An appellate tribunal has nullified the Enforcement Directorate’s (ED) seizure of over ₹29.28 crore from Buy Hatke Internet Pvt. Ltd., the company behind the cryptocurrency exchange BitBNS. The decision, issued on March 4, 2025, by Chairman Justice Munishwar Nath Bhandari and Member V. Anandarajan under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act (SAFEMA), underscores the limits of regulatory overreach in digital asset markets.
Background of the ED Investigation
The case stems from a fraud probe where operators lured investors into apps with promises of daily or weekly returns before vanishing with the money. Authorities filed cheating charges under Section 420 of the Indian Penal Code, prompting the ED to open an Enforcement Case Information Report (ECIR).
Investigators traced roughly ₹19.67 crore in suspected proceeds to a single BitBNS user account. Claiming the platform facilitated money layering, the ED froze more than ₹29 crore in the company’s bank accounts through a provisional order dated December 21, 2021, later confirmed.
Tribunal’s Ruling in Favor of BitBNS
The tribunal sided with BitBNS, emphasizing its role as a mere transaction facilitator. The platform connects buyers and sellers but holds no control over virtual digital assets (VDAs) once users purchase and transfer them.
Records confirm the user converted the deposits into VDAs and withdrew them to another venue well before the freeze. The account holder, onboarded 2.5 years earlier, completed strict KYC checks, including video verification and geo-tagging, with no ties to the 13 primary fraud suspects.
Authorities failed to justify attaching funds exceeding the alleged ₹19.67 crore. In its order, the tribunal declared: “The appellant company was functioning as a transaction facilitator having no control over the use of VDAs by users post-purchase… we find no reason for the respondents to attach the bank account of the appellant company.”
This reversal highlights a core principle of cryptocurrency: self-custody. Once users move assets off exchanges into their own wallets, platforms relinquish control, shielding businesses from liability over downstream actions. Yet public blockchains’ transparency often exposes wallet activity, drawing regulators to innocent parties through traceable trails.
Implications for Crypto and Financial Freedom
The ruling reinforces free-market dynamics, where innovation thrives without undue government interference. It serves as a reminder that overzealous enforcement risks punishing facilitators rather than perpetrators, potentially stifling user-controlled digital finance.
Privacy-preserving systems address these traceability pitfalls head-on. Networks like Zano, with confidential transactions by default, minimize public ledger exposure, allowing legitimate users to transact without becoming regulatory targets. Such infrastructure bolsters fungibility and reduces the entanglement seen in high-profile laundering probes.
