Investigation underway into major Bitcoin scam involving Indian law enforcement authorities
A Special Investigation Team (SIT) is currently investigating several officers from the Indian Crime Branch, including Inspector General of Police (IGP) Sandeep Patil, in relation to a Bitcoin scam. The SIT has issued a notice to IGP Sandeep Patil, who was the head of the Crime Branch at the time, in order to address inconsistencies in the investigation of the scam.
The scam revolves around hacker Srikrishna Ramesh, also known as Sriki, and his associate Robin Khandelwal. Sriki, the mastermind behind the scam, hacked a cryptocurrency exchange called Unocoin in 2017 and stole 60.6 Bitcoins, which were worth approximately ₹1.14 crore ($137,000) at the time. He also hacked various other online platforms and used cryptocurrency to launder the stolen funds.
Sriki then traded 150 Bitcoins, worth ₹5.5 crore, through Khandelwal. The duo was initially arrested in 2020 on charges of using Bitcoin to purchase drugs online.
According to a First Information Report (FIR) filed by the SIT in January, four former Crime Branch officers – Sridhar Poojar, Prashanth Babu, Chandradhar SR, and Lakshmikanthaiah – along with private cyber expert Santhosh Kumar, are facing charges of illegal confinement, breach of trust by a public servant, and destruction of evidence related to the Bitcoin scam. The allegations include manipulating the investigation to cover up the misappropriation of the recovered Bitcoins.
Initially, the investigators claimed to have found 31 Bitcoins worth 9 crores from Sriki and 0.08627702 BTC from Khandelwal. However, these Bitcoins could not be located. The explanation given was that Sriki had manipulated the Bitcoin core application to mislead the investigation. However, the Crime Branch did not further investigate the details of this manipulation.
Furthermore, the SIT’s findings suggest that Inspector Chandradhar took Khandelwal into custody and forced him to transfer money from his account to the crypto exchange Wazirx in order to purchase Bitcoins. This was allegedly done to compensate for the Bitcoins that the Crime Branch could not recover from Khandelwal, who had already used up his crypto resources.
The SIT is also investigating Rishab, the son of an Additional Director General of Police (ADGP), for his alleged involvement in the scam. He is accused of using illegally acquired money from Bitcoin trading. The SIT claims that he received a cheque for ₹40 lakh during the time when Sriki was active and used this money to buy a car.
This development comes as India has witnessed an increase in cryptocurrency-related scams over the years. Just recently, the country’s Enforcement Directorate cracked down on two major scams and seized over $30 million. Prior to that, the ED collaborated with the FBI to dismantle a $360 million drug trafficking ring that was powered by cryptocurrencies.
