8.2.1 Introduction: Criminal Remedies in Cryptocurrency Cases
Cryptocurrency-related crimes have become increasingly prevalent, ranging from exchange hacks and investment frauds to ransomware attacks and money laundering. The Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, which replaced the Code of Criminal Procedure (CrPC), 1973, provides the procedural framework for initiating and prosecuting criminal actions. This part examines how victims can initiate criminal proceedings for crypto-related offences.
The criminal justice system offers remedies that civil litigation cannot provide: punishment of offenders, deterrence, and in some cases, more effective asset recovery through police powers. However, criminal proceedings require establishing offences beyond reasonable doubt and navigating complex procedural requirements.
Transition from CrPC to BNSS
The Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 came into effect on July 1, 2024, replacing the Code of Criminal Procedure, 1973. Key provisions relevant to cryptocurrency crimes include:
| CrPC (Old) | BNSS (New) | Subject Matter |
|---|---|---|
| Section 154 | Section 173 | FIR Registration |
| Section 156(3) | Section 175(3) | Magistrate's power to order investigation |
| Section 200 | Section 223 | Private complaint examination |
| Section 202 | Section 225 | Postponement of issue of process |
| Section 204 | Section 227 | Issue of process |
| Section 482 | Section 528 | Inherent powers of High Court |
Types of Criminal Remedies Available
- FIR Registration (Section 173 BNSS): For cognizable offences, police must register FIR and investigate
- Private Complaint (Section 223 BNSS): Complainant directly approaches Magistrate, who examines and may direct investigation
- Magistrate Direction (Section 175(3) BNSS): Magistrate orders police to investigate and report
- Cyber Crime Portal: Online complaint mechanism for cyber offences
The choice between FIR and private complaint depends on the offence (cognizable vs non-cognizable), police responsiveness, complexity of case, and whether victim prefers direct control over prosecution. Private complaints under Section 223 BNSS offer greater control but require more effort from the complainant.
Cognizable vs Non-Cognizable Offences
The distinction between cognizable and non-cognizable offences is crucial for determining available procedures:
- Cognizable Offences: Police can arrest without warrant and must investigate upon receiving information. Most serious cyber crimes (hacking, fraud above threshold) are cognizable.
- Non-Cognizable Offences: Police cannot arrest without warrant and require Magistrate's order to investigate. Minor offences or those with lower punishment.
8.2.2 Section 223 BNSS: Private Complaints to Magistrate
Section 223 of BNSS (formerly Section 200 CrPC) provides the mechanism for private complaints directly to a Magistrate. This is particularly useful when police refuse to register FIR, the offence is non-cognizable, or the complainant prefers direct judicial oversight of the prosecution.
"A Magistrate taking cognizance of an offence on complaint shall at once examine the complainant and the witnesses present, if any, upon oath or affirmation, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate." Section 223, Bharatiya Nagarik Suraksha Sanhita, 2023
Requirements for Section 223 Complaint
- Written Complaint: Detailed complaint setting out facts constituting the offence, parties involved, dates, and losses suffered
- Jurisdictional Magistrate: Filed before Magistrate having jurisdiction over the offence location
- Verification: Complaint must be verified/sworn
- Supporting Documents: Evidence supporting allegations (blockchain records, communications, transaction history)
Procedure After Filing
The Magistrate follows a structured procedure upon receiving a Section 223 complaint:
Stage 1: Examination of Complainant (Section 223)
- Magistrate examines complainant and witnesses on oath
- Examination reduced to writing and signed
- Purpose: Verify genuineness and prima facie existence of offence
Stage 2: Inquiry/Investigation (Section 225)
- Magistrate may postpone issue of process and conduct inquiry personally, or
- Direct investigation by police or other agency
- For cryptocurrency cases, investigation direction is common due to technical complexity
Stage 3: Issue of Process (Section 227)
- If Magistrate satisfied that prima facie case exists, issues summons/warrant
- For summons cases: summons to accused
- For warrant cases: summons initially (warrant if non-appearance)
When filing Section 223 complaints for crypto crimes, prepare a comprehensive complaint with: (1) Clear narrative of facts; (2) Identification of accused with available details (wallet addresses, exchange accounts, communication records); (3) Technical explanation of how the fraud occurred; (4) Documentary evidence with proper indexing; (5) Valuation of loss. Technical complexity may lead Magistrate to direct police investigation under Section 225.
