Hammad Ali etc. vs State

Form No.HCJD/C-121

ORDER SHEET

LAHORE HIGH COURT

Multan Bench, Multan

JUDICIAL DEPARTMENT

Crl. Misc. No. 1974-B/2026

Hammad Ali and others Vs The State and another

S.No. of Order/ Date of order/ Order with the signature of the Judge and that of parties or counsel where Proceeding proceeding necessary

30.04.2026 Chaudhry Ali Abbas, Advocate, assisted by Malik Atta Ullah Kharal, Advocate, with the Petitioners.

Mr. Mehroz Aziz Khan Niazi, Assistant Attorney General, with Nauman, SI/FIA.

Mr. Tayyab Butt, Law Officer, State Bank of Pakistan (SBP). Hafiz Talha, Advocate, for Securities and Exchange Commission of Pakistan (SECP).

Mr. Muhammad Khurshid, Deputy Director (Legal), Pakistan Virtual Assets Regulatory Authority (PVARA).

Rana Muhammad Asif Saeed, Advocate, for the Complainant.

Tariq Saleem Sheikh, J. – Through this application, the Petitioners seek pre-arrest bail in case FIR No.90/2025 dated 25.04.2025 registered at Police Station FIA, CCRC, Multan, for offences under sections 419, 420, 468 & 471 PPC, and sections 13 and 14 of the Prevention of Electronic Crimes Act, 2016 (PECA).

2.Brief facts of the case are that Muhammad Farhan (the “Complainant”) lodged a complaint with the Federal Investigation Agency (FIA), Cyber Crime Reporting Centre (CCRC), Multan. He stated that about three years earlier, an acquaintance introduced him to a cryptocurrency trading application and encouraged him to invest in digital assets. He initially invested Rs.5,000,000/-, which he described as equivalent to 25,000 USDT (United States Dollar Tether). Shortly thereafter, the cryptocurrency market experienced a downturn, resulting in a depletion of his account balance. Expecting the market to stabilise, the Complainant invested an additional 25,000 USDT to offset the losses already sustained. However, the market suffered another crash, prompting him to invest a further 30,000 USDT. This cycle of losses and reinvestments continued, compelling the Complainant to repeatedly inject additional capital in the hope of recovering his funds. In this

manner, he claims to have invested an aggregate sum of 270,000 USDT, which he generated through the liquidation of his movable and immovable assets, including his residence, gold ornaments, vehicles and business assets. Subsequently, the cryptocurrency trading company in question froze his account, after which he was unable to access the digital assets he had invested in.

3.According to the Complainant, he acquired USDT through multiple Peer-to-Peer (P2P) merchants operating through an online cryptocurrency application. He made payments by transferring Pakistani rupees from his bank accounts to various bank accounts held by the said P2P merchants. Upon receipt of payment, the merchants transferred the corresponding USDT into his cryptocurrency trading account bearing Account No. YUMNA: 1212/159533349 (titled Muhammad Farhan). The complaint was registered as Enquiry No.183/24.

4.During the enquiry, the FIA found that the Complainant had conducted 351 transactions through 237 bank accounts and had transferred an aggregate amount of Rs.68,664,460/- to various persons in exchange for USDT. The FIA also found that USDT was transferred into two cryptocurrency accounts, one in the name of the Complainant and the other in the name of his brother, Sohail Nazeer. The latter account was also allegedly operated by the Complainant. Out of 177 persons linked with the transactions, the Complainant submitted affidavits in favour of 72 persons and stated that he did not wish to proceed against them. The attribution to the present Petitioners is as follows: Hammad Ali is stated to have received Rs.45,000/-; Asad Amjad, Rs.49,000/-, and two amounts of Rs.250,000/- each; and Muhammad Athar, Rs.499,500/- and Rs.31,611/-. In view of these findings, FIR No. 90/2025 was registered.

