Cryptocurrency Blanket “Inducement” Allegations Don’t Survive: Bombay High Court Quashes FIR

A recent decision of the Hon’ble Bombay High Court (Nagpur Bench) is a timely reminder that cryptocurrency-linked complaints do not dilute the basic criminal law threshold. Even where a complainant alleges a high-return “crypto/token” pitch and a large number of investors, the prosecution must still show, for each accused, what they actually did that amounts to cheating or criminal breach of trust. In this case, the Court quashed the FIR against four accused because the allegations against them stayed at the level of a broad “inducement” narrative, with no role-specific material showing misappropriation or dishonest conduct.

BACKGROUND

The prosecution arose from Crime No. 470/2023 registered at Civil Lines Police Station, Akola for offences under Sections 406 and 420 read with Section 34 of the Indian Penal Code, 1860. The complainant alleged that he was introduced to the accused in and was persuaded to invest money in a new venture on the assurance of high returns.

The complaint’s most striking feature was the promise of extraordinary returns (2% daily, 60% monthly, and 720% annually). The complainant also alleged that the “inducement” included a representation that if investors deposited money in Indian currency, they would receive returns in dollars.

Although the FIR was framed under conventional IPC provisions, the factual matrix recorded by the Court is unmistakably crypto-linked: a scheme branded in token/crypto language (“Platin Ultima”) and a platform referenced as “PLC Ultima”, presented through digital communications and high-return marketing.

The accused moved the High Court for quashing, the counsel, Mr. Ashish Deep Verma, submitted that the complainant’s narrative tried to rope in multiple persons on a sweeping allegation of “inducement”, without identifying any concrete act by these four accused that would satisfy the ingredients of cheating or criminal breach of trust. He emphasised that the investigation record did not show any role-specific material that these four accused (i) made a specific dishonest representation, (ii) dealt with or controlled investor funds, or (iii) derived any wrongful gain from the complainant’s investment.

Thus, to treat “inducement” as a conclusion, not evidence. Encouraging participation in an investment pitch, even if morally questionable, is not automatically the same as cheating unless it is supported by particulars showing deception at the inception. Likewise, criminal breach of trust cannot be assumed in the absence of entrustment and misappropriation.

The State opposed quashing, contending inter alia that the accused played an active role in inducing the complainant to invest and that several investors were duped, with the stake said to be more than Rs. 50 crores.

FINDING OF THE HIGH COURT

The Hon’ble High Court having perused the general terms and conditions of “PLC Ultima”, including risk and legality disclaimers such as access being “at your risk” and the platform not guaranteeing that participation is legal under the user’s national law. The Court did not treat these disclaimers as a complete answer to criminal liability, but their inclusion shows how online/token ecosystems operate, and why courts must separate (a) platform-level marketing and disclaimers from (b) the specific, provable role of each accused.

The judgment reflects a cautious approach, the Court does not broadly “approve” or “disapprove” crypto schemes, but insists that criminal prosecution must be evidence-led, and not a dragnet built on guilt by association.

On examining the FIR, the Court found that the allegations against four accused did not travel beyond a general claim that they were connected with the investment pitch and encouraged investors by projecting unusually large gains. The Court also noted that investors invested considering the prospect of “handsome earning”.

The Court treated the complainant’s own narrative as showing a profit-motive investment decision driven by a promise of extraordinary returns, and held that a prosecution cannot be sustained against peripheral participants unless the record discloses something more concrete than broad “inducement”. In the Court’s view, compelling these four accused to face trial on such general allegations would amount to an abuse of process.

Thus, the law cannot be used to prosecute everyone allegedly connected to an investment pitch unless the complaint and investigation disclose specific acts that constitute the offence.

CONCLUSION

The Bombay High Court’s quashing order is a useful marker in the growing universe of cryptocurrency-linked criminal complaints. It reinforces that while complainants may characterise such schemes as “crypto” or “digital” investment frauds, the survival of an FIR against each accused will turn on role-specific allegations and prima facie evidence, not merely on association with a seminar or promotional activity.

Thus, caution against turning inducement into a catch-all label. Crypto-linked investment pitches often involve multiple layers of promoters, organisers, speakers, introducers, and “community” participants. The Court’s approach signals that criminal prosecution cannot be expanded to everyone in that ecosystem unless the allegations and material show a role-specific act of deception or a money trail pointing to personal benefit. At the same time, where the investigation points to cash collection and receipts/withdrawals, courts are likely to allow the prosecution to continue and be tested at trial.