Advantages of Section 223 Complaints
| Advantage | Relevance to Crypto Cases |
|---|---|
| Bypasses police inaction | Useful when police unfamiliar with crypto crimes or refuse FIR |
| Direct judicial oversight | Magistrate supervises investigation from outset |
| Complainant controls prosecution | Can present case directly; not dependent on police diligence |
| Non-cognizable offences covered | Some crypto-related offences may be non-cognizable |
| Territorial flexibility | Can file where any part of cause of action arose |
Drafting the Section 223 Complaint
A well-drafted Section 223 complaint for cryptocurrency crimes should include:
Para 1-3: Complainant details and locus standi
Para 4-6: Accused details (including known identifiers - email, phone, wallet addresses, exchange accounts)
Para 7-15: Detailed narrative of facts in chronological order
Para 16-18: Technical explanation of the crypto transaction/fraud
Para 19-21: Offences allegedly committed with section numbers
Para 22-24: Cause of action and jurisdiction
Para 25: Limitation compliance
Para 26: Prior steps taken (police complaint, if any)
Para 27: Relief sought
Annexures: Documentary evidence indexed and paginated
8.2.3 FIR Registration Under Section 173 BNSS
Section 173 of BNSS (formerly Section 154 CrPC) mandates registration of First Information Report (FIR) for cognizable offences. Police have a statutory duty to register FIR upon receiving information of a cognizable offence; refusal is itself an offence.
"Every information relating to the commission of a cognizable offence, if given orally to an officer in charge of a police station, shall be reduced to writing by him or under his direction, and be read over to the informant; and every such information, whether given in writing or reduced to writing as aforesaid, shall be signed by the person giving it..." Section 173(1), Bharatiya Nagarik Suraksha Sanhita, 2023
Mandatory FIR Registration
The Supreme Court has consistently held that police must register FIR when information discloses cognizable offence:
Key Holdings
The Constitution Bench held:
- Registration of FIR is mandatory under Section 154 CrPC (now Section 173 BNSS) if information discloses commission of cognizable offence
- No preliminary inquiry is permissible before FIR registration for cognizable offences
- Preliminary inquiry may be conducted only in exceptional cases (matrimonial disputes, commercial offences, medical negligence, corruption cases)
- Police officer who fails to register FIR commits offence under Section 166A IPC
Application to Crypto Cases
For cryptocurrency fraud involving cognizable offences (cheating, criminal breach of trust), police must register FIR immediately upon receiving complaint. The technical complexity of crypto is not grounds for preliminary inquiry or refusal.
Procedure for FIR Registration
- Information: Provide written complaint to Officer In-Charge of police station with jurisdiction
- Verification: Officer reads back and obtains signature
- Registration: FIR registered and copy provided free of cost
- Investigation: Police commence investigation under Section 176 BNSS
Remedies When Police Refuse FIR
If police refuse to register FIR for cryptocurrency crime:
Option 1: Superintendent of Police (Section 173(4) BNSS)
- Send written complaint to Superintendent of Police by registered post
- SP shall either investigate personally or direct investigation
- Provides escalation within police hierarchy
Option 2: Magistrate Direction (Section 175(3) BNSS)
- Approach Magistrate having jurisdiction
- Magistrate can direct police to register FIR and investigate
- Direction is binding on police
Option 3: High Court (Article 226 / Section 528 BNSS)
- Writ petition seeking direction to register FIR
- Criminal revision under Section 528 BNSS (inherent powers)
- Courts have directed FIR registration in appropriate cases
Zero FIR
Section 173(7) BNSS provides for "Zero FIR" - registration of FIR at any police station regardless of jurisdiction, with subsequent transfer to the jurisdictionally competent station. This is useful for:
- Urgent cases requiring immediate registration
- When jurisdictional station is inaccessible
- Online crimes where jurisdiction may be uncertain
Many police stations remain unfamiliar with cryptocurrency crimes and may attempt to avoid registration citing technical complexity or jurisdictional issues. Prepare a clear, factual complaint identifying cognizable offences (cheating under Section 420 IPC/Section 318 BNS) and assert the mandatory nature of FIR registration. If refused, immediately escalate through available remedies.