5.Chaudhry Ali Abbas, Advocate, submits that the present case proceeds on an incorrect understanding of Binance-based P2P virtual-asset transactions. He explains that, in such transactions, the merchant publishes the rate on the P2P platform; the customer places an order and transfers Pakistani rupees to the merchant’s disclosed bank account; and, after verification of payment, the merchant transfers the corresponding virtual asset to the customer’s digital wallet. According to

him, the FIR itself describes this pattern: the Complainant paid Pakistani rupees to P2P merchants, and USDT was transferred into cryptocurrency accounts used or controlled by him. The loss complained of arose later, when the platform froze those accounts. Counsel argues that an exchange of value through a platform mechanism does not, merely because it involves virtual assets, establish cheating, forgery, or electronic fraud. There is nothing to show that the Petitioners owned or controlled that platform, operated the Complainant’s cryptocurrency accounts, or caused the freezing of those accounts.

6.Mr. Chaudhry further contends that the case is substantially based on documentary and electronic evidence, consisting of bank statements, account-opening forms, transaction records, and cryptocurrency account details. The relevant material is already in the possession of the FIA or can be obtained from banks, financial institutions, or other relevant sources in accordance with law. He submits that the Petitioners have joined the investigation, and there is no allegation that they have misused the concession of ad-interim pre-arrest bail. Their arrest, therefore, would cause them unnecessary humiliation and harassment.

7.Mr. Mehroz Aziz Khan Niazi, Assistant Attorney General (AAG), has opposed the application. He submits that the matter relates to the years 2021 to 2023, when virtual currencies/tokens were not legal tender in Pakistan and no person or entity had been authorised or licensed by the State Bank of Pakistan (SBP) for their issuance, sale, purchase, exchange, or investment. Referring to BPRD Circular No.03 of 2018, he submits that transactions of this nature were required to be reported to the Financial Monitoring Unit as suspicious transactions. He argues that the subsequent SBP clarification issued in 2025 and the enactment of the Virtual Assets Act, 2026 (the “VAA”) do not retrospectively legitimise transactions carried out in disregard of the regulatory framework then in force.

8.The AAG next contends that sections 4 and 5 of the Foreign Exchange Regulation Act, 1947 (FERA), restrict unauthorised dealings in foreign exchange and payments to or for the benefit of persons resident outside Pakistan, except in accordance with the permission or

exemption granted by SBP. According to him, cryptocurrency is a “currency” within the meaning of section 2(b) of FERA and the Petitioners’ alleged role as P2P merchants, receiving Pakistani rupees and transferring USDT through an online platform, discloses a culpable violation of that Act. He further submits that the Petitioners were not arrayed merely because they dealt in virtual assets. They are alleged to be among the P2P merchants whose bank accounts received funds from the Complainant or from accounts used by him.

9.Lastly, the AAG submits that the case involves cybercrime. It concerns electronic records, online accounts, virtual wallets, P2P platform activity, and digital transfers of USDT. Although account- opening forms and bank statements for most accounts have been obtained, some records remain to be collected. He submits that custodial interrogation may be required to ascertain the source of funds, the identity of persons operating the accounts, platform credentials, wallet addresses, the flow of USDT, and the possible involvement of other persons. He argues that pre-arrest bail is an extraordinary relief and that the Petitioners have failed to establish mala fide, an ulterior motive, or abuse of process by the investigating agency.

10.Counsel for the Complainant, Rana Muhammad Asif Saeed, Advocate, has adopted the AAG’s arguments. He maintains that the Complainant is a victim of systematic virtual-asset fraud. The Petitioners cannot portray themselves as innocent sellers merely because the amounts received in their bank accounts appear modest when viewed in isolation. He further submits that financial and cyber offences may be carried out through multiple accounts and fragmented transactions. The Petitioners’ precise role, whether as independent merchants, facilitators, or conduits, requires investigation. He lastly submits that the Petitioners have not shown any mala fide on the part of the Complainant or the investigating agency, which is a sine qua non for the grant of pre-arrest bail.

