Key Highlights
- The Punjab and Haryana High Court denied anticipatory bail in a digital arrest case involving the siphoning of Rs 2.65 crore.
- Investigators traced part of the stolen funds into cryptocurrency purchases, strengthening the prosecution’s money-trail findings.
- The court said custodial interrogation is necessary at this stage and granting bail could derail the ongoing probe.
In India, the Punjab and Haryana High Court has denied anticipatory bail to an accused in a high-value “digital arrest” cyber fraud case, after investigators traced part of the stolen funds into cryptocurrency transactions.
As per a local report, Justice Rajesh Bhardwaj dismissed the pre-arrest bail plea on February 9, observing that the accused had actively exploited technology to cheat the complainant and siphon off his money.
“The petitioner has taken undue benefit of technology and actively participated in the offence of cheating and siphoning of the hard-earned money of the complainant,” the court said.
Digital arrest scam and forged court order
The FIR was registered on August 6, 2025, at the Cyber Crime Police Station in Khanna, Ludhiana, Punjab. The complainant said he was put under “digital arrest” and forced to transfer more than Rs 2.65 crore in several transactions.
As per the prosecution, the accused used a forged order purportedly issued by the Supreme Court of India to lend authenticity to the fraud.
Funds routed through firms and crypto conversions
Investigators told the court that the siphoned money was distributed across accounts linked to 18 firms located in different parts of India. Importantly, investigators found that part of the stolen money was converted into cryptocurrency to move the funds further.
The prosecution said a co-accused used around Rs 8.62 lakh to buy crypto through a mobile application. The crypto assets were later sold, and the funds were credited to accounts of other accomplices, forming a key part of the digital money trail.
Shell firm accounts under lens
One of the major transactions involved Rs 72.42 lakh deposited into the account of K.K. Enterprises, Jalandhar. While the firm’s proprietor is a driver by profession, the court noted material suggesting that the accused had full access to and control over the firm’s bank accounts.
According to the state, the accused gained control of these accounts by befriending the proprietor’s family through his wife’s beauty parlour business, promising assistance in settling abroad. Investigators further alleged that money was withdrawn by the petitioner, with some amounts transferred directly into his wife’s bank account.
Defence claims dismissed
Appearing for the petitioner, advocate Sandeep Arora argued that the accused had been falsely implicated and had no connection with K.K. He argued that the petitioner had no link with K.K. Enterprises and had no previous criminal record. The defence also said the petitioner was willing to resolve the matter and repay the money, if required.
The court, however, was not persuaded, citing the gravity of the allegations and the large scale of the fraud involved.
The High Court held that the investigation is still at an early stage and that custodial interrogation is necessary to trace the full money trail, including cryptocurrency transactions.
Granting anticipatory bail at this stage, the court said, would scuttle the ongoing investigation.
Wider crypto crime context
The order comes at a time when authorities in India are stepping up action against crypto-linked cyber frauds. The order comes amid a wider crackdown on crypto-linked frauds in India.
Recently, the Ahmedabad Police arrested key accused in a separate crypto scam involving nearly Rs 100 crore, exposing similar patterns of fund layering and digital laundering. While another investigation uncovered the theft of USDT worth about Rs 19 crore through a fake KYC scheme.
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