Karnataka SIT to file chargesheet in 2017 case of Bitcoin theft from crypto exchange

The arrest of Sriki, 29, by the Bengaluru crime branch police in November 2020 had revealed his involvement in the 2017 Unocoin hacking case but no chargesheet was filed by the crime branch police, leaving the case “unresolved”.

On July 17, 2017, Harish B V, the co-founder of Unocoin Technologies, filed a police complaint in Karnataka’s Tumkur, where the exchange is located, stating that 60.6 Bitcoins were stolen by unknown people in a hacking that occurred on June 23, 2017.

The complaint alleged that the total value of the Bitcoins stolen was Rs 1.14 crore, at the rate of Rs 1.67 lakh per Bitcoin (the prevailing rate at the time). It further alleged that the stolen Bitcoins were moved to two separate online locations.

The CID SIT – constituted in June 2023 to look at alleged corruption in the handling of cases against Sriki – has found that the Bengaluru crime branch police did not recover any stolen Bitcoin from the hacker, but instead used other mechanisms to resolve the hacking cases.

In the Unocoin case, a director of the cryptocurrency exchange is alleged to have paid Rs 7 lakh to a Bengaluru police officer to recover the stolen Bitcoins after Sriki’s arrest, the CID SIT has found. Co-founder Harish purportedly paid the sum crime branch officer Prashant Babu, the SIT stated in court filings after the arrest of the officer on January 24.

“There is however no recovery of Bitcoin from the hacker shown in the investigation records from the 2020-21 period. The Tumkur case is being treated as unresolved and the SIT will file a chargesheet,” police sources said.

Along with Harish, the other co-founder Sathvik V were granted anticipatory bail in February this year after the SIT issued notices to them and sought information on police efforts to embezzle Bitcoin from the hacker.

2020 Bitcoin scam

The Bitcoin scam from the tenure of the BJP in Karnataka involves allegations of police grabbing of a large cache of the cryptocurrency that was found in the crypto wallets of the hacker Srikrishna in 2020. The services of the Unocoin founders were used extensively in the crime branch investigations to recover Bitcoin found in Sriki’s possession according to court filings by the crime branch and the SIT.

The SIT has stated in court arguments in recent weeks that the Bitcoins in Sriki’s possession were illegally accessed by the police while he was in their custody between November 2020 and January 2021.

Sriki and his accountant Robin Khandelwal were initially arrested by the crime branch police in November 2020 on charges of buying drugs over the darknet using Bitcoin. This eventually led to the cracking of several cyber crimes in Karnataka involving Srikrishna Ramesh, including a Rs 11.5 crore heist from the Karnataka e-governance cell during July-August 2019.

The handling of the cases resulted in allegations of corruption by the then Opposition Congress party. At the time of the hacker’s arrest, the value of one Bitcoin was in the range of $25,000 (around Rs 20 lakh) which soared to $60,000 (around Rs 50 lakh) by April 2021.