8.2.4 Criminal Offences Applicable to Cryptocurrency Crimes
Cryptocurrency crimes may attract provisions from multiple statutes: the Information Technology Act, 2000; Bharatiya Nyaya Sanhita (BNS), 2023 / Indian Penal Code; Prevention of Money Laundering Act, 2002; and others. Understanding applicable offences is essential for proper complaint drafting and prosecution strategy.
Information Technology Act, 2000
Section 43 - Penalty for Damage to Computer Systems
Civil penalty provision for unauthorized access, damage, or disruption. Applicable to exchange hacks and unauthorized cryptocurrency transfers. Maximum penalty: Rs. 1 crore compensation.
Section 66 - Computer Related Offences
Criminal punishment for acts under Section 43 done dishonestly or fraudulently. Punishment: Up to 3 years imprisonment and/or fine up to Rs. 5 lakhs.
Section 66C - Identity Theft
Using another person's electronic signature, password, or unique identification feature. Applicable to cryptocurrency wallet theft, exchange account compromise. Punishment: Up to 3 years and fine up to Rs. 1 lakh.
Section 66D - Cheating by Personation Using Computer Resource
Cheating by personation using computer resource or communication device. Applicable to impersonation scams, fake exchange websites. Punishment: Up to 3 years and fine up to Rs. 1 lakh.
| Section | Offence | Punishment | Cognizable |
|---|---|---|---|
| Section 66 | Computer Related Offences | 3 years + Rs. 5 lakhs | Yes |
| Section 66C | Identity Theft | 3 years + Rs. 1 lakh | Yes |
| Section 66D | Cheating by Personation | 3 years + Rs. 1 lakh | Yes |
| Section 67 | Obscene Material (NFT) | 5 years + Rs. 10 lakhs | Yes |
| Section 72 | Breach of Confidentiality/Privacy | 2 years + Rs. 1 lakh | Non-cognizable |
Bharatiya Nyaya Sanhita, 2023 / IPC Provisions
Note: BNS 2023 replaced IPC from July 1, 2024. For offences committed before this date, IPC applies.
Cheating (Section 318 BNS / Section 420 IPC)
Cheating and dishonestly inducing delivery of property. Most common provision for crypto fraud. Punishment: Up to 7 years and fine.
Criminal Breach of Trust (Section 316 BNS / Section 406 IPC)
Dishonest misappropriation of property entrusted. Applicable to exchange embezzlement, fund managers. Punishment: Up to 3 years (simple CBT) or 7 years (by agent/banker).
Theft (Section 303 BNS / Section 379 IPC)
Dishonest removal of property without consent. Applicable if cryptocurrency recognized as property. Punishment: Up to 3 years and fine.
Criminal Conspiracy (Section 61 BNS / Section 120B IPC)
Agreement to commit illegal act or legal act by illegal means. Applicable to organized crypto fraud. Punishment: Same as substantive offence.
Forgery (Section 336 BNS / Section 463 IPC)
Making false document with intent to cause damage. Applicable to forged KYC documents, fake screenshots. Punishment: Up to 2 years.
Section 318 BNS defines cheating: "Whoever, by deceiving any person, whether or not such deception was the sole or main inducement, (a) fraudulently or dishonestly induces the person so deceived to deliver any property to any person... commits 'cheating'." Punishment extends to 7 years imprisonment and fine. This is the primary provision for cryptocurrency investment fraud.
