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The Truth Of Unocoin’s Cryptocurrency ATM and the Arrest of a Co-Founder

“How are they selling Bitcoins on an ATM?”, asked my dad while reading the news out of a Gujarati Newspaper. I woke up early the other day and was having Breakfast with my dad when the news of Unocoin’s ATM reached mainstream media. “Did you write about this on Coin Crunch?”, he asked after I explained to him that it is not a cryptocurrency ATM, just an INR ATM to deposit and withdraw Rupees from your Unocoin account. 

The truth is, despite knowing that media is mis-reporting it, despite putting out a statement on twitter and despite knowing a lot about the “Unocoin Kiosk”, I decided to sit on the story. We broke the story and got acknowledged nowhere for it. But I didn’t write a thorough piece because my gut asked me to wait. Sometimes when your gut tells you to wait, you wait. And, here we are. 

Unocoin’s ATM was seized by the Cyber Crime Branch, Bengaluru. Co-Founder Harish BV, 37 has been arrested. Harish was produced to the court, which sent him to police custody for seven days. He was arrested for operating the device illegally without any approvals from authorities the reports in media say. 

Update: Unocoin’s CEO and Co-founder Sathvik Vishwanath was arrested on Wednesday and has been sent to police custody for seven days as well. 

According to a report in Times of India, in addition to the kiosk, the police also seized ‘two laptops, a mobile, three credit cards, five debit cards, a passport, five seals of Unocoin company, a cryptocurrency device and Rs 1.8 lakh.’

The Truth of the ATM

Let us begin by digging into the reality about a machine that was disbursing and accepting cash for Unocoin Customers – reported as Unocoin’s Cryptocurrency ATM. 

Unocoin Rebranded their ATM as a Cash deposit and withdrawal Kiosk

It is Not A Cryptocurrency ATM

  • Can you buy Bitcoin with it? No.
  • Can you buy any altcoins with it? No.
  • Can you deposit and Withdraw INR in cash with it? Yes. 
  • Then how is it a Cryptocurrency ATM or vending machine? 

While the headlines floating around the mass media were about how you can now buy Bitcoin in India’s first ever Bitcoin ATM in Bengaluru, there was no truth to it. 

In reality, the only Bitcoin Vending Machine or an ATM, also India’s first, even before Unocoin’s INR ATM came to being sat in a shop on MG road in Delhi since April. It was installed and operated by Digital Assets LLP. 

As of today morning, their twitter account, that was openly criticising Unocoin for taking their glory has been taken private, hence their tweets are no longer accessible. The company’s website has expired. Bitcoin ATM tracking website, Coin ATM radar reports that the Bitcoin ATM machine has been removed. It almost seems like a precautionary measure taken to stop the heat from Bengaluru to reach Delhi.

The Bitcoin Vending Machine installed in Delhi in April, is now removed. Source: Coin ATM Radar

Is Unocoin’s ATM illegal?

Unocoin’s ATM was merely a desk to accept cash or give cash to their users. Opinion on Unocoin ATM’s legality stands divided. Unocoin has insisted that they are breaking no laws and not in violation of RBI guidelines on prohibition in dealing with virtual currencies, aka Banking ban. 

“Our ATMs do not need banking network or relationship to work. They just work as the cash deposit and dispensing alternative for Unocoin customers,”

Sathvik Vishwanath, CEO, Unocoin (as reported on Quartz)

“Cash Handling restrictions in India are applied to it”, said Vishwanath over a text exchange. Vishwanath tells me that many non-unocoin customers were trying to use it as a Bank ATM and hence to avoid confusion, they are rebranding it to “Kiosks”.

You could deposit or withdraw a minimum of 1000 INR from the machine with a limit to 10000 INR per day, only in the multiples of 500. Replace the machine with a person who is taking and giving cash on behalf of Unocoin to its customers within the limits set by the law, you might warm up to the machine. Even CryptoKanoon, blockchain news analysts agree. 

Blame the Media

Media thrives on sensationalisation. A headline “An Indian Bitcoin Exchange introduces machine for its customers to deposit and withdraw INR in cash” is far too boring compared to “India gets its first Bitcoin ATM to buy and sell Bitcoin by cash amid RBI’s ban”. 

There is little truth to the second one, but it is what gets the clicks. 

Mainstream media hyped the ATM as a cryptocurrency ATM and that caught the attention of many outside of the crypto ecosystem, such as my dad. Now, I can explain it to my father, I can write an article and explain it to our readers, but we are still far from the reach that mainstream media has and it is bound to catch some unwanted and unreasonable eyes. 

Unocoin immediately removed their ATM from its place and released a statement. 

Enters Cyber Crime Branch

Crypto Communities such as Coin Crunch, Indiabits and others receive information on happenings around the cryptosphere faster than mainstream media does most of the time. 

On Monday, a telegram user Sangan found out that the CCB (Cyber Crime Branch, Bengaluru) were investigating the Unocoin ATM at Fort Kemp Mall, where it was installed. Photos shared by Sangan spread within the community. I posted one on twitter.

Vishwanath confirmed in a private message that the rumours were true, however he assured that all was okay. There was no mention of an arrest. The arrests happened on Tuesday according to reports. 

There are no comments from Unocoin yet on the arrest. However, it was reported that Sathvik Vishwanath was arrested by the CCB on Wednesday. The arrest news came out after this article was published. 

Cause of Arrest of Unocoin’s Co-Founder

As per the reports in local media, the arrest of Unocoin Co-founder Harish BV is on the grounds that the company did not take appropriate permissions before installing the machine. 

Before the reports were clear, some media channels spread the news that Harish BV was allegedly under arrest for money laundering. 

Installing a cash deposit and withdrawal machine does require permissions and Unocoin seems to have forgotten to take them or deliberately skipped them. It is unclear as of now and we shall soon find out more. 

More media reports after the arrest of CEO Sathvik Vishwanath suggests that police has logged a case against the founders for Cheating, forgery and fraud as well. 

Cryptocurrency is an unregulated space. Many people still believe crypto is illegal and banned in India while it is not. It is not a legal tender but mainstream media spreads this message like it is illegal. We cannot blame the authorities for not knowing the whole truth. They probably followed the negativity on Unocoin’s ATM and began an investigation. 

To Summarise

Let me summarise this in a quick listicle fashion

  • On Oct 09, 2018 – Leaked images of Unocoin’s Crypto ATM surfaces on social media. 
  • Oct 10, 2018 to Oct 14, 2018 – Multiple media outlets begin reporting on Unocoin’s ATM
  • Oct 15, 2018 – Unocoin makes official announcement, plans 30 ATMs across the country. For the purpose of depositing and withdrawing INR, only for Unocoin customers. 
  • Between Oct 16, 2018 and Oct 22, 2018 – Mainstream media spread the news like wildfire with misinformation such as 
    1. India’s first Cryptocurrency ATM
    2. Buy Bitcoin with Cash from ATM
  • Oct 22, 2018 – Cyber Crime Branch Bengaluru opens investigation 
  • Oct 23, 2018 – Unocoin ATM is seized and co-founder Harish BV arrested and sent to Police Custody for Seven days by court. 
  • Oct 24, 2018 – Unocoin CEO Sathvik Vishwanath arrested.

We at Coin Crunch truly believe that justice will prevail and hope for a speedy trial in Apex court where exchanges are taking on the RBI for its Banking ban. A ruling or regulations from the Government will clear the air around the uncertainty of Cryptocurrency and blockchain space in India. 

Update Note: The article was updated to include details of Unocoin CEO Sathvik Vishwanath’s arrest.

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