Corporate frauds investigations in India are still trying to accommodate the use of information and communication technology (ICT) related investigation tools. Scientific and techno legal methodologies like e-discovery and cyber forensics practices are still not used in a full fledged manner in India. The growing importance and use of e-discovery for ascertaining corporate frauds cannot be ignored any more.
Law enforcement agencies of India have not used the cyber forensics best practices while engaging in techno legal investigations. Whether it is CBI’s investigation or IPL match fixing case or forensic analysis of Nokia’s computers, a lack of techno legal and scientific approach was very much apparent. In the absence of clear regulations and guidelines for effective investigation of cyber crimes in India this task has become even more difficult to achieve.
Recently the Reserve Bank of India (RBI) cautioned users of virtual currencies against various risks. Reacting immediately, the Enforcement Directorate (ED) immediately searched the office and website of Seven Digital Cash LLP. The ED officials raided the premises of Mahim Gupta in Ahmedabad, who provides a trading platform through his website buysellbit.co.in. During the preliminary investigation, the ED found that it is in clear violation of the Foreign Exchange Management Act (FEMA) rules of the country as central bank does not permit such transactions.
”We have found that through the website 400 persons have recorded 1,000 transactions worth a few crores of rupees. We are gathering the data of the transactions and name of the people who have transacted in the virtual currency from Gupta’s server that is hired in the US. At present, we believe that this is a violation of foreign exchange regulations of the country. If we are able to establish money laundering aspect then he can be arrested,” said a top ED official.
A separate raid was also conducted in Satellite area of the city. However, the person the investigation agency was looking for could not be found. ”When we reached his office, he was not there. We have sealed the premises,” the official added.
As per the sources, the owners of the both the Bitcoin trading firm would be booked under FEMA Act initially. However, after detail investigation of the data collected, if any hawala transaction or criminal nature transaction is detected then they would be booked under the appropriate Act. Even the provisions of Information Technology Act, 2000 can be invoked against these websites.
Bitcoin users in India are vulnerable to legal actions of diverse nature. Even other Bitcoin websites in India can be prosecuted in due course of time. Even Income Tax Overseas Units (ITOUs) of India have been established in foreign countries to curb black money. With the present corporate environment of India fast changing, taking Indian laws for granted by the Bitcoin websites is not a good strategy.
The Enforcement Directorate (ED) must also use e-discovery and cyber forensics methods to detect possible legal violations by Bitcoin websites so that only legitimate and law abiding websites can operate. It is high time for the ED to use e-discovery and cyber forensics methodologies to gather crucial evidence against the guilty website and successfully prosecute them for violating Indian laws.