The Lahore High Court (LHC) this week ruled that peer-to-peer (P2P) cryptocurrency transactions and receiving related funds in a bank account, by themselves, are not a fraud or an electronic crime.
In a detailed 15-page judgment, Justice Tariq Saleem Sheikh upheld the pre-arrest bail of three individuals accused by the Federal Investigation Agency (FIA) in a case linked to cryptocurrency trading.
FIA said the accused received money from their victim through their bank accounts. The complainant claimed he transferred nearly Rs. 686 million while purchasing around 270,000 USDT after being persuaded by an acquaintance to invest in cryptocurrency. He later alleged that his crypto account was frozen.
The court held that merely transferring virtual assets or receiving money through a bank account is insufficient to establish offences such as fraud, forgery, or violations under the Prevention of Electronic Crimes Act (PECA).
It said investigators must prove that the accused deceived the investor, created forged electronic records, or were directly responsible for freezing the complainant’s account.
The judgment also clarified that although cryptocurrencies are not recognized as legal tender in Pakistan, this alone does not make them illegal. It added that the State Bank of Pakistan’s 2018 circular restricts regulated financial institutions rather than private individuals and does not create a criminal offence for personal crypto trading.
The court added that buying or selling USDT does not violate foreign exchange laws unless prosecutors can establish an illegal foreign exchange transaction.
LHC didn’t find any evidence that the accused misled the complainant, manipulated electronic records, or controlled the platform where the assets were frozen.
It ruled that their physical custody was unnecessary and allowed their pre-arrest bail to stand.
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