Delhi High Court rejects investor pleas seeking crypto regulation, CBI probe into Bitbns

The Delhi High Court on February 11 dismissed pleas by cryptocurrency investors seeking regulation of crypto exchanges and a probe by Central Bureau of Investigation (CBI) into Bitbns and compensation for losses. [Aditya Malhotra v Union of India; Rana Handa v Bitbns Internet]..Justice Purushaindra Kumar Kaurav held that the petition was not maintainable in writ jurisdiction since the dispute was against a private crypto exchange not amenable to writs. He also ruled that neither a CBI probe nor directions to frame cryptocurrency regulation could be issued in the absence of exceptional circumstances. .The Court added that compensation claims involve disputed facts and must be pursued before appropriate civil or statutory forums.."If there is no regulation governing the preliminary issue, it is for the legislature to consider and address the matter," the Court said..The petitioner, one Rana Handa, approached the High Court alleging that he invested ₹14.22 lakh on the Bitbns platform and faced withdrawal restrictions along with discrepancies in the valuation of his Bitcoin holdings. He sought directions for stricter regulation of cryptocurrency exchanges, constitution of a Special Investigation Team under the CBI and release of his funds.The Court declined the reliefs, noting that the petitioner had alternative remedies available under the statutory framework, including approaching the jurisdictional Magistrate if an FIR is not registered. It also held that private entities such as cryptocurrency exchanges do not fall within the definition of “State” under Article 12 and therefore, cannot be subjected to writ directions for release of funds."They are not discharging any public functions. They, therefore, are not amenable to the writ jurisdiction of this Court," the judge said.On the plea seeking a regulatory framework, the Court emphasised that writ jurisdiction is meant to enforce existing statutory duties and cannot be used to compel the legislature to enact laws or policies in a particular manner..Relying on this reasoning, the Court dismissed a connected petition filed by multiple investors in Aditya Malhotra & Ors. v. Union of India & Ors., which sought similar directions against Bitbns, including a CBI probe, release of funds and compensation for alleged losses.In the Malhotra case, the Court held that claims for compensation involved disputed questions of fact requiring evidence and trial, and therefore could not be adjudicated in writ proceedings. The investors were granted liberty to pursue their claims before appropriate civil or statutory forums..The petitioners were represented by advocates Kartik Malhotra, Anindit Mandal, Sushant Gautam and Dinesh Jotwani..The respondents were represented by advocates Dipan Sethi, Snehashish Bhattacharya, Amit Tiwari, Ayushi Srivastava, Ayush Tanwar, Arpan Narwal, Kushagra Malik, Anurag Jain, Vipul Ganda, Ishan Upadhaya, Sakshi Panwar, Udita Singh, Rohan Kothari, Aditya Wadhwa, Shivani Pegatraju, Anupam S Sharma, Harpreet Kalsi, Ripudaman Sharma, Vashisht Rao, Riya Sachdeva, Amisha P Dash, Aditya Verma, Parkhi Rai and K Rigved Prasad..[Read Rana Handa Judgment].[Read Aditya Malhotra Judgment].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.