Crypto traders exposed to FIA scrutiny amid regulatory vacuum

ISLAMABAD: In December 2018, a sub-inspector of the FIA arrested Ghulam Ahmed Roomi on flimsy charges.

His computer, laptop, and phone were confiscated, and he was tortured. A demand of Rs5 million was made to secure his release, but the deal was finalised at Rs1.5 million with his family. Nevertheless, it took him three weeks to be released from jail. Roomi thought this would mark the end of his ordeal, but it was only the beginning. Once home, he encountered yet another shock. Roomi was involved in the crypto business and maintained three wallets to store his virtual assets, including eleven bitcoins. The current value of one bitcoin is approximately Rs27 million. These assets were stolen by the raiding sub-inspector, Khalid Saeed.

The wallets were not listed in the seizure memo. Roomi’s email accounts associated with his blockchain addresses were deactivated using his confiscated laptop. However, Khalid missed deactivating one account, and five bitcoins were stolen from it. Roomi managed to trace this transfer from his wallet to another account. When senior cybercrime officers were informed, an inquiry was ordered.

Asmatullah Junejo, the then Additional Director of Cybercrime, found Khalid guilty of the “illegal and unauthorised transfer of electronic currency from the blockchain accounts of the complainant, with criminal and dishonest intentions to steal the money.” Rizwan Arshad, a senior FIA investigator, was also implicated as a facilitator for failing to include the stolen amount in his technical report. Rizwan and Roomi were not only from Okara but also lived in the same residential area. Rizwan played a key role in negotiating the Rs1.5 million bribe paid by Roomi’s family. Another police constable was also complicit in this criminal scheme.

The inquiry vindicated Roomi and held the FIA staff responsible for his mental and physical torture, as well as the theft of his money. An FIR was ordered against Khalid, along with an investigation into his assets. However, this failed to help Roomi recover his bitcoins. Khalid pleaded for mercy and returned only a partial amount of the stolen bitcoins. Roomi had little choice but to accept, as pursuing full compensation could have left him with nothing.

Despite this partial resolution, the fabricated case against Roomi continues to haunt him. More than five years later, the case remains unresolved in court. Junejo’s inquiry primarily addressed the bitcoin theft, while the charges against Roomi, as outlined in the FIR, await judicial determination. At the time of the raid, Roomi was involved in crypto mining, which was falsely labelled as an illegal activity in the FIR. The FIR cited a 2017 State Bank of Pakistan (SBP) letter, which upon plain reading, did not declare crypto mining illegal.

Currently, Pakistan lacks a legal framework to regulate crypto mining and trading. This absence of regulation means these activities are neither explicitly legal nor illegal. The SBP, in a 2019 statement to the Sindh High Court, clarified that it had not declared crypto illegal but cautioned against its volatility. Given this context, Roomi’s arrest was illegal. Asmat Junejo’s report found the invocation of Sections 420 and 468 of the Pakistan Penal Code in the FIR to be baseless and recommended action against the guilty officer for abuse of authority.

Despite these findings, the case against Roomi lingers in court, where he continues to make regular appearances. He is not the only victim of such harassment. Many of his colleagues in the crypto business have relocated abroad, conducting their trade freely in countries like Turkey and the UAE, where the crypto industry thrives. In contrast, Pakistan’s lack of regulation has created a grey area exploited by fraudsters and rogue FIA staff who intimidate traders.

A well-placed official revealed that there are no instructions from the FIA’s Director-General to target individuals involved in crypto trading. However, rogue elements within the agency fabricate excuses to intimidate traders. Nevertheless, complaints continue to pour in. This correspondent is aware of several cases where traders have sought protection from the Islamabad High Court and Lahore High Court to evade arrests. This practice is not limited to the FIA; police are also involved. Recently, a crypto trader in Karachi was kidnapped and released only after being coerced into transferring $340,000 from his wallet. A Counter-Terrorism Department official was among the kidnappers.