Crypto Exchange Fraud Is Not a Public Law Issue Just Because Many Investors Are Affected: Delhi HC Tells BitBNS Users Their Crypto Dispute Must Be Settled in Civil Court

Delhi High Court: While dismissing an intra-court appeal filed by users of the cryptocurrency exchange platform BitBNS, a Division Bench of Devendra Kumar Upadhyaya, CJ., and Tejas Karia, J., held that disputes arising out of an alleged cyber incident, withdrawal restrictions, and fund mismanagement by a private cryptocurrency exchange are in the nature of private commercial disputes and do not warrant the exercise of writ jurisdiction.

Reiterating that the mere fact that a large number of investors are affected does not convert such disputes into matters involving enforceable public law rights, the Court held that, in the absence of a specific statutory regulatory framework governing cryptocurrency exchanges, no direction could be issued for a Central Bureau of Investigation (CBI)/Special Investigation Team (SIT) investigation or for release of funds and compensation in writ proceedings, leaving the appellants to pursue appropriate civil, consumer, or other remedies available in law.

Background

The appellants, who are users of the cryptocurrency exchange platform BitBNS, challenged the alleged failure of the platform to safeguard users’ funds following a reported cyber incident. BitBNS, operated by Respondent 11 and co-founded by Respondents 12 and 13, had earlier functioned in the backdrop of evolving regulation of virtual digital assets in India. While the Reserve Bank of India’s 2018 Circular restricting banking services to cryptocurrency businesses was set aside by the Supreme Court in Internet and Mobile Assn. of India v. RBI, (2020) 10 SCC 274, the Finance Act, 2022 subsequently introduced a taxation regime for virtual digital assets. On 1 February 2022, BitBNS issued a public statement regarding a cyber incident, after which users were permitted to withdraw only up to ₹5000 per day. Alleging financial fraud, fund mismanagement, operational lapses, and prolonged restrictions on withdrawals, affected users lodged a collective complaint on the National Cyber Crime Portal on 6 September 2024. Thereafter, the appellants filed a writ petition seeking, inter alia, a regulatory framework for cryptocurrency exchanges, a CBI/SIT investigation into the alleged fraud, directions for release of users’ funds, and compensation for losses suffered. The Single Judge dismissed the writ petition, holding that the dispute arose primarily from private law transactions and that BitBNS was not “State” under Article 12 of the Constitution, thereby declining to order a CBI/SIT investigation while granting liberty to the appellants to pursue alternative remedies. Aggrieved by the said decision, the appellants preferred the present intra-court appeal.

Analysis

The Division Bench held that the dispute, in essence, was between individual customers and a private cryptocurrency exchange in relation to a cyber incident, withdrawal restrictions and alleged fund mismanagement, and was therefore in the nature of a private commercial dispute. The Court observed that the mere fact that a large number of investors had been affected did not, by itself, transform the controversy into one involving enforceable public law rights. Since Respondents 11—13 were private entities, neither created, financed nor controlled by the State, and the taxation of virtual digital assets under the Finance Act, 2022 did not render them “State” within the meaning of Article 12 of the Constitution, no case was made out for directing a CBI or SIT investigation. Affirming its earlier decision in Rana Handa v. BitBNS Internet (P) Ltd., 2026 SCC OnLine Del 2399, the Court reiterated that, in the absence of a specific regulatory statute governing cryptocurrency exchanges, writ jurisdiction could not be invoked merely because a large number of investors were affected.

The Court further held that the prayers seeking release of funds, lifting of withdrawal restrictions and grant of compensation involved disputed questions of fact requiring determination of individual account balances, examination of whether the restrictions imposed after the public statement were protective measures or amounted to mismanagement, proof of the cause of loss, determination of culpability and quantification of damages. Such issues required evidence and trial and were not amenable to adjudication in writ proceedings under Article 226. Observing that a collective criminal complaint had already been filed on the National Cyber Crime Portal and that remedies for recovery of funds and compensation remained available before the competent civil courts or consumer fora, the Court held that the appellants were not without remedy.

Decision

Finding no infirmity in the impugned judgment and no ground to distinguish the case from Rana Handa v. BitBNS Internet (P) Ltd., the Division Bench dismissed the appeal, declined to issue a regulatory mandamus or grant monetary relief in writ proceedings, and disposed of the pending application without any order as to costs.

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[Amit Ranjan v. Union of India, LPA 393 of 2026, decided on 2-7-2026]

Advocates who appeared in this case:

For the Appellant: Syed Adil Muneer, AOR, Dinesh Jotwani and Sharanya Tripathi, Advocates

For the Respondent: Amit Tiwari, CGSC, Premtosh K. Mishra, SPP with Ayushi Srivastava, Arpan Narwal, Kushagra Malik, Abhinav Sharma, Dipan Sethi, Snehashish Bhattacharya, Anubhav Upadhyay, Rohan Kothari and Shivani Pegatraju, Advocates

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