Pakistan’s judiciary just provided clarity on a contentious issue. The Lahore High Court ruled that crypto P2P trading isn’t automatically illegal. Therefore, peer-to-peer cryptocurrency transactions receive legal protection. Moreover, Justice Tariq Saleem Sheikh’s 15-page judgment upheld pre-arrest bail for three accused individuals. The ruling distinguished between legitimate trading and actual fraud carefully.
The case involved a complainant who alleged losing Rs. 686 million during cryptocurrency transactions. He claimed to have purchased approximately 270,000 USDT after consulting an acquaintance. Subsequently, his crypto account was frozen. Meanwhile, the Federal Investigation Agency charged three individuals with fraud and electronic crimes. However, the court found insufficient evidence proving criminal conduct specifically.
The judgment established important distinctions for crypto P2P trading fundamentally. Merely transferring virtual assets doesn’t constitute fraud independently. Additionally, receiving money through bank accounts carries no criminal liability by itself. Investigators must prove actual deception occurred. Furthermore, they need evidence of forged electronic records. Still, prosecutors must demonstrate direct responsibility for account freezing too.
The court clarified that cryptocurrency status remains ambiguous yet consistent. Although cryptocurrencies lack legal tender recognition in Pakistan, this distinction matters critically. The absence of legal tender status doesn’t automatically criminalize transactions. Furthermore, the State Bank’s 2018 circular restricts regulated financial institutions only. It doesn’t criminalize private individual trading whatsoever.
Foreign exchange violations require specific proof additionally. Buying or selling USDT doesn’t violate currency laws automatically. Prosecutors must establish that illegal foreign exchange transactions occurred directly. Therefore, standard cryptocurrency trading falls outside these prohibitions typically.
The LHC found no evidence supporting FIA’s fraud allegations. The accused hadn’t misled the complainant demonstrably. Electronic records showed no manipulation or forgery whatsoever. Additionally, the accused didn’t control the platform freezing assets. Consequently, their physical custody proved unnecessary entirely.
The judgment protects legitimate traders while maintaining fraud prosecution capabilities. Courts can still prosecute actual deception and criminal schemes. However, ordinary cryptocurrency transactions receive legal recognition now. This crypto P2P trading ruling establishes important precedent for Pakistani digital finance development. Finally, the decision balances innovation with consumer protection appropriately.
