Indian Crime Officials Under Investigation for Major Bitcoin Scam

In a startling development, several officers from India’s Crime Branch, including an Inspector General of Police (IGP), are currently under investigation by a Special Investigation Team (SIT) for their alleged involvement in a significant Bitcoin scam. This case has uncovered a web of corruption and illegal activities among law enforcement officials, spotlighting the vulnerabilities and challenges in regulating cryptocurrencies in India.

The Genesis of the Scam

The scam revolves around hacker Srikrishna Ramesh, known as Sriki, and his associate Robin Khandelwal. Sriki, the mastermind behind the operation, gained notoriety in 2017 when he hacked into the cryptocurrency exchange Unocoin and stole 60.6 Bitcoins, valued at approximately ₹1.14 crore ($137,000) at the time. His activities did not stop there; Sriki continued to hack various online platforms, amassing and laundering substantial amounts of cryptocurrency.

In 2020, Sriki and Khandelwal were arrested on charges of purchasing drugs over the internet using Bitcoin. Their arrest marked the beginning of a complex investigation that has since revealed the involvement of high-ranking police officials in the scam.

The Role of Crime Branch Officials

The SIT has charged four former Crime Branch officers—Sridhar Poojar, Prashanth Babu, Chandradhar SR, and Lakshmikanthaiah—along with a private cyber expert, Santhosh Kumar, with illegal confinement, breach of trust by a public servant, and destruction of evidence. The allegations include manipulating the investigation to cover up the misappropriation of Bitcoins recovered during the probe.

Initially, investigators claimed to have recovered 31 Bitcoins from Sriki and 0.08627702 BTC from Khandelwal. However, these Bitcoins mysteriously disappeared, with explanations suggesting that Sriki had manipulated the Bitcoin core application to mislead the investigation. The SIT’s findings further indicate that Inspector Chandradhar coerced Khandelwal into transferring money from his account to the crypto exchange WazirX to purchase Bitcoins, ostensibly to compensate for the missing Bitcoins.

Broader Implications and Political Ramifications

The investigation has not only implicated the officers directly involved but also raised questions about broader political connections. The SIT is probing Rishab, the son of an Additional Director General of Police (ADGP), for allegedly using illegal money acquired through Bitcoin trading. Rishab is accused of receiving a ₹40 lakh cheque during the period of Sriki’s activities and using these funds to purchase a car.

This scandal has significant political implications. Following the recent elections in Karnataka, the new Congress government reopened the Bitcoin case, suspecting that members of the previous BJP administration and senior police officials were involved. The Congress had promised during their campaign to thoroughly investigate the case, highlighting a commitment to addressing corruption.

The Ongoing Investigation and Public Reaction

The SIT’s investigation is ongoing, with searches conducted at the residences of Sriki and his associates to collect further evidence. The CID officials have registered fresh FIRs against the former Crime Branch officials involved in the case, charging them with criminal conspiracy, destruction of evidence, and criminal breach of trust.

The public reaction to these revelations has been one of shock and dismay. The involvement of law enforcement officials in such a high-profile scam undermines public trust in the police force and raises serious concerns about the integrity of the institutions meant to uphold the law.

The Rise of Cryptocurrency-Related Crimes in India

This case is part of a larger trend of rising cryptocurrency-related crimes in India. The nation’s Enforcement Directorate (ED) has been actively cracking down on crypto scams, seizing over $30 million in recent operations. Earlier, the ED collaborated with the FBI to dismantle a $360 million drug trafficking ring that utilized cryptocurrencies for transactions.

These incidents underscore the dual-edged nature of cryptocurrencies: while they offer significant benefits for financial innovation and privacy, they also pose substantial risks for facilitating illegal activities. The Indian government is under increasing pressure to establish robust regulatory frameworks to mitigate these risks and protect consumers.

Conclusion

The investigation into the involvement of Crime Branch officials in the Bitcoin scam highlights the deep-rooted issues of corruption within the Indian law enforcement system. As the SIT continues its probe, the case serves as a critical reminder of the need for stringent oversight and regulation in the burgeoning cryptocurrency sector. The outcomes of this investigation will likely influence future regulatory approaches and the broader discourse on cryptocurrency governance in India.