The country’s first virtual currency ATM, installed in Bengaluru’s Kempfort Mall with much fanfare only a week ago, has now been closed and its co-founder arrested for setting up the ATM without regulatory permission.
The Cyber Crime Police in Bengaluru has registered a case against Unocoin for setting up the ATM without permission and have also arrested the company's co-founder Harish BN (37).
The ATM was set up despite the Reserve Bank of India's crackdown on cryptocurrency in India.
“The ATM kiosk installed by Unocoin in Bengaluru's Kempfort Mall has not taken any permission from the state government and is dealing in cryptocurrency outside the remit of the law," the Cyber Crime department of the Central Crime Branch (CCB) stated in a media release.
The police also arrested Harish and seized several gadgets, including laptops, one mobile and one cryptocurrency besides device three credit cards, five debit cards, one passport, five company seals and Rs1.79 lakh in cash from him. The materials seized included two Harish was produced in the 1st ACMM Court in Bengaluru before he was taken into police custody.
Installed by virtual currency exchange company Unocoin, the ATM in Kempfort Mall allowed customers to deposit and withdraw a minimum amount of Rs1,000
But the so-called bitcoin ATM breached RBI regulations against bitcoin transactions. The RBI had, earlier this year, issued a notification – ‘Prohibition on Dealing in Virtual Currencies’ – that financial institutions associated with the RBI are not permitted to deal in cryptocurrency.
The central bank had also stated that cryptocurrency is not legal tender.
Unocoin claimed in a statement that it is merely attempting to accommodate “newer mechanisms and solutions to reduce the hurdle facing (regulatory) hurdles by the present central governments stand.”
Users of the erstwhile ATM could withdraw and deposit bitcoins but could not buy or sell them. Unocoin was planning to install similar ATMs in Mumbai and Delhi.
The ATM, however, was not operational and was also shifted from Bengaluru's Kempfort Mall to another location after several reports emerged in the media.