Summary The Lahore High Court ruled that crypto P2P transactions or bank transfers alone cannot establish fraud, confirming pre-arrest bail for three suspects in an FIA investigation.
LAHORE (Muhammad Ashfaq) – The Lahore High Court has issued a significant ruling on cryptocurrency-related transactions, holding that merely conducting peer-to-peer (P2P) virtual asset transactions or receiving money in a bank account does not, by itself, constitute evidence of fraud, forgery or electronic crime.
Justice Tariq Saleem Sheikh issued a detailed 15-page judgment while confirming the pre-arrest bail of three accused in a case related to cryptocurrency transactions.
The Federal Investigation Agency (FIA) had registered a case against Hammad Ali, Asad Amjad and Muhammad Athar under Sections 419, 420, 468 and 471 of the Pakistan Penal Code, along with Sections 13 and 14 of the Prevention of Electronic Crimes Act (PECA), 2016. The accused were alleged to have worked as P2P merchants and received funds from the complainant through their bank accounts.
According to the judgment, complainant Muhammad Farhan told the FIA that he had been persuaded by an acquaintance to invest in cryptocurrency. He initially purchased 25,000 USDT and later continued investing after suffering losses, eventually buying 270,000 USDT by transferring nearly Rs686 million to different individuals.
The complainant stated that he sold his house, vehicles, business assets and gold to finance the investments. He later claimed that the cryptocurrency platform froze his account, leaving him unable to access his virtual assets.
In the ruling, Justice Tariq Saleem Sheikh held that the transfer of virtual assets through an online platform or the receipt of funds in a person's bank account does not automatically prove involvement in fraud, forgery or electronic crime. The court said the prosecution must establish that the accused induced the complainant to invest through deception, created fake electronic records or played a role in freezing the complainant's account.
The court further observed that while virtual assets and cryptocurrencies are not legal tender in Pakistan, they cannot be declared illegal or prohibited solely on that basis. It also noted that the State Bank of Pakistan's 2018 circular applied to banks and regulated entities and did not create a criminal offence for private individuals. The judgment added that buying or selling USDT alone does not amount to a violation of the Foreign Exchange Regulation Act unless an unlawful foreign exchange transaction is specifically established.
The court found no evidence on record showing that the accused deceived the complainant, created forged electronic records, committed electronic fraud or controlled the platform that froze the complainant's account. It also noted that all evidence was documentary in nature, the accused had joined the investigation and no need for their physical custody had been established.
On these grounds, the Lahore High Court confirmed the interim pre-arrest bail of all three petitioners, directing each of them to furnish surety bonds of Rs1 million.
