Indian Crime Officials Under Investigation for Involvement in Major Bitcoin Scam

Indian Crime Officials Under Investigation for Involvement in Major Bitcoin Scam

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.

The SIT has issued a notice to Sandeep Patil, the former head of the Crime Branch, to address discrepancies in the investigation into the Bitcoin scam orchestrated by hacker Srikrishna Ramesh, also known as Sriki, and his associate Robin Khandelwal. Sriki, the scam’s mastermind, hacked the cryptocurrency exchange Unocoin in 2017, stealing 60.6 Bitcoins worth ₹1.14 crore (approximately $137,000) at the time. He also hacked various other online platforms and laundered the funds through cryptocurrency.

Sriki and Khandelwal were arrested in 2020 for purchasing drugs on the internet using Bitcoin. 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 being charged with illegal confinement, breach of trust by a public servant, and destruction of evidence related to the Bitcoin scam.

The allegations suggest that the officers manipulated the investigation to cover up the misappropriation of Bitcoins recovered during the probe. Initially, investigators claimed to have retrieved 31 Bitcoins worth ₹9 crore from Sriki and 0.08627702 BTC from Khandelwal. However, these Bitcoins were never found. The explanation given was that Sriki had “manipulated the Bitcoin core application to mislead the investigation,” but the Crime Branch did not pursue further details on this manipulation.

Additionally, the SIT’s findings indicate that Inspector Chandradhar coerced Khandelwal into transferring money from his account to the crypto exchange WazirX to purchase Bitcoins, ostensibly to replace the missing Bitcoins that the Crime Branch could not recover.

The SIT is also investigating Rishab, the son of an Additional Director General of Police (ADGP), for his alleged involvement in the scam. Rishab is accused of using illegal money acquired through Bitcoin trading, including a ₹40 lakh cheque received during the period when Sriki was active, which he allegedly used to purchase a car.

This development comes amid a rise in cryptocurrency-related scams in India. Earlier this month, the nation’s Enforcement Directorate cracked down on two major scams, seizing over $30 million. Previously, the ED collaborated with the FBI to dismantle a $360 million drug trafficking ring powered by cryptocurrencies.

The ongoing investigation underscores the growing scrutiny and regulatory challenges surrounding cryptocurrency in India, highlighting both the potential for illicit activities and the need for robust oversight.

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