Prevention of Money Laundering Act, 2002
PMLA provisions apply when cryptocurrency is used for money laundering:
- Section 3: Offence of money laundering - whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process connected with proceeds of crime
- Section 4: Punishment - Rigorous imprisonment for 3-7 years (up to 10 years for specified offences) and fine
- Proceeds of Crime: Includes any property derived from scheduled offence, including cryptocurrency
Selecting Applicable Offences
| Crypto Crime Type | Primary Offences | Secondary Offences |
|---|---|---|
| Exchange Hack | Sections 66, 66C IT Act | Section 303 BNS (Theft) |
| Investment Fraud | Section 318 BNS (Cheating) | Section 61 BNS (Conspiracy) |
| Phishing/Impersonation | Section 66D IT Act | Section 318 BNS |
| Exchange Embezzlement | Section 316 BNS (CBT) | Section 318 BNS |
| Ponzi Scheme | Section 318 BNS | PMLA Section 3 (if proceeds laundered) |
| Ransomware | Section 66 IT Act | Section 308 BNS (Extortion) |
8.2.5 Investigation of Cryptocurrency Crimes
Investigation of cryptocurrency crimes requires specialized technical expertise that most police stations lack. Understanding the investigation process helps complainants assist investigations effectively and ensures crucial evidence is preserved.
Cyber Crime Cells and Specialized Units
Most states have established specialized cyber crime cells:
- State Cyber Crime Cells: Headquarters-level units with technical expertise
- District Cyber Cells: Local units in major districts
- National Cyber Crime Reporting Portal: www.cybercrime.gov.in for online complaints
- Indian Cyber Crime Coordination Centre (I4C): Central coordination under MHA
Investigation Powers Under BNSS
Section 176 - Investigation Procedure
- Officer may proceed to investigate facts and circumstances
- Take measures for discovery and arrest of offender
- Record statements under Section 180 BNSS
Section 185 - Search and Seizure
- Search of any place where thing necessary for investigation may be found
- For cryptocurrency: computers, mobile devices, hardware wallets
- Search warrant required unless urgent circumstances
Section 94 - Attachment of Property (PMLA cases)
ED can provisionally attach property including cryptocurrency under PMLA.
Digital Evidence Collection
Proper evidence collection is crucial for cryptocurrency crime prosecution:
- Device Seizure: Computers, phones, hardware wallets with proper documentation and hashing
- Blockchain Analysis: Transaction tracing using blockchain forensic tools
- Exchange Records: Section 91 BNSS requisition to exchanges for account and transaction data
- Communication Records: Emails, messages, call records through proper process
- IP Address Tracing: Technical analysis to identify perpetrators
Section 65B Certification (Evidence Act)
Section 65B of the Indian Evidence Act, 1872 governs admissibility of electronic records. For cryptocurrency evidence:
- Electronic records must be accompanied by Section 65B certificate
- Certificate must be from person in charge of computer during relevant period
- Must specify conditions of Section 65B(2) are satisfied
Key Holdings on Section 65B
Three-judge bench overruled Shafhi Mohammad (2018) and held that Section 65B(4) certificate is mandatory for admissibility of electronic evidence. The certificate requirement cannot be dispensed with.
Implication for Crypto Cases
Blockchain records, exchange data, and communication records must be accompanied by proper Section 65B certificates. Failure to obtain certificate can render evidence inadmissible and jeopardize prosecution.
Complainants should immediately preserve: (1) Screenshots of all transactions with timestamps; (2) Complete communication history with accused; (3) Exchange account statements; (4) Wallet transaction history; (5) Any documents received from accused. Prepare copies with Section 65B certificates where possible. This evidence may be crucial for both investigation and trial.
Assistance from Exchanges
Cryptocurrency exchanges can provide crucial evidence. Police can seek:
- KYC Documents: Identity of account holders
- Transaction Records: Complete transaction history
- IP Logs: Login IP addresses for location identification
- Communication Records: Support tickets, chat logs
- Account Freezing: Preventing dissipation of proceeds
8.2.6 Magistrate Procedures and Trial
After investigation, the case proceeds through Magistrate procedures culminating in trial. Understanding these procedures helps complainants monitor case progress and participate effectively in prosecution.
Filing of Charge Sheet (Section 193 BNSS)
Upon completing investigation, police file charge sheet (police report) under Section 193 BNSS containing:
- Names of parties
- Nature of information
- Names of witnesses
- Whether accused arrested or released on bail
- Whether accused forwarded to Magistrate
- Whether offence appears committed and if so, by whom
Cognizance of Offence
Magistrate takes cognizance under Section 210 BNSS based on:
- Police Report: Charge sheet filed after investigation
- Private Complaint: Section 223 complaint after examination
- Own Knowledge: Magistrate's own knowledge or suspicion (rare)
Commitment to Sessions Court
For offences triable exclusively by Sessions Court (punishment > 7 years), Magistrate commits case under Section 232 BNSS. Many serious cryptocurrency crimes (PMLA, organized fraud) may be committed to Sessions.