11.Rebutting the AAG’s contentions, Mr. Chaudhry argues that BPRD Circular No. 03 of 2018 dated 06.04.2018 was addressed to banks, DFIs, microfinance banks, Payment System Operators, and Payment Service Providers, and not to private individuals. It advised

those entities not to process, use, trade, hold, transfer value, promote, invest in, or facilitate transactions in virtual currencies/tokens. According to him, the Circular may have justified regulatory reporting or risk-based action by the entities to which it was addressed, but it did not, by itself, convert every private P2P virtual-asset transaction into a criminal offence.

12.Having regard to the questions involved, I issued notice to the Pakistan Virtual Assets Regulatory Authority (PVARA), the State Bank of Pakistan (SBP), and the Securities and Exchange Commission of Pakistan (SECP), and directed them to assist the Court on the question whether cryptocurrency is regarded as a “currency”, “commodity”, or “security” internationally and under the laws of Pakistan.

13.In its written response filed in compliance with this Court’s order, PVARA stated that there is no uniform international classification of cryptocurrency. Different jurisdictions treat it differently, and even within the same jurisdiction, its character may vary depending on the nature of the token, the transaction, and the regulatory context. It further explained that Pakistan has enacted the VAA, which regulates virtual assets as a distinct statutory category and expressly clarifies that they are not legal tender. According to PVARA, P2P transactions do not fall within its mandate under the Act, and the transactions involved in the present case predate both the VAA and its predecessor, the Virtual Assets Ordinance, 2025 (the “2025 Ordinance”).

14.SBP stated that virtual assets are not legal tender and that they are not foreign currency or foreign exchange within the meaning of section 2 of FERA or section 19 of the State Bank of Pakistan Act, 1956. According to SBP, the question whether virtual assets may be classified as commodities or securities falls within the domain of the SECP, the primary regulator of the commodities and securities markets in Pakistan.

15.SECP submitted that there is no universally accepted classification of cryptocurrency as currency, commodity or security. In the United States, some cryptocurrencies have been treated as commodities for the purposes of commodities regulation, while other crypto-assets may be examined under securities law if the transaction satisfies the test of an “investment contract” articulated in S.E.C. v. W.J.

Howey Co. (328 U.S. 293). In that case, the United States Supreme Court held that an investment contract means a contract, transaction, or scheme in which a person invests money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party. SECP further stated that the European Union has adopted a different approach under the Markets in Crypto-Assets Regulation, treating crypto-assets as a separate class of digital assets, while assets falling within the definition of traditional financial instruments remain subject to the existing securities regime. According to SECP, cryptocurrency cannot presently be regarded as a “security” under the Securities Act, 2015, or as a “commodity” under the Futures Market Act, 2016. The VAA has created a dedicated regulatory framework for virtual assets, rather than bringing them within the pre-existing categories of securities or commodities.

16.Arguments heard. Record perused.

17.The controversy involved in this case raises two questions. The first concerns the legal and regulatory status of virtual assets in Pakistan at the relevant time. The second is whether the evidence presently available prima facie connects the Petitioners with the offences invoked in the FIR and whether their arrest is necessary for the purpose of investigation.

18.Before addressing the above questions, it is necessary to understand the terminology relevant to the present controversy. “Cryptocurrency” is a broad expression commonly used for digital assets that are based on cryptographic technology and distributed ledger or blockchain systems. Bitcoin is one example. A “stablecoin” is a digital asset that seeks to maintain a relatively stable value by reference to another asset or unit of account, usually a fiat currency. USDT, commonly known as Tether, is a privately issued fiat-referenced stablecoin.

19.The terminology relating to such assets has evolved over time. The Financial Action Task Force (FATF), in its Updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service

Providers (October 2021),1 uses the term “Virtual Asset”, and defines it as “a digital representation of value that can be digitally traded, or transferred and can be used for payment or investment purposes. Virtual assets do not include digital representations of fiat currencies, securities and other financial assets that are already covered elsewhere in the FATF Recommendations.” FATF’s earlier work, principally its publications titled Virtual Currencies: Key Definitions and Potential AML/CFT Risks (2014) and Guidance for a Risk-Based Approach to Virtual Currencies (2015), used the term “virtual currency” to refer to digital methods of transmitting value over the internet. Thereafter, FATF adopted the terms “Virtual Asset” and “Virtual Asset Service Provider” in its Recommendations and Glossary. Those terms are reflected in the 2021 Guidance, which revised and superseded the June 2019 Guidance of the same title. The shift from “virtual currency” to “Virtual Asset” is significant. A virtual asset may perform some economic functions associated with money, including payment or investment, but it does not thereby become fiat currency or legal tender.

