A digital currency and an alleged ‘scam’ surrounding it has become the hottest political topic in Karnataka, with the two main parties in the state, the ruling Bharatiya Janata Party (BJP) and chief opposition Congress, trading barbs on it. The genesis of the recent fight related to the alleged misappropriation of bitcoins can be traced to the arrest of 25-year-old Srikrishna Ramesh alias Sriki, described by the Karnataka cybercops as a ‘master cyber criminal’ in November last year and again on Saturday in an unrelated matter.

The accused was arrested in November last year on charges of procuring drugs on the dark web with payments being made in crypto-currencies and peddling it to high profile clients. During the course of the investigation, cops have uncovered Sriki's links to various other cybercrime activities, including the alleged hacking and illegal transfer of Rs 11.55 crore of state government funds via Karnataka’s e-procurement portal.

Sriki has also hacked several online services including BTC2pm.me – a Bitcoin exchange, Haverlock Investments, a trading platform for Bitcoin investors and various other businesses including MPEX and Paytiz.

During the investigation, Sriki has confessed to hacking and illegally transferring more than 5000 bitcoins after being interrogated by the cybercrime branch of the Criminal Investigation Department (CID) and Central Crime Branch (CCB) of the Bengaluru police.

Since each bitcoin is valued at around $65,000 (approx. ₹48.22 lakhs), the value of cyber-criminal activity, if found true, would run into several hundred crores. The value of cryptocurrencies, including Bitcoin, fluctuates wildly on a daily basis.

Initially, the CCB even claimed that it had managed to recover 31 bitcoins estimated then at a value of ₹9 crore, only to retract the claim later, saying that the accused had misled it. In February of this year, the state police filed a detailed 757-page charge sheet in the First Additional Chief Metropolitan Magistrate (ACMM) court in Bengaluru against Sriki. Still, the accused eventually managed to get bail in the case.

Siddaramiah’s allegation

The whole investigation has now got mired in political controversy as leader of opposition Siddaramiah has demanded to know what happened to the 5,000 bitcoins allegedly recovered from the accused.

Incidentally, the current Chief Minister Basavaraj Bommai was the state home minister when Sriki was arrested on cyber fraud charges. Congress is accusing that two senior BJP leaders are involved in ensuring that the alleged criminals are protected.

Siddaramiah recently, in a series of tweets, claimed, “It raises lot of suspicion about the conduct of state govt when we read news reports about Bitcoin scam. Instead of targeting those who question the scam, @CMofKarnataka should present the facts in front of the people. As per news reports, in the charge sheet filed by CCB police, it is recorded that the accused has looted 5000 Bitcoins through unethical hacking. Who holds these Bitcoins now? Have they got it transferred to accounts of investigating agencies? Or are they clueless”

CM hits back

However, CM Bommai hit back, saying that the state had already referred the investigation to central agencies, including CBI and ED, who have taken over the investigation. The CM also said that there was no question of shielding anybody involved in criminal activity.

Former home minister and senior Congress leader Ramalinga Reddy speaking to BusinessLine, said “If the state government has nothing to hide then there should be an independent investigation by a sitting judge of the Supreme Court, so that the complete truth is known. If the issue was not serious do you think that the PMO itself would recommend a further investigation?”

Police sources told BL that while Sriki is an accomplished hacker who has been involved in several cyber-criminal activities, he was also an inveterate liar who tends to exaggerate. “The 5000 bitcoins he claimed are just his claims. Whatever we have been able to uncover, we have filed in the charge sheet. Anyway, now the ED and CBI are also investigating, the truth will come out.”

State BJP spokesperson S Prakash said, “It does not behove senior leaders like the leader of the opposition, KPCC President and others to make wild allegations. It is not as if Bitcoin is a physical asset to be seized and produced before a court of law. The authorities are doing their job and we should allow them to complete a free and fair investigation. Our CM has already that there is no question of shielding anybody.”

On Saturday, Sriki, who is on bail in the cyber fraud cases, was detained by the city police in an unrelated matter after a brawl at a Bengaluru five-star hotel. The Bengaluru police have said that they are interrogating him and may seek further custody by producing him before a magistrate, for more investigation.

For now, though, Bitcoin has become a hot topic of conversation in political circles in the state, with everyone wondering if really 5,000 bitcoins were seized from the accused, and if yes, who has now access to it?

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