Hacked Indian Bank Moves Against Bitcoin in Court

A bug in the Unified Payments Interface (UPI) app of Bank of Maharashtra (BoM) in India has been reportedly hacked to access funds that were later used to invest in Bitcoin through three companies across the city.

A report says four persons hacked and made away with Rs 6.14 crore (about $1 mln) from several accounts in 23 branches of the bank within 49 days.

Anti-Bitcoin action demanded

As a result, the bank has now filed an application in the Indian courts for action against Bitcoin companies in India. It also called on the government to provide clarity on India’s position on virtual currencies especially as “there are growing concerns of their use in money laundering or financing terrorism.”

Leading Bitcoin exchange affected

Police have frozen the accounts of the three companies involved in the Bitcoin transactions and recovered Rs 4.58 crore from the accused, which include Rs 1 crore worth of Bitcoin. Zebpay, one of India’s leading Bitcoin exchanges, is among the companies affected by the situation.

Its advocates explain that the platform has not conducted any form of illegal activities as suggested by the bank. It says all transactions on its platform, which a user could only perform after submitting KYC documents, happen strictly via bank accounts and not through cash. Hence, transactions are recorded and easily identifiable for accountability.

Though Bitcoin is not currently regulated in India, the country is very strategic with regards to the currency’s global growth.

The demonetization exercise embarked upon by the country late last year played a role in the rise of Bitcoin price over the $1,000 range. With its vast population and developing market, a regulation of the digital currency by the Indian government has been considered in place to advance its adoption. Reports have it that the government has plans to regulate it so that all the activities related to Bitcoin could be properly monitored and applicable taxes added.

However, the bank hack comes at a time when a committee recently constituted by India’s Reserve Bank looked into activities related to digital currencies such as Bitcoin. In effect, it is expected to slow things down. The committee has to make its recommendations known by May.

The Bitcoin market has been on the lookout for a positive outcome from the Inter-Disciplinary Committee set up earlier in April to take stock of the present status of virtual currencies both in India and globally. It was also established so as to examine the existing global regulatory and legal structures governing the currencies. It would also be expected to suggest measures for dealing with issues related to them, including consumer protection, money laundering, etc.