20.FATF defines2 a “Virtual Asset Service Provider” (VASP) as any natural or legal person who, as a business, conducts specified activities involving virtual assets for or on behalf of another person. These activities include exchanges between virtual assets and fiat currencies, exchanges between one or more forms of virtual assets, transfers of virtual assets, safekeeping or administration of virtual assets or instruments enabling control over them, and participation in financial services relating to an issuer’s offer or sale of a virtual asset. FATF also recognises peer-to-peer (P2P) transactions, which mean virtual-asset transfers conducted without the involvement of a VASP or another intermediary subject to anti-money laundering and counter-terrorist financing (AML/CFT) obligations, including transfers between users acting on their own behalf. Such transactions are not explicitly subject to those controls under the FATF Standards because the Standards generally impose obligations on intermediaries rather than individuals.

FATF, Updated Guidance for a Risk-Based Approach: Virtual Assets and Virtual Asset Service Providers (Financial Action Task Force, Paris, October 2021), available at: http://www.fatf-gafi.org/publications/ fatfrecommendations/documents/Updated-Guidance-RBA-VA-VASP.html. The 2021 Guidance revised and superseded the earlier Guidance of the same title issued in June 2019.

ibid.

Crl. Misc. No. 1974-B/2026 8

Countries may, however, adopt national-level measures to mitigate risks associated with P2P activity.

21.The 2021 FATF Guidance proceeds on a risk-based approach. It recognises that new technologies, products, and related services may promote financial innovation, efficiency, and financial inclusion, but may also create opportunities for criminal misuse. FATF does not require countries to treat VASPs or virtual-asset activities as inherently high risk in every case. The assessment depends upon the nature of the activity and the attendant circumstances. Relevant considerations may include the cross-border character of the transaction, the degree of anonymity involved, and the absence of face-to-face interaction. P2P transactions may pose an additional risk because they occur without the involvement of a VASP or another intermediary subject to AML/CFT obligations. In such cases, controls ordinarily applied by intermediaries, including customer due diligence and suspicious transaction reporting, may not be undertaken.3

22.Although the FATF Guidance is not binding as domestic law, it is relevant in two respects. First, it provides a recognised basis for characterising USDT as a virtual asset, that is, a digital representation of value used for payment or investment, rather than as fiat currency, legal tender, or a monetary instrument issued or guaranteed by any sovereign authority. Secondly, it shows that the legal character of a virtual asset is not fixed or uniform. It depends upon the function the asset performs and the language, object and scheme of the particular statute under which the question of classification arises.

23.Pakistan, too, passed through a transitional phase. On 06.04.2018, the State Bank of Pakistan issued BPRD Circular No. 03 of 2018, titled “Prohibition of Dealing in Virtual Currencies/Tokens”. It stated that virtual currencies/tokens such as Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, Pay Diamond, and ICO tokens4 were not legal tender, were not issued or guaranteed by the Government of Pakistan, FATF’s subsequent Targeted Update on Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service Providers (June 2025) reiterates that virtual-asset activity must be approached on a risk-sensitive basis. It also notes the increasing use of stablecoins by illicit actors and the attendant need for appropriate risk-mitigation measures.

Initial Coin Offering (ICO) is a fundraising mechanism used in the virtual-asset or cryptocurrency sector. In an ICO, a project or company offers new digital tokens or coins to investors, usually in exchange for established cryptocurrency, such as Bitcoin or Ethereum, or sometimes fiat currency, to finance the development of the project or platform.

and that SBP had not authorised or licensed any individual or entity for their issuance, sale, purchase, exchange, or investment in the country. Banks, DFIs, microfinance banks, Payment System Operators, and Payment Service Providers were advised to refrain from processing, using, trading, holding, transferring value, promoting, or investing in virtual currencies/tokens. They were also advised not to facilitate their customers or account holders in transacting in them, and any such transaction was required to be reported to the Financial Monitoring Unit as a suspicious transaction.

