Delhi High Court Denies Bail to Crypto Fraudster Umesh Verma Over 30% Returns Scheme

The Delhi High Court has denied bail to businessman Umesh Verma, who is accused of orchestrating a fraudulent cryptocurrency investment scheme. The court's decision was driven by concerns over the potential damage to India’s financial system, as such activities could convert legal funds into untraceable assets, posing significant risks to economic stability.

Justice Girish Kathpalia emphasized that crypto-related fraud carries serious risks to the economy. The case involves deliberate misuse of investor trust and financial resources, highlighting the need for stringent measures to prevent financial crimes that could destabilize the economic landscape. The court's ruling underscores the judiciary's position against crypto-based fraud and the urgency for stronger oversight and investor protection.

Verma, the founder of the Dubai-based Pluto Exchange, was arrested in December 2020 following a complaint by investor Joginder Kumar. Kumar alleged that he was promised monthly returns of up to 30 percent on a ₹5 lakh investment. Investigations by the Economic Offences Wing revealed that Verma defrauded at least 61 investors from various states, with combined losses nearing ₹50 lakh. Despite regulatory warnings, Verma continued to collect funds from unsuspecting individuals, demonstrating a pattern of deception and defiance of the law.

The court noted Verma's history of 13 convictions for similar frauds and his inability to honor mediation agreements. His continued operation of the fraud scheme, even after losing recognition among authorities, further highlighted his intent to cheat and control investors. Verma argued that his business failed due to changing policies and that he had paid many investors’ claims. However, the court concluded that his actions were clearly fraudulent and intended to mislead individuals.

India has implemented strict measures to control crypto-related transactions in recent years. A new tax regime, involving a 30 percent tax on gains and a one percent deduction on high-value transfers, was announced following the Supreme Court’s 2020 reversal of the 2018 Reserve Bank ban. In 2023, the government included crypto transactions in the Prevention of Money Laundering Act, reflecting the increasing scrutiny and regulatory pressure on the industry. Courts have repeatedly challenged legislatures to develop a transparent regulatory framework to curb the industry’s increasing fraud rate.

The court’s decision to deny bail to Verma reinforces the judiciary’s stance against crypto-based fraud. As scams increase, the call for stronger oversight and investor protection continues to gain urgency. The denial of bail serves as a warning to others involved in similar activities, underscoring the legal system's commitment to maintaining financial stability and protecting the public from fraudulent schemes. This decision comes at a time when cryptocurrency-related scams are increasingly being scrutinized for their potential to disrupt traditional financial systems, reflecting a growing awareness of the complexities and dangers posed by digital currencies, particularly when used for illicit activities.