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 Lahore: Lahore High Court Justice Tariq Saleem Sheikh’s landmark decision on cryptocurrency, in which he granted pre-arrest bail to the accused in a landmark case related to Peer-to-Peer (P2P) transactions through cryptocurrency, has ruled that the fact that a person transacted virtual assets through an online platform or transferred money to his bank account cannot automatically make him guilty of cheating, forgery or electronic fraud.

Lahore High Court Justice Tariq Saleem Sheikh issued a detailed 15-page judgment.

The Federal Investigation Agency (FIA) registered a case against the petitioners Hammad Ali, Asad Amjad and Muhammad Athar under sections 419, 420, 468, 471 of the Pakistan Penal Code and sections 13 and 14 of the PECA Act 2016, alleging that they were among the people who received money from the complainant while working as P2P merchants and the money was transferred to their bank accounts at different times.

According to the court decision, the complainant Muhammad Farhan told the FIA ​​that an acquaintance persuaded him to invest in cryptocurrency; he initially bought 25 thousand USDT, later due to continuous losses, he continued to invest more and transferred about Rs 68.6 million to different people to buy a total of 270 thousand USDT.

He said that he sold his house, vehicles, business assets and even gold for this purpose, but later the crypto platform froze his account, due to which he could not access his virtual assets.

Justice Tariq Saleem Sheikh laid down an important legal principle in his decision that the transfer of virtual assets through an online platform or the receipt of money in a person’s account does not prove that he has committed fraud, forgery or electronic fraud. The prosecution must prove that the accused deceived the complainant into investing, produced fake data or fake electronic records, or had any role in the freezing of the platform’s account.

The court held that virtual assets or cryptocurrencies are not legal tender in Pakistan, but cannot be declared illegal or prohibited on this basis alone. The State Bank circular in 2018 did not create a criminal offence for private individuals but was only a guideline for banks and other regulated entities. Just because someone bought or sold USDT, he cannot be held guilty of violating the Foreign Exchange Regulation Act, unless a clear nexus is proven to be a foreign payment or illegal foreign exchange.

According to the decision, there is no material on record to show that the petitioners deceived the complainant, created a fake electronic record, committed electronic fraud or controlled the platform that froze the complainant’s account. Moreover, all the evidence is documentary in nature, the petitioners have joined the investigation and the need for investigation in their physical custody has not been proven.

For these reasons, the court confirmed the interim pre-arrest bail of the petitioners and ordered them to submit surety bonds of one million rupees each.