24.Thereafter, by Circular No. ECD/M&PRD/PR/01/2025-36 dated 30.05.2025, SBP clarified that the 2018 advisory had been issued to its regulated entities due to the absence of a legal and regulatory framework for virtual assets, and not because virtual assets “had been declared illegal in the country.” SBP further stated that it and the Finance Division were engaged with the Pakistan Crypto Council established by the Federal Government with a view to developing, among other things, appropriate legal and regulatory measures for virtual assets in Pakistan. On 08.07.2025, the 2025 Ordinance was promulgated to regulate virtual assets and virtual asset service providers. It was subsequently replaced by the VAA.

25.The 2018 Circular must, however, be read in its proper context. The Circular did not, by itself, create a penal offence against private individuals. Its addressees were regulated financial and payment- sector entities, not private individuals transacting with each other. The description of virtual currencies/tokens as “not legal tender” also did not make them illegal or contraband. The subsequent SBP clarification dated 30.05.2025 reinforces this position.

26.The VAA has introduced a comprehensive statutory regime for virtual assets. It provides for the licensing, regulation and supervision of virtual assets, virtual asset service providers and related blockchain- based activities in Pakistan. It defines a “Virtual Asset” as a digital representation of value capable of being digitally traded or transferred and used for payment or investment purposes, while clarifying that virtual assets are not legal tender. It also establishes the Pakistan Virtual Assets Regulatory Authority (PVARA) as the licensing, regulatory and

supervisory body. The relevance of this subsequent legislation is limited in the present case. It shows Pakistan’s movement from the absence of a dedicated statutory framework to a comprehensive regulatory regime, but it does not retrospectively determine criminal liability for transactions which took place before its enactment.

27.Pre-arrest bail is an extraordinary relief intended to protect a person against arrest sought for mala fide reasons, as an abuse of process, or merely to humiliate him. Such circumstances may, in an appropriate case, be inferred from the surrounding facts. The mere fact that the transactions here involve virtual assets cannot justify arrest. The Court must consider whether the evidence presently available connects the Petitioners with the offences invoked in the FIR and whether their arrest is necessary for investigation.

28.The Petitioners are accused of offences under sections 419, 420, 468 & 471 PPC and sections 13 & 14 of PECA. Section 419 PPC concerns cheating by personation. The FIR does not allege that any Petitioner pretended to be some other person, used a false identity, or induced the Complainant by personating another. No fictitious profile, account, or merchant identity has been attributed to the Petitioners. The mere receipt of money into their bank accounts, without more, does not, prima facie, constitute cheating by personation.

29.Section 420 PPC requires deception and dishonest inducement to deliver property, or to make, alter, or destroy a valuable security or anything signed or sealed and capable of being converted into a valuable security. The prosecution must also point to some basis for inferring dishonest intent at the inception of the transaction. In the present case, the FIR states that the Complainant purchased USDT through P2P merchants and that the corresponding USDT was credited to cryptocurrency accounts used or controlled by him. The available record does not suggest that the Petitioners caused the subsequent freezing of those accounts by the online platform. The essential ingredient of dishonest inducement at the inception of the transaction is, therefore, not prima facie established. Even otherwise, the offence under section 420 PPC is bailable.

30.Sections 468 and 471 PPC concern forgery for the purpose of cheating and the use of a forged document or electronic record as genuine. The prosecution has not so far identified any document, electronic record, transaction confirmation, wallet credential, account record, or platform entry allegedly forged by the Petitioners or used by them as genuine. On the present record, these provisions do not appear to be attracted against the Petitioners.

