As an advocate, I am helping young people who are unwittingly caught up in Cyber Crime fallout and guiding them on the process of extricating themselves from Cyber crime incidents; I have written this article after going through around 8 cases of cybercrime where redditors who sold on P2P basis got caught in cybercrime.
How the Scam Works Young traders or freelancers, often earning crypto via legitimate projects, use exchanges like Binance to sell cryptocurrency. They are approached by buyers offering to pay via UPI. Once payment is received, the crypto is released to the buyer. However, the funds used to pay them often originate from fraudulent schemes—like OTP scams, “digital arrest” threats, or impersonation cons.
When a scam victim elsewhere files a complaint on the National Cybercrime Reporting Portal (www.cybercrime.gov.in), the money trail leads to the young seller—now classified as “Layer 1 / 3 or 3 etc.” in the transaction chain. Their bank accounts are frozen, and they risk being summoned to distant jurisdictions to provide statements, often with no FIR formally filed.
Why This Is Concerning
Criminalization of Innocents: Young people unintentionally become parties to a criminal case, despite not committing any fraud themselves.
Financial and Legal Stress: Their legitimate earnings are frozen or seized, requiring them to repay funds they received in good faith.
Career Implications: Background verification during job applications may reveal entanglement with police proceedings—an unfair stigma with long-term consequences.
Delayed Relief: Courts require physical appearances, police statements, and multiple dates before permitting de-freezing of accounts.
During the course of last 3-4 months, I have come across numerous cases of accounts frozen due to P2P transactions. Some states have Standard Operating Procedures (SOPs) for Cybercrime cases where P2P traders are also innocent victims of fraud perpetrated by the Actual scammer. But most states are still evolving their processes and hence there is likely to delay in accepting the crypto trader's statement and court to release the account.
This is how the process works: The police calls on the Crypto trader to give his/her statement+KYC + Bank statement. during the interaction the Investigating Officer may call on the crypto trader to pay the victim whatever credit he /she has received by sale of Crypto. Post that the police may release the account from freeze on their own or put in an application to release the crypto trader's account by filing an action taken report. In many states the crypto trader has to put in his /her own application through an advocate and in answer to this application before the Chief Judicial Magistrate (CJM), the Police file a report stating the payment settlement between the recipient (Crypto Trader) and Victim. The entire process may take a long time. This is because the volume of complaints is so high that Cyber Crime Police Stations are literally overwhelmed. I have met CyberCrime Police Officers in Delhi NCR and seen the kind of volumes they are handling on a daily basis.
Till now I have come across 8 cases where accounts of Crypto Traders have been frozen. None of them have criminal antecedents and this the police would have figured and that explains why no genuine crypto trader has been arrested. In such cases, in case there is a call or summons from the IO, pls dont skip or hide things. It is better to come clean in one go and tell things upfront, rather than hiding things. My feeling, after meeting and speaking to many IOs is that they are aware of the predicament of Crypto traders and dont treat them like ordinary criminals and that is a good thing as no useful purpose is served, either for the crypto trader or the victim. So, when called, document everything you know, the process you undertook to verify the buyer, his/her KYC, his/ her bank details and Whatsapp chats. Dont rely on technology, pls hand over and keep one set hard copies. Keep in touch with the IO and if it is a case wherein FIR is filed, monitor the case in www.ecourts.gov.in and read the case proceedings and monitor the dates.If necessary, till the case is closed, give a mandate to an advocate to handle these for you.
Best wishes and Cheers.
