- Court limits freezing to fraud amounts in cryptocurrency investigations.
- Full account freezes deprive individuals of financial stability and livelihood.
In a landmark ruling, the Madras High Court in Chennai has clarified that police and investigative agencies cannot freeze entire bank accounts while probing cyber crime cases. Instead, they are allowed to freeze only the specific amount involved in the alleged fraud. This decision comes as a critical intervention at a time when account freezes have become increasingly common in investigations linked to cryptocurrency transactions.
The ruling was delivered by Justice G. Jayachandran in response to a petition from Mohammed Saifullah, whose HDFC Bank account was frozen for over a year by the Telangana State Cyber Security Bureau (TSCSB) during an ongoing cryptocurrency investigation. The case in question involved only ₹2.48 lakh, yet the entire balance of ₹9.69 lakh was rendered inaccessible, according to the local media outlet.
Moreover, the court found that freezing entire accounts, especially in cryptocurrency-related cases, unfairly deprives individuals of their financial stability. And hinders their ability to conduct daily transactions. Justice Jayachandran underscored that under the guise of investigation. It, which is freezing an entire account without specifying the amount tied to the alleged fraud is improper.
Legal Requirement For Notifying
The court further stressed the frequent disregard of legal requirements for notifying both account holders. And the court when accounts are frozen. It is under Section 106 of the BNSS, which replaced Section 102 of the Criminal Procedure Code. The authorities are mandated to inform the judicial magistrate of any seizure of assets. In many cryptocurrency cases, individuals are left unaware of why their accounts were frozen until significant financial disruption has occurred.
By allowing Saifullah to access his account with the condition of maintaining the disputed ₹2.48 lakh, the ruling serves as a reminder for investigative agencies to follow due process in cryptocurrency fraud investigations. Some community members feel this decision sets a precedent for protecting citizens’ rights amid the growing use of cryptocurrencies.
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