31.Turning to PECA, section 13 concerns electronic forgery and section 14 relates to electronic fraud. Section 13 is attracted where a person interferes with, or uses, any information system, device or data, with the requisite intent, and by input, alteration, deletion or suppression of data causes unauthentic data to result, intending that such data be considered or acted upon for legal purposes as if it were authentic. The requisite intent may be to cause damage or injury to the public or to any person, to make an illegal claim or title, to cause any person to part with property or enter into an express or implied contract, or to commit fraud. The essence of the offence is, therefore, the creation of unauthentic data through the specified electronic act, coupled with the statutory intent that it be treated as authentic for legal purposes. Where such conduct relates to a critical infrastructure information system or data, subsection (2) prescribes an enhanced punishment.

32.Section 14 of PECA relates to electronic fraud. It is attracted where a person, with intent for wrongful gain, interferes with, or uses, any information system, device or data, or induces any person to enter into a relationship, or deceives any person, and the act or omission is likely to cause damage or harm to that person or to any other person. Unlike section 13, which turns on unauthentic data intended to be considered or acted upon as authentic for legal purposes, section 14 is wider. It may apply even where no unauthentic data is created, provided there is intent for wrongful gain, together with interference, use, inducement or deception, and an act or omission likely to cause damage or harm.

33.Given the above distinction, the mere fact that a transaction was carried out through an online platform, or that virtual assets were transferred digitally, does not automatically establish electronic forgery

or electronic fraud against every recipient of funds. For section 13 of PECA, the prosecution must identify the information system, device or data allegedly used or interfered with so as to create unauthentic data intended to be treated or acted upon as authentic. For section 14 PECA, it must point to some basis for inferring intent for wrongful gain, together with interference, use, inducement or deception, and an act or omission likely to cause damage or harm. At present, the attribution to the Petitioners is confined to specified bank receipts associated with alleged P2P transactions. No material has been shown to indicate that they induced the Complainant to use the platform, made any representation regarding its safety or legitimacy, acted in concert with its operators, created or manipulated any data, or had any role in the freezing of the Complainant’s accounts. It is, therefore, doubtful whether sections 13 and 14 of PECA are attracted against them at this stage.

34.Although FERA has not been invoked in the FIR, the AAG has also contended that the transactions disclose contravention of that statute. The AAG’s argument is twofold. First, he submits that section 2(b) of FERA defines “currency” in inclusive terms, covering coins, currency notes, bank notes, postal notes, money orders, cheques, drafts, travellers’ cheques, letters of credit, bills of exchange and promissory notes; section 2(c) defines “foreign currency” as any currency other than Pakistan currency; and section 2(d) defines “foreign exchange” to include foreign currency and deposits, credits and balances payable in any foreign currency. On this basis, he argues that USDT, being a dollar- referenced digital medium, falls within these definitions. Secondly, he submits that sections 4 and 5 restrict unauthorised dealings in foreign exchange and payments to or for the credit of persons resident outside Pakistan. According to him, the Petitioners’ alleged role as P2P merchants, receiving Pakistani rupees and transferring USDT through an online platform, would attract the penal consequences prescribed by section 23.

35.Broadly stated, section 4 restricts unauthorised dealings in foreign exchange, including buying, borrowing, selling, lending or exchanging foreign exchange with a person who is not an authorised dealer, except with the previous general or special permission of SBP.

Section 5 regulates, inter alia, payments to or for the credit of persons resident outside Pakistan, payments made by order or on behalf of such persons, and payments made as consideration for, or in association with, the receipt by any person of a payment, the acquisition by any person of property outside Pakistan, or the creation or transfer of a right to receive a payment or acquire property outside Pakistan, except in accordance with the permission or exemption contemplated by the Act. These provisions apply where the transaction has the statutory nexus contemplated by FERA. Therefore, before they can be pressed into service for purposes of this bail application, the prosecution must show, at least tentatively, that the Petitioners’ alleged receipts involved foreign currency or foreign exchange, or a payment, remittance, or other transaction falling within the restrictions imposed by the Act.

