Bitcoin scam: 2 Bengaluru cryptocurrency exchange founders seek bail after cyber experts arrest
The founders of a cryptocurrency exchange in Bengaluru, whose services were utilised by the city police in 2021 to validate the disappearance of 31 Bitcoins transferred to a police wallet after they were seized from international hacker Srikrishna Ramesh, alias Sriki, have sought anticipatory bail.
Sathvik V and Harish B V, the founders of Unocoin Technologies Pvt Ltd, one of the first Bitcoin exchanges in India, have sought anticipatory bail in the Bitcoin case involving Sriki after a Special Investigation Team of the Karnataka Criminal Investigation Department (CID) arrested Santhosh Kumar K S, CEO, Group Cyber ID (GCID) Technologies, and police inspector Prashanth Babu, the former head of the Bengaluru city police technical cell, in the Bitcoin scam case on January 25.
Santhosh Kumar is accused of illegally accessing the crypto wallet of Robin Khandelwal, an associate and accountant of Sriki, during the probe of the hacking cases against Sriki. Santhosh Kumar allegedly accessed the crypto wallet of the accountant at the instance of the police and transferred Bitcoin valued at Rs 1.83 lakh to his crypto wallet.
In a new FIR filed in the Bitcoin scam on January 24, the SIT named Santhosh Kumar and four former Central Crime Branch (CCB) officers Sridhar Poojar (now a DySP), inspectors Prashanth Babu, Chandradhar S R, and Lakshmikanthaiah. They are accused of illegal confinement of the hacker and his accountant Robin Khandelwal, breach of trust by a public servant, and destruction of evidence.
The SIT is investigating the Bitcoin scam dating to the 2020-21 period when the BJP was in power in Karnataka on account of allegations of large-scale corruption by the police and politicians following the arrest of the hacker in November 2020. It was formed by the Karnataka Congress government in July 2023, soon after coming to power in the state, for investigating cases connected to the laundering of Bitcoins and other cases.
The Congress in Karnataka has alleged the police and politicians collected bribes through cryptocurrency from Srini and his associates to weaken the cases reported during the Bharatiya Janata Partys rule in the state.
Sriki, who was caught initially in a case of buying drugs online with Bitcoin by the Bengaluru police Crime Branch in November 2020, was found to be involved in multiple hacking cases. It included the theft of Rs 11.5 crore in 2019 from the e-procurement cell of the Karnataka governments e-governance unit as well as the hacking of poker and gambling sites, the police have said.
Court denies Unocoin founders bail
On Saturday, a district court in Bengaluru said the interim anticipatory bail sought by Sathvik V and Harish B V cannot be granted without hearing the objections of the SIT. The court said, It is necessary to hear the prosecution before passing any order on this application. Therefore, interim bail as prayed cannot be granted.
Sathvik V was called in as an expert by the Bengaluru police in January 2021 to certify that 31 Bitcoins that were seized from a cloud crypto wallet belonging to Sriki on January 8, 2021, had disappeared when the police wallet was opened again on January 22. He has been an advocate for Bitcoin for over a decade and gave a talk on the future of Bitcoin at one of the first international Bitcoin conferences in Bengaluru in 2013.
Harish B V was an expert during the seizure of the crypto wallet belonging to Robin Khandelwal.
Role of Unocoin founders
Sathvik V was called in as an expert on January 22, 2021, by the cybercrime unit of the Bengaluru police Crime Branch for opening a police crypto wallet in Unocoin in which Bitcoin seized from Sriki had been transferred on January 8, 2021. Srikis wallet was accessed by the police in a case of alleged hacking of sites like Casino 143 and Poker Saint, operated by the gaming firm Pacific Gaming Pvt Ltd, where the hacker is alleged to have stolen data that resulted in losses for the firm.
Initially, when the cloud crypto wallet of Sriki was seized by the police on January 8, 2021, in the presence of witnesses and Santhosh Kumar the recovery of 31 Bitcoins was reported.
The password of the wallet was owned123. As directed by investigating officer Mr Chandradhara S R we have changed the password of the wallet for custody as the same can be used from anywhere as the wallet was a cloud wallet, says the January 8, 2021, panchnama report for the seizure of Srikis crypto wallet.
The details of the changed password credentials were printed and the same was sealed in a cover on which we panchas and the investigation officer also signed and handed over to the investigation officer for further custody and the envelope cover was wax sealed, states the panchnama whetted by the cyber expert Santhosh Kumar and given to the cyber police.
On January 22, 2021, when the same wallet was accessed with the password in the sealed envelope it was found to contain BTC of 64.38176356 and an available BTC of 186.81152676, says a second panchnama report of January 22. When an attempt was made to transfer the amount to a police wallet, a pop-up message said TX already in Blockchain.
Post this, as the transaction was not showing on the blockchain explorer, we informed the experts at UNOCOIN and they explained that the transaction was not through as the Private Key for the said wallet was not available and the application has been modified to show fake transactions and the wallet is of an exchange and it will not be possible to transact on the wallet without the authorized key also called private key, says a January 22, 2021, panchanama report that was attested by Santhosh Kumar and Sathvik V.
Harish B V, the second Unocoin founder, was the expert on hand during the seizure by the police of a cloud wallet on WazirX belonging to Khandewal where an available balance of 0.08627702 BTC was transferred to a wallet created by Unocoin Technologies Pvt Ltd under the wallet name cyber crime.
Police response to disappearance of seized Bitcoins
In November 2021, the Bengaluru police claimed Sriki deceived them into believing they had seized 31 bitcoins from his personal electronic wallet leading to a public disclosure in January 2021 of the seizure of 31 bitcoins worth Rs 9 crore from the hacker.
The Bengaluru crime branch police in an official note in November 2021 said a Bitcoin account claimed by the accused as his personal account with 31 bitcoins in it was actually a live wallet of an exchange to which Srikrishna did not have a private key leading to the realisation that the hacker had deceived police into believing they had seized 31 bitcoins.
During the process of seizing, the accused, Srikrishna showed a BTC wallet which contained 31.8 BTC. The wallet password was changed in the presence of cyber experts and government panchanamas and the entire procedure was recorded under mahazar and submitted to court, the Bengaluru police said.
Subsequently, court permission was obtained to use the password to transfer the said Bitcoins to a police wallet account. Upon reaching the said wallet shown by the accused Srikrishna, it showed 186.811 Bitcoins (instead of the seized 31 Bitcoins), they said.
On inquiry, cyber experts opined that the said account claimed by the accused as his personal account, was in fact, a live wallet of an exchange and the accused did not have a private key for this. Hence, the said account was left untouched and as a result, no Bitcoins were transferred to the police wallet, they added.
SIT findings on Bitcoin scam
On January 5, 2021, on the instructions of now-arrested police inspector Prashanth Babu, Santhosh Kumar is alleged to have gained access to crypto wallets and email and bank accounts of Sriki and Robin Khandelwal and changed the logins and passwords in the absence of witnesses or court orders, the SIT has said.
According to the SIT, Sriki was also permitted to use mixers that allow the transfer of Bitcoins to be camouflaged and data on a laptop given to the hacker by the police has been deleted as part of efforts to hide evidence of illegal activities.
In police statements that are on record in charge sheets filed by the CCB, Sriki has said he was forced to hand over all cryptocurrency in his possession to the police.
Text source: MCC.EXCHANGE