Trial Procedure
Summons Cases (Punishment up to 2 years)
- Simplified procedure under Sections 283-289 BNSS
- Substance of accusation stated to accused
- If pleads guilty, conviction recorded
- If pleads not guilty, prosecution evidence, defense, judgment
Warrant Cases (Punishment > 2 years)
- Detailed procedure under Sections 262-277 BNSS
- Framing of charge after consideration of prosecution material
- Prosecution evidence with cross-examination
- Statement of accused under Section 342 BNSS
- Defense evidence (if any)
- Arguments and judgment
Complainant's Role in Trial
In private complaint cases, the complainant has active role:
- Presenting prosecution evidence
- Examining witnesses
- Making arguments
- Can engage private counsel (Public Prosecutor handles state cases)
Even in police-investigated cases (FIR route), the complainant can: (1) Engage private counsel to assist PP under Section 304 BNSS; (2) Object to discharge/acquittal; (3) File appeal against acquittal; (4) Make submissions on sentencing. Active participation improves conviction prospects.
8.2.7 Quashing of Criminal Proceedings
Accused in cryptocurrency cases may seek quashing of criminal proceedings under Section 528 BNSS (formerly Section 482 CrPC). Understanding quashing grounds helps both complainants (to oppose) and defense (to seek relief).
"Nothing in this Sanhita shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Sanhita, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice." Section 528, Bharatiya Nagarik Suraksha Sanhita, 2023
Grounds for Quashing
1. No Offence Disclosed
If allegations, even if taken at face value, do not constitute any offence. For crypto cases: legitimate trading activity characterized as fraud.
2. Pure Civil Dispute
If dispute is essentially civil in nature and criminal prosecution is abuse of process. Common in crypto disputes where contractual breach is framed as cheating.
3. Malafide/Ulterior Motive
If criminal case filed with malafide intention to harass or for ulterior purposes.
4. Settlement Between Parties
For compoundable offences, if parties have settled. Note: Serious offences under PMLA are not compoundable.
Categories for Quashing
The Supreme Court enumerated situations where FIR/criminal proceedings may be quashed:
- Allegations do not prima facie constitute any offence
- Allegations are absurd and improbable
- Express legal bar to prosecution
- Criminal prosecution manifestly attended with mala fide
- Dispute is of purely civil nature
- Clear abuse of process of court
Defending Against Quashing Petitions
As complainant, to oppose quashing petition in crypto case:
- Establish Criminal Intent: Show dishonest or fraudulent intent, not mere civil breach
- Demonstrate Deception: Evidence of active misrepresentation, not just failed business
- Counter Civil Dispute Argument: Distinguish from legitimate business dispute
- Prima Facie Case: Show sufficient material to warrant trial
Many crypto disputes involve failure to return funds or failed investments. Courts examine whether there was deception at inception (criminal) or subsequent default (civil). Evidence of false promises, non-existent projects, or Ponzi structure indicates criminal intent. Mere investment loss or business failure does not automatically constitute cheating.
Key Takeaways from Part 2
- Section 223 BNSS (formerly Section 200 CrPC) enables private complaints directly to Magistrate, bypassing police inaction
- Section 173 BNSS mandates FIR registration for cognizable offences; refusal can be challenged before SP, Magistrate, or High Court
- Multiple statutes apply: IT Act (Sections 66, 66C, 66D), BNS/IPC (cheating, CBT, theft), and PMLA for money laundering
- Investigation requires specialized cyber crime units; complainants should preserve digital evidence with Section 65B certification
- Trial follows standard criminal procedure; complainants can engage private counsel to assist prosecution
- Quashing petitions under Section 528 BNSS may be filed by accused; oppose by establishing criminal intent and deception
- Cyber crime portal (cybercrime.gov.in) provides online complaint mechanism for crypto frauds