36.In Internet and Mobile Association of India v. Reserve Bank of India [2020] 2 S.C.R. 297, the question whether virtual currencies could be regarded as “currency” arose with reference to section 2(h) of India’s Foreign Exchange Management Act, 1999. The definition of “currency” in section 2(b) of Pakistan’s FERA is broadly similar to section 2(h) of India’s 1999 Act, inasmuch as both provisions refer to recognised monetary and negotiable instruments such as coins, currency notes, bank notes, postal notes, money orders, cheques, drafts, travellers’ cheques, letters of credit, bills of exchange and promissory notes. The difference is that section 2(h) of India’s 1999 Act also includes “such other similar instruments, as may be notified by the Reserve Bank.” Pakistan’s FERA contains no corresponding residuary clause or notification-based mechanism. The Supreme Court of India noted that the Reserve Bank of India itself had taken the position that virtual currencies did not fall within the definition of “currency” under section 2(h) of the 1999 Act. It further observed that, although the Reserve Bank could have notified virtual currencies as “other similar instruments”, no such notification had been issued. This reasoning is not binding, but it supports the view that virtual assets should not, at least for purposes of deciding this bail application, be brought within FERA merely because they may perform some economic functions associated with money.

37.The structure of FERA reinforces this view. Its provisions are framed around recognised currency, foreign currency, foreign- exchange balances, negotiable instruments, securities, gold, silver and regulated payment mechanisms. USDT does not naturally fall within any of the enumerated categories in section 2(b). Likewise, it does not become “foreign currency” merely because it is traded internationally, or “foreign exchange” simply because its value is pegged to, or determined by reference to, a foreign currency. The written responses of PVARA, SBP and SECP support this conclusion.

38.However, this does not mean that a cryptocurrency-related transaction can never attract FERA. Where the surrounding arrangement involves a prohibited or regulated payment, conversion into or out of foreign currency, remittance of value to a person resident outside Pakistan, use of banking channels for foreign-exchange evasion, or any device designed to defeat the Act, FERA may apply on account of that statutory nexus. In such a case, liability would arise from the foreign- exchange component of the transaction, not merely from the use of a virtual asset. In the present case, no material has been shown at this stage to establish that the Petitioners dealt in recognised foreign currency, received or remitted foreign exchange, made any payment to or for the credit of a person resident outside Pakistan, or used any device to evade FERA. The allegation against them is confined to the receipt of specified amounts in Pakistani bank accounts in alleged P2P transactions. Those receipts may require further investigation, but they do not, by themselves, establish the statutory nexus required for the application of

FERA.

39.The individual attribution to the Petitioners is limited to the receipt of the amounts specified in paragraph 4 above. These receipts may, on the present record, be consistent with routine P2P merchant activity, namely receiving Pakistani rupees and transferring the corresponding USDT. No evidence presently connects the Petitioners with any deception, dishonest inducement, forgery, unauthentic data, electronic fraud, or role in the operation of the platform that froze the Complainant’s accounts. The ingredients of the offences invoked in the FIR are, therefore, not prima facie established against them.

40.I have also considered the contention that the transactions involving the Petitioners form part of a wider pattern. Financial and cyber offences may involve multiple accounts and fragmented transactions, and the investigating agency is entitled to examine the role of each account holder. Criminal liability, however, remains individual. The case is substantially based on documentary and electronic records that are either already available to the investigating agency or can be obtained from the relevant banks, financial institutions, platform, or regulator. The Petitioners have joined the investigation, and no misuse of the concession of ad-interim pre-arrest bail has been alleged. In these circumstances, no convincing reason has been shown why their custodial interrogation is necessary.

41.The above discussion does not exclude the application of any other law, including anti-money laundering, taxation, or banking law, where its ingredients are established on the basis of independent material. The competent authority may proceed accordingly.

42.For the foregoing reasons, this application is allowed. The ad-interim pre-arrest bail already granted to the Petitioners is confirmed, subject to their furnishing fresh bail bonds in the sum of Rs.1,000,000/- (Rupees one million) each, with one surety in the like amount for each Petitioner, to the satisfaction of the trial court.

43.The observations made above are tentative and confined to the decision of this bail application. The trial court shall decide the case independently on the basis of the evidence before it, without being influenced by those observations.

(Tariq Saleem Sheikh) Judge Ahsan

Announced in open court on _____________

Judge

Approved for reporting

Judge