A petition before Madras High Court seeks a ban on advertisements about cryptocurrency trading in all media platforms until the Government makes proper rules and regulations for Crypto trading.
The Finance Secretary, Cabinet Secretary and the Ministry of Information & Broadcasting have been arraigned as the Respondents to stop advertisements on crypto trade within a fixed time as stipulated by the High Court. The PIL filed on behalf of Advocate Ayyaa Subramanian states that illegal trading in cryptocurrencies has aggravated money laundering, terrorist financing and extortion activities.
“On the 1st page of newspapers itself ,several media sources of our country are publishing the advertisements for the unsecured crypto currency trading companies”, the affidavit filed by the petitioner submits alleging that these advertisements as misguiding and propagating false information to exploit the public.
The petitioner submits that cryptocurrencies cannot adequately fulfil the functions of money and opens up new avenues for tax evasion and other criminal activities. Since crypto trading is not regulated by any centralized agency or authority, and solely issued and controlled by its developers, they are prone to losses arising out of hacking, loss of password, compromise of access credentials etc. according to the petitioner.
Placing reliance on the RBI Press Release cautioning investors and traders in cryptocurrency dated 2013, the petitioner states that the creation, trading or use of Virtual Currencies is replete with financial, operational and personal data security risks.
The petitioner also refers to the process of crypto mining and claims that it leads the attackers to easily access the user information which leads to theft of personal information of the users.
“There is no established framework for recourse to customer problems/disputes resolution as payments by crypto-currencies take place on a peer-to-peer basis without an authorized central agency which regulates such payments”, the petitioner affidavit states
The petitioner also mentions the Government’s Inter-Disciplinary Committee Report of 2017 that recommended issuing a warning through the public media about the lack of cryptocurrency’s legal validity as a medium of exchange. The interdisciplinary committee also recommended the people who bought cryptocurrencies in good faith to offload the same in jurisdictions where it’s not illegal. Further, the committee had also recommended action against those who indulge in cryptocurrency trading even after all these warnings.
In the end of 2019, the Government of India had also warned the buyers, investors and traders that cryptocurrencies are not legal tenders.
“It is submitted that The Bank for International Settlements (BIS) has recently warned that the emergence of crypto-currencies has become a combination of a bubble, a Ponzi scheme and an environmental disaster, and calls for policy responses (BIS, 2018). The Financial Action Task Force (FATF) has also observed that crypto assets are being used for money laundering and terrorist financing. A globally coordinated approach is necessary to prevent abuses and to strictly limit interconnections with regulated financial institutions”, adds the petitioner affidavit.
For the court’s reference, the petitioner also talks at length about various scams pertaining to virtual currencies, crypto trading and exchange platforms in recent times. Citing that the cryptocurrencies are highly volatile in nature and the legal status of exchange platforms for cryptocurrencies set up in various jurisdictions is unclear, the petitioner calls for a ban on advertisements promoting the same.