retain full constitutional and statutory rights. And here's the thing — most people in Rohan's situation don't know these rights exist until it's too late to assert them properly.

• Right against self-incrimination: Under Article 20(3) of the Constitution, you cannot be compelled to be a witness against yourself. As confirmed in Selvi v. State of Karnataka, 2010, this right extends to custodial interrogation.
• Right to legal representation: Article 22(1) guarantees you the right to consult an advocate of your choice from the moment of any detention or questioning.
• Right to be produced before Magistrate within 24 hours: Section 58 BNSS makes this mandatory; any detention beyond 24 hours without Magistrate's remand is illegal.
• Right to know grounds of arrest: Section 47 BNSS requires the arresting officer to inform you of the grounds clearly, in a language you understand.
• Right to copy of FIR: Under Lalita Kumari v. Government of UP, 2014, the FIR must be registered when a cognizable offence is disclosed, and a copy must be provided free of cost.

Bail Provisions

Bail strategy becomes critical if the IO escalates the matter and you're summoned or arrested. For Section 318(4) BNS (cheating), the offence is bailable, and you can seek bail at the police station itself. For Section 316 BNS, anticipatory bail under Section 482 BNSS from the Sessions Court is advisable as soon as you sense the investigation is turning toward you. Regular bail, if already arrested, is filed under Section 480 or Section 483 BNSS depending on whether the trial court has taken cognizance. Typical bail conditions include surrendering your passport, appearing before the IO as directed, and not tampering with witnesses. A specialist advocate can frame bail conditions in a manner that limits unnecessary restrictions on your movement and banking access.

Quashing of FIR / Case

And here's the thing — if an FIR has been registered naming you despite clear evidence that you are a bona fide downstream recipient with no knowledge of the fraud, quashing is a very viable remedy. The High Court exercises inherent powers under Section 528 BNSS to quash an FIR where no prima facie cognizable offence is disclosed against a particular accused, or where continuing the proceedings would be an abuse of the process of court. In State of Haryana v. Bhajan Lal, 1992, the Supreme Court laid down the categories under which quashing is appropriate — one of which is exactly this: the accused had no criminal intent and the allegations do not disclose an offence against them. A well-documented quashing petition with your P2P trade records can be highly effective.

If You Are the Victim

Your account is frozen. You've done nothing wrong. Here's how to protect yourself systematically if you simply received UPI payment through a P2P crypto trade:

• Obtain the exact case numbers from your bank branch in writing and identify the cyber cell and IO handling the linked complaint.
• Submit a formal representation to the IO clearly establishing your position as a bona fide seller who received payment through a legitimate P2P platform.
• Simultaneously send an email to your bank's nodal officer (details available on the bank's RBI-mandated nodal officer disclosure page) requesting expedited review of the lien.
• If the IO does not respond within 15 days of your written representation, escalate through your advocate to the SP Cyber or approach the Magistrate.
• Do not transfer remaining funds out of the frozen account abruptly — it may be misread as an attempt to evade the investigation.

Documents You Must Keep Ready

• Aadhaar card and PAN card (self-attested copies)
• Complete bank account statement for at least the last six months
• P2P platform order ID and trade confirmation screenshot (with timestamps)
• UPI transaction reference numbers for the specific payments under lien
• In-platform and off-platform chat logs with the buyer (the UPI sender)
• KYC documents submitted to the P2P platform (proving your verified identity on the platform)
• Any email or written communication received from the bank regarding the lien
• Self-declaration letter (already submitted, retain a copy with proof of submission)

What Evidence Is Required?

• Primary evidence — P2P trade record: The platform-generated order confirmation showing the trade, the asset sold, the agreed price, and the payment mode.
• Primary evidence — UPI transaction record: Bank statement entry plus NPCI UPI reference number establishing that the payment was received from the buyer and not from any third-party mule account directly.
• Secondary evidence — Chat logs: Conversations on the P2P platform and WhatsApp with the buyer confirming the trade terms.
• Secondary evidence — Platform KYC status: Proof that you completed KYC on the platform and that the buyer's KYC was also verified.
• Circumstantial evidence — Pattern of transactions: Showing that this was part of a regular trading pattern and not a one-off suspicious receipt.
• Documentary evidence — Prior clean account history: Bank statements and ITR filings showing legitimate income and no prior suspicious activity.

How the Police Behave in Such Cases

Cyber cell IOs handling UPI-linked fraud complaints routinely freeze all accounts in the payment chain — sometimes up to Layer 3 or Layer 4 — without individually verifying each account holder's knowledge or intent. The IO's primary obligation is to the original complainant, and bulk freezes are administratively easier to execute. Frankly, most IOs are cooperative once you present clear documentation showing you're a downstream recipient with no connection to the original fraud. Delays in issuing NOC, however, are common — and escalating through your advocate to the IO's superior officer or to the court often accelerates the process significantly.

Timeline of Legal Process

• Day 1-3: Obtain case numbers from bank; identify IO and cyber cell details through the 1930 cyber helpline.
• Day 3-7: Submit formal legal representation drafted by your advocate to the IO, with full supporting documents. Simultaneously notify the bank's nodal officer.
• Day 7-21: Await IO's response. Most IOs respond to formal advocate-drafted communications within two to three weeks.
• Day 21-30: If no response, file an escalation to the SP Cyber. Alternatively, the advocate may file an application before the CJM for directions to release the lien.
• Day 30-60: In cases where court intervention is needed, the Magistrate typically hears the matter and may direct the IO to file a status report, after which the lien is often released.

Advocate Sudhir Rao, Supreme Court of India