One of the co-founders of Unocoin, Sathvik Vishwanath, recounts his arrest and what authorities should have done differently.
Murky regulations don’t help anyone. Potential businesses may think that they’re doing nothing wrong oblivious to the fact that regulatory authorities are waiting to pounce on some perceived infraction, something that Unocoin has first-hand experience with.
While a resolution on the controversial ban in India continues to be delayed, the country’s oldest cryptocurrency exchange, Unocoin, introduced India’s very first Bitcoin ATM. The celebration was short-lived because soon after launching, the ATM was seized and the owners of the exchange were arrested.
Unocoin Co-founder Discusses Arrest
One of the co-founders, Sathvik Vishwanath, recounted to Quartz India that he had somewhat of a premonition that he was next in the firing line after co-founder Harish BV was arrested:
I knew this was coming after Harish was charged. I was at home that morning, trying to figure out what needs to be done to get Harish out of police custody, when the officials came to my house. They took me for questioning and later I was also charged and sent to judicial custody.
Police at the time alleged that the owners did not receive permission from the government to operate the ATM but the lawyer for the directors, Swaroop Anand, believes that authorization was not required:
It is a kiosk that is being set inside the mall and the mall would have had already taken trade permissions. Therefore, there was no need for Unocoin to take any other permission and there had not been any violation of licence requirements.
The police also made disparaging comments about the industry after the arrests were made. Vishwanath explained:
I have no idea where they (the police) are getting this false information from. For instance, they also told me we promised 2x returns and are trying to cheat customers. We have never made such claims nor have there been any complaints against us for swindling customers.
Arrests Have Spread Fear
However, Vishwanath does admit that the term ‘ATM’ may have given authorities the wrong impression. He said that “it is just a kiosk which enables our customers to transact with us and not really an ATM that requires the banking regulator’s approval”.
Another lawyer agrees that this may have been what caused the police to act so swiftly:
It just added fuel to the fire. There is a sense of legitimacy attached to the word ‘ATM’ as it typically gives the impression that it is a part of the banking channel. This led to more anxiety among the police as they possibly thought it was a misrepresentation.
Unocoin’s ATM wasn’t the only item seized. Harish’s laptops, mobile phone, cash, and even his passport was taken among other things. It is also believed that authorities hinted that Vishwanath needed to be swiftly arrested due to money laundering concerns.
Vishwanath concluded that the whole situation could have been handled differently:
They could have had asked for clarifications, issued a penalty, or there are many other simpler ways in which this could have been dealt with instead of making us look like criminals.
A direct result of the seizures and arrests is that others in the Indian crypto community are now worried that they will soon be facing the same fate.
Do you think that Indian authorities will now be actively looking for crypto platforms to prosecute? Let us know in the comments below!
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