Cryptocurrency exchange co-founders get anticipatory bail in Karnataka Bitcoin scam case

The special court in Bengaluru granted conditional anticipatory bail to the duo on a surety of Rs 2 lakh each and with the condition that they should appear before the SIT within 15 days and co-operate. They have also been directed not to leave the country without the court’s permission.

They argued in the anticipatory bail plea that they were not named as accused persons in the complaint registered on January 24 by an SIT officer in a CID cyber crime police station. They expressed fear that they might be arrested in the case on account of the SIT summoning them for questioning soon after the arrest of two people on January 25.

The SIT arrested cyber expert KS Santhosh Kumar, who is CEO of Cyber ID Technologies, and a former head of the Bengaluru police technical cell, Prashant Babu, in connection with a FIR registered on January 24.

The SIT argued this week that the arrested police officer illegally accessed the Amazon Web Server wallet files of Sriki, 29, following his arrest in November 2020 by the Bengaluru police and did not record the details of the accessed wallets as evidence.

The SIT said the officer misused the services of private cyber experts Gagan Jain, Santhosh Kumar and Sathvik V to delete the bash history on the Amazon Web Server and destroy evidence as a consequence.

“As a result, crucial information on the Bitcoin wallets in the Amazon Web Server was erased and put out of reach of investigations,” the SIT alleged.

Sathvik’s counsel, however, rejected the allegation of being complicit in the destruction of evidence.

“Apart from a stray statement that accused No.4 (police officer) along with accused No.1 (Santhosh Kumar) cleared the history relating to wallet files on the AWS belonging to Sriki, absolutely no specifics have been provided to demonstrate that any crime was committed by the petitioners,” the court noted.

The SIT said that the probe had revealed that one of the co-founders had paid Rs 7 lakh to the arrested police officer to recover Bitcoins that had been earlier hacked and stolen from their exchange by hacker Sriki.

The SIT also argued that one of the co-founders monitored Sriki while he was hacking websites at the instance of a police officer at the office of a private cyber expert following Sriki’s arrest in November 2020.

The Unocoin founders told the court that they were willing to provide answers to allegations by co-operating in the probe. “Under the circumstances, they have made out grounds for grant of anticipatory bail,” the special court ruled.

The SIT has also named three former Bengaluru crime branch officers—Sridhar Poojar (now a DySP), inspectors Chandradhar S R and Lakshmikanthaiah—in the FIR filed on January 24, where the officers are accused of illegal confinement of the hacker and his accountant, breach of trust by a public servant and destruction of evidence. Poojar has also approached the special court for interim anticipatory bail in the case.

The SIT is investigating a 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 police and politicians following the arrest of the hacker in November 2020.

The SIT was formed by the Congress government in July 2023, shortly after coming to power in the state in May that year, for “investigating cases connected to laundering of Bitcoins and other cases”.

Sriki, who is accused in multiple cases of hacking of government websites and poker gaming websites in Bengaluru, has alleged in statements given to the police and enclosed with chargesheets filed between 2020-2022 that he was forced by police officers to part with Bitcoins that were in his possession when he was arrested.

The SIT has obtained voluntary statements from the hacker in the course of the investigation of alleged corruption and wrongdoing in the aftermath of his arrest.