Delay in response from foreign shores stalling Karnataka Bitcoin scam probe: Home Minister Parameshwara

In reply to a question raised by BJP MLA Basanagouda Patil Yatnal in the Legislative Assembly on the status of the SIT probe, he said, “Since the case involves companies, cryptocurrency exchanges, and international exchanges located in foreign countries, the collection of evidence has to be done as per the law, and this is being done through Interpol. The information is coming slowly from different countries.”

The SIT has sent out 15 MLAT requests, seven letters rogatory, and 10 Interpol Blue Corner Notices. So far, it has received 10 replies: five responses to the MLAT requests, two replies to the letters rogatory, and three responses to the Blue Corner Notices, the minister said.

“In order to complete the investigation quickly, information is being sought through letters, and all legal steps are being taken to complete the investigation,” he said.

The home minister stated that the alleged Bitcoin scam probably involves international networks, and the accused are experts in Bitcoin and the dark web. The government also stated that the SIT had concluded investigations in two of the nine cases linked to hacker Srikrishna Ramesh.

In one case, the value and amount of stolen Bitcoins were determined based on a complaint filed by businessman Harish B V. He reported the theft of 60.6 bitcoins, valued at Rs 1.14 crore, from the Unocoin exchange in India in 2017, according to the home minister. He also noted that in the other cases, there was no specific mention of the number of bitcoins that were stolen.

The investigation into the hacker’s alleged breach of cryptocurrency exchanges aims to determine whether the funds stolen from these exchanges were used to pay off police officers and others following the hacker’s arrest in November 2020. The Bengaluru Crime Branch police apprehended the hacker for purchasing drugs from the dark web using Bitcoin.

After his arrest in November 2020, Sriki stated to the police that he had hacked several international exchanges between 2016 and 2020. He claimed to have used stolen Bitcoin to enjoy a lavish lifestyle with his associates. Additionally, he said that he provided police officers with a significant amount of the cryptocurrency he had in his possession after his arrest.

After allegations of widespread corruption involving Crime Branch policemen and political leaders in the handling of hacker cases during the BJP government’s tenure in Karnataka from 2019 to 2023, the newly formed Congress government established the SIT in June 2023.

According to statements from witnesses who assisted the police in investigating the hacker in 2020, the SIT stated that during the arguments for denying bail to two police officers implicated in the alleged scam, Sriki was in possession of over 4,000 Bitcoin, valued at approximately Rs 850 crore, at the time of his arrest in November 2020.

The SIT discovered that Sriki hacked the Unocoin cryptocurrency exchange, based in Tumkur in Karnataka, in June 2017, stealing 60.6 Bitcoins valued at Rs 1.14 crore at that time.

“The evidence of the hacking needs to be collected from the exchanges where the hacking is said to have occurred. This will help confirm the hacker’s claims and verify that the stolen funds were used for payments in India,” an SIT officer had said.

Hacking claims by hacker Srikrishna after his arrest in 2020

The Bengaluru Crime Branch initially arrested Sriki and his accountant Robin Khandelwal in November 2020 on charges of buying drugs online using Bitcoin. The case involving the purchase of drugs on the darknet led to the cracking of several cyber crimes in Karnataka, including a Rs 11.5 crore fund heist from the Karnataka e-governance cell in 2019.

During his police custody following his arrest in November 2020, Sriki provided a voluntary statement to the police. He claimed involvement in several hacking incidents, including one at the Bitfinex exchange in the British Virgin Islands, where he was part of a hacking group based in the Netherlands.

“Bitfinex was my first big Bitcoin exchange hack. The exchange was hacked twice, and I was the first person to do so. The second instance was a simple spear phishing attack which led to two Israeli hackers working for the army getting access to the computers of one of the employees which gave them access to the AWS cloud account,” Sriki had told the police.

The SIT has been investigating several police officers from the Bengaluru Crime Branch who were active during the 2020-2021 period for the past year. Four of these officers have been arrested for wrongdoing, along with a cyber expert who aided the police in investigating the hacker cases.