Supreme Court of India Directs RBI to Unfreeze Koinex’s Crypto Account
The Honorable Supreme Court of India has directed the Reserve Bank of India (RBI) to unfreeze Koinex’s current account with the Central Bank of India, containing over INR 12 crore (or 120 million).
The directive came as a part of the Supreme Court’s judgment in the RBI vs. Internet and Mobile Association of India (IAMAI) matter, wherein Koinex (listed as Discidium Internet Labs Pvt. Ltd.), was petitioner no. 6 in Writ Petition 373 filed in 2018.
In 2018, when Koinex made an attempt to close their Central Bank of India account and requested a demand draft, they were informed that the matter had been referred to higher authorities or regulators and that the account had been frozen. In reply to Koinex’s petition, RBI stated it had not issued any direction to the Central Bank to freeze the account.
The Supreme Court saw RBI’s response to the incident as “lukewarm” and “wholly unjustified.” The judgment went on to clarify that since Koinex’s business activities were not declared to be explicitly unlawful, RBI was obliged to direct the Central Bank of India to “defreeze” the account and release the funds held within, together with the applicable interest rate.
Koinex Was Victim of RBI’s Crypto Ban
Crypto exchanges in India suffered considerably after RBI’s impugned April 2018 directive ring-fencing crypto, which was overturned by the Supreme Court of India yesterday.
Koinex, one of India’s largest cryptocurrency exchanges, fell victim to the nation’s war on digital currencies and closed its operations on June 27, 2019. RBI’s circular caused startups like Koinex considerable financial burden as they continued to operate despite regulatory hurdles.
In a blog post announcing the firm’s closure, Koinex co-founder Rahul Raj stated, “Multiple delays by the government agencies in clarifying the regulatory framework for cryptocurrencies despite our pending writ petition in the Supreme Court of India, coupled with regular disruption in our operations, the final decision has been taken after duly considering all the latest developments in the crypto and blockchain industry in India.”
Raj added that just because of their association with a digital assets exchange operator, their team was forced to answer questions utterly unrelated to crypto transactions, including those about their salaries, rents, and purchases. This, coupled with high costs of operations and consistent denials in accessing payment services, had made continued business economically unfeasible.
Before RBI’s unconstitutional directive, the crypto market in India was worth over $12.9 billion, with crypto exchanges growing at an astronomical rate. However, this growth was short-lived and stalled with the materialization of restrictions on banking institutions that exchanges were dependent upon deeply.
The Supreme Court’s verdict is thus enthusiastically welcomed by digital asset exchange platforms, with many hoping that it will boost the industry once again.