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RBI’s Banking Ban Bars the Pune City Police Department from Cashing Out Seized Crypto

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RBI prohibits police from cashing out crypto

The impact of banking restrictions imposed by the Reserve Bank of India (RBI) has reached the country’s police department. A report unveiled this news on October 4. Per the publication, RBI’s banking ban prevented the country’s police from cashing out crypto seized during their operations.

According to the report, the Pune city police department sold some of the crypto coins it seized from Akash Kantilal Sancheti. The coins sold totaled $1.2 million. However, the police found that they could not access the funds due to the current RBI banking ban. Per the report, the number of coins was 244.0925, and this number included an unspecified amount of BTC.

The Pune city police department reportedly hired Discidium Internet Labs Private Ltd., the operator of Koinex exchange to sell the coins. However, the publication notes that the funds are currently frozen in the firm’s bank account at a branch of the Central Bank of India.

RBI Claims It Did Not Freeze Discidium Internet Labs’ Account

Ujjwala Pawar, the district government pleader said,

The police’s plea is pending before the sessions court.

In its response to a court notice, the RBI claimed that it had not frozen the account of Discidium Internet Labs. On top of this, the agency noted that it had not instructed the Central Bank of India to freeze the funds.

Following this complication, Discidium Internet Labs allegedly filed an interlocutory application before the country’s supreme court. In so doing, the firm hopes the court will order the RBI to direct the Central Bank of India to unfreeze the account.

RBI’s Banking Ban

This news comes after the RBI issued a notice on April 6, 2018, banning all banks and payment system providers from dealing in crypto. In the circular, the RBI specified that it had prohibited “maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer/receipt of money in accounts relating to purchase/ sale of VCs [virtual currencies],”.

This ban became effective three months later forcing banks to cut all ties with the crypto world. As a result, most Indian crypto exchanges and startups shut down. Koinex was among the exchanges that had to shut down.

At that time, Koinex announced that it had shut down following the adverse crypto rules. The exchange noted that the ban had frozen the bank accounts holding user funds and that its capital was thus held up.

Rahul Raj, Koinex’s CEO said,

We have consistently been facing denials in payment services from payment gateways, bank account closures and blocking of transactions for trading of digital assets.

This news comes after India’s Ministry of Finance published its much-anticipated crypto regulatory report. The ministry noted that it had submitted this report, which contains a draft to ban crypto, to the government. The ministry noted that all concerned agencies would examine the report in consultation. However, the final decision on whether to ban crypto or not would rest with the government.

Do you think the Indian government will pass the bill to ban crypto into law? Let us know in the comments below.

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