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Unocoin co-founder and chief executive Sathvik Vishwanath was arrested in Bengaluru on October 24, 2018, one day after fellow co-founder Harish B.V. was detained at the company’s cryptocurrency kiosk in Kemp Fort Mall. Police alleged that the machine lacked required permissions and supported unlawful cryptocurrency dealing. Unocoin said it was a customer cash-and-account kiosk, not a bank-connected ATM. In February 2021, the Karnataka High Court quashed the FIR, charge sheet and related criminal proceedings against the founders.
That sequence matters: the arrests arose from a disputed kiosk and India’s uncertain 2018 regulatory environment, while the later court order set aside the criminal case. It did not establish that every cryptocurrency activity was legal or that every company decision was correct.
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What Unocoin was and what the kiosk was supposed to do
Founded in 2013, Unocoin was one of India’s early cryptocurrency exchanges. Vishwanath was its chief executive and co-founder; Harish B.V. was another co-founder and served as chief financial and compliance officer. Public accounts also identify Sunny Ray and Abhinand Kaseti among the founders.
Unocoin promoted the Kemp Fort Mall machine as India’s first cryptocurrency or “Bitcoin ATM.” Its intended operation was more limited than that label suggested:
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- A customer would deposit or withdraw Indian rupees at the kiosk.
- The amount would be associated with the customer’s Unocoin account.
- The customer could then use the account balance on Unocoin’s website or app to buy or sell cryptocurrency.
Contemporary reporting said the machine was still undergoing checks and was not fully operational when Harish was detained. Unocoin later emphasized that the device was not connected to the banking network and did not dispense Bitcoin directly. It facilitated transactions between customers and Unocoin.
How the arrests unfolded
Harish B.V. was detained first
On October 23, 2018, Bengaluru Cyber Crime or Central Crime Branch personnel detained Harish at the Kemp Fort Mall kiosk and subsequently arrested him. The kiosk was seized. The FIR was dated October 23 and became Crime No. 3761/2018.
Vishwanath was arrested the next day
Vishwanath was arrested on October 24, one day later. In an interview republished by Scroll, he said he was at home trying to work out how to secure Harish’s release when officials arrived, took him for questioning, charged him and sent him to judicial custody. A contemporary New Indian Express report placed the arrest in Tumakuru. Because accounts differ on the precise location, the well-established point is the timing: Vishwanath was arrested the day after Harish.
What Vishwanath said about the arrest
Vishwanath told Quartz, in the account republished by Scroll, that he expected to be next after Harish’s detention. He described himself as surprised and concerned by the police response. He rejected any suggestion that Unocoin had promised customers doubled returns or intended to cheat them.
He also argued that confusion about cryptocurrency, including descriptions of crypto as simply “illegal” in India, contributed to the hostile response. Those statements are Vishwanath’s recollection and interpretation, not independent findings about what happened.
Police allegations and Unocoin’s defense
| Police or FIR position | Unocoin’s position |
|---|---|
| Police alleged that the kiosk had been installed without required state-government permissions. | Unocoin said the mall’s existing trade permissions covered the installation and that no additional licence was required. |
| Investigators alleged that the operation dealt in cryptocurrency outside the applicable legal framework. | The company said it was facilitating customer transactions with Unocoin, not operating a banking ATM or an unlicensed bank service. |
| Reported allegations included cheating, criminal conspiracy, forgery and use of forged documents as genuine, alongside Information Technology Act and Indian Penal Code provisions. | Unocoin disputed the substance of the allegations and said the machine’s function had been misunderstood. |
The reported FIR invoked IPC Sections 34, 420, 465, 468, 471, 474 and 120B, as well as Section 66 of the Information Technology Act. An arrest or charge is not a finding of guilt.
Why calling it an “ATM” mattered
The terminology was more than a marketing detail. “ATM” commonly means a machine connected to a regulated banking network that dispenses or accepts cash. Unocoin’s kiosk instead linked cash activity to customer balances on its own exchange.
Vishwanath later described the use of “ATM” as a major branding mistake because it could imply a regulatory status or banking relationship the machine did not have. Unocoin’s later account is available in its contemporaneous statement. The public-facing label helped create the classification dispute at the center of the arrest.
Was cryptocurrency illegal in India in October 2018?
It is inaccurate to reduce the position to “Bitcoin was illegal.” On April 6, 2018, the Reserve Bank of India directed regulated entities not to provide services to businesses dealing in virtual currencies. That restriction made banking access and ordinary exchange operations extremely difficult, but it was not the same as a nationwide criminal statute automatically banning possession or trading.
The Supreme Court later set aside the RBI circular in Internet and Mobile Association of India v. Reserve Bank of India. The regulatory environment remained unsettled; the decision was not a blanket legalization of every crypto activity in India.
What happened immediately in court
Vishwanath filed a habeas corpus petition concerning Harish’s detention. The Karnataka High Court dismissed it after the state told the court that Harish had been arrested under a registered FIR and produced before a magistrate. During the proceedings, the court was informed that Vishwanath had also been arrested and was in judicial custody. The 2018 petition addressed the legality of the detention process; it did not decide the underlying criminal case. Contemporary coverage appears in the New Indian Express and the reported case record.
How the criminal case ended
In February 2021, the Karnataka High Court quashed the October 23, 2018 FIR, the May 3, 2019 charge sheet, the order taking cognizance and related criminal proceedings against Unocoin, Harish B.V. and Sathvik Vishwanath in Crime No. 3761/2018. The court’s reported reasoning linked the proceedings to the RBI circular that the Supreme Court had already set aside. The judgment is reproduced in the reported Karnataka High Court record; summaries are also available from The News Minute, Bar & Bench and LiveLaw.
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Quashing set aside the specified prosecution. It was not a declaration that every Unocoin action complied with every rule, nor a blanket ruling on cryptocurrency businesses.
Why this episode remains important
- Regulatory ambiguity: Exchanges operated amid severe banking restrictions without a simple statutory answer covering every crypto activity.
- Classification risk: A company’s technical description of a machine can differ sharply from how law enforcement interprets a familiar financial term.
- Due-process perspective: The arrests, remand and allegations were stages of a case, not convictions.
- Long-term outcome: Coverage that stops at the 2018 arrests misses the 2021 quashing that ended the criminal proceedings.
A contemporary Scroll account said Unocoin claimed nearly 1.3 million customers and 45 investors across five countries. Those figures describe the company’s 2018 claims, not current verified scale. Contemporary reports also said officials seized laptops, a mobile phone, payment cards, a passport, company seals, a cryptocurrency device and about ₹1.8 lakh in cash from the office.
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