Karnataka's multi-crore Bitcoin scam: Cong govt orders SIT probe

The Karnataka Bitcoin case, involving influential politicians, hit the headlines again after Home Minister Dr G. Parameshwara ordered a reinvestigation by a newly formed Special Investigation Team (SIT) under the Crime Investigation Department (CID).

The Congress party has alleged that the BJP government is behind the scam, and after assuming power, it has initiated a reinvestigation through SIT. Consequently, the Congress government is now actively pursuing a fresh inquiry into the Bitcoin scandal, which had caused a stir during the tenure of former Chief Minister Basavaraj Bommai, who had attempted to refute the accusations.

The Bitcoin scam was one of the biggest scandals that engulfed the BJP government. There were serious allegations implicating the offspring of many influential ministers. Besides, many high-ranking police officers were also believed to be hand-in-glove. The Congress party has indirectly questioned the reasons behind the evident concerns of Nalin Kumar Kateel, the BJP state president, subsequent to the announcement of the re-investigation into the case.

The Congress had also directly accused Bommai of trying to cover up the case before the elections. It alleged that instead of ordering a comprehensive investigation into the colossal scam involving over Rs 5,000 crore, the government sought to downplay its severity. The party also claimed that the government played a role in securing bail for the primary suspect, Srikrishna alias Sriki, who is currently evading authorities.

A case with international links

Following these events, a war of words ensued between the Congress and the BJP. During this period, Bommai made a statement suggesting the involvement of Congress leaders in the scandal. However, in response, the Congress challenged Bommai to disclose the names he was referring to.

Watch: Karnataka bitcoin scam: Did Bengaluru hacker hoodwink cops?

The case has international ramifications, with foreign investigative agencies visiting both Delhi and Karnataka to gather information regarding Sriki, also known as Srikrishna (28). The Union Home Ministry has been kept apprised of the developments, and central agencies such as the Income Tax department and the Enforcement Directorate (ED) have compiled data related to the case.

The crux of the case lies in the involvement of numerous politicians in this case, who utilise Sriki as a means to accumulate digital wealth. The investigation will primarily focus on determining whether these politicians illegally transferred funds to foreign nations via the ‘dark web’ with Sriki’s assistance. Additionally, it aims to ascertain if they were complicit in hacking activities and pilfering funds from national and international BitCoin networks.

Thus, this scandal caused significant uproar within the state and the political arenas beyond it. Speaking of Bitcoin, what exactly is it? Bitcoin, akin to traditional currencies like the rupee or dollar, exists in the form of a cryptocurrency. It is a digital currency that is intangible and cannot be physically held or visually perceived. Instead, it manifests solely as numerical data on computers or mobile devices.

This digital currency was created in 2009 through the implementation of cryptography technology. Bank and other transactions can be done without any intermediaries and at very low transfer fees. Furthermore, Bitcoin transactions do not require the user’s details and transactions can be done anonymously.

The multi-crore scam: At a glance

Sriki, the mastermind behind the Bitcoin scam, comes from Bengaluru. He completed his pre-University course (intermediate) from a reputed college and went on to do graduation in the Netherlands. He befriended renowned hackers during his college days and eventually became an international hacker.

Also read: Karnataka bitcoin scam: Cong MLA seeks details of ‘seizure’ from accused Ramesh

He was accused of hacking various cryptocurrency trading platforms and stealing thousands of Bitcoins from them. The information about the hacked money invested in the form of Bitcoin was available to the investigation team. The CCB police arrested him in a drugs case and the direction of the investigation changed when it came to know that he was an international hacker. Later, it was revealed that he was involved in the Bitcoin scam. Meanwhile, Sriki had also allegedly hacked the state government’s e-procurement portal and looted Rs 46 crore.

When did the case come to light? It has been going on since 2015 till date. It is said that foreign and central investigation teams are gathering information about Sriki

The timeline

2015, 2016: Sriki hacked the Bitcoin exchange Bitfinex twice. In 2015, Sriki stole a small number of Bitcoins and in 2016, it is said that he stole 1,20,000 Bitcoins. The current value of these Bitcoins is 7 billion dollars (about Rs 4,900 crore). In 2017, Srikrishna hacked the Bit Club Network server and stole 100 Bitcoins from it.

November 17, 2020: Srikrishna, a resident of Jayanagar, was arrested by the CCB police in a drug case registered at the KG Nagar police station in Bangalore. In the investigation, his cybercrime and Bitcoin illegality were discovered.

December 1, 2020: Even as the CCB was investigating the Bitcoin illegality, the officials of the Enforcement Directorate had written a letter asking for information about Srikrishna’s case.

ED wrote a letter to CCB officials on the arrest of Srikrishna and the CCB investigation. He requested to provide the information, along with the FIR copy of this case and the list of allegations.

January 14, 2021: The CCB police seized 31 Bitcoins worth Rs 9 crore from Srikrishna, and the CCB submitted a 75-page charge sheet against Srikrishna to 1st ACMM Court on February 22, 2021. Detailed information reference about Bitcoin Earnings worth crores of rupees in the charge sheet.

February 22, 2021: The accused hacked the website of the American money exchange agency BTCe.com and earned 3,000 BTC (Rs 1,370 crore) from it. After that, the Bit Phoenix website was hacked and its server was taken over. For this, he got the help of two Israeli hackers. 2,000 BTC (Rs 913.33 crore) coin was earned from this, according to the information in the charge sheet submitted by the CCB police.

March 3, 2021: Since it was a serious case, Bengaluru City Joint Commissioner of Police (Crime) Sandeep Patil had written to the Enforcement Directorate, requesting an investigation.

April 28, 2021: Bangalore City Police Commissioner Kamal Pant requested the Interpol Department to conduct an investigation through Interpol as Srikrishna’s network had spread abroad.

October 27, 2021:  After former CM Siddaramaiah’s tweet, the Bitcoin case became political. There is information that influential politicians of the state are involved in drugs and Bitcoin scams. For this reason, he tweeted that the report that the investigators are trying to cover up the case is worrying.

October 29, 2021: Chief Minister Basavaraja Bommai, who had responded to former CM Siddaramaiah’s allegations, said there is no question of protecting anyone in the Bitcoin case. He clarified that further investigation of the case is being conducted by the central investigation agencies.

October 29, 2021: Home Minister Araga Jnanendra said that there is no question of who will be protected in the Bitcoin scam case. The issue of Bitcoin is very serious and politicians and police officials have said that whoever is involved will be found and punished.

November 6, 2021: Hacker Srikrishna and gold businessman Vishnu Bhatt were arrested by Jeevan Bhima Nagar police station on charges of assaulting the hotel staff.

A wave of alarm 

Sriki was released on bail on November 10, 2021, and denied all the allegations. Amidst all this, Congress leader Priyank Kharge and former Advocate General AS Ponnanna had put many questions before the Bommai government regarding the police investigation while the case was still under the purview of the court. How did the accused get the drugs while in custody? Why was the accused put in prison? These were some of the questions raised.

Also read: Amid Karnataka bitcoin row, hacker Srikrishna gets arrested for brawling

The charge sheet also drew criticism due to its glaring inadequacies in conducting a thorough investigation. Priyank Kharge said that the Bitcoin scam will claim CM Basavaraja Bommai. This gave another twist to the case. He had made serious allegations that the BJP leaders, their children, close associates and officials were involved.

A total of 77 cases have been registered across the state involving fraudulent activities related to Bitcoin investments. The concerned authorities, including the Criminal Investigation Department (CID), are actively investigating several of these cases. An RTI activist had lodged a complaint with the central government regarding the Bitcoin scam. Now that this case is going to be re-investigated again, it should not be a surprise why it has caused alarm among many people.