The newly elected Congress-ruled government in Karnataka will initiate an investigation into the Bitcoin scam, minister Priyank Kharge said.

Kharge has pledged Bitcoin probe as the government’s sixth guarantee to the people.

For the investigation, the probe team would take the help of cybercrime experts. Delving deep into the case, the government is aiming to unearth big names associated with the scam, Kharge told ET.

To put things into perspective, Bengaluru Central Crime Branch (CCB) arrested Srikrishna Ramesh, aka Sriki, for procuring drugs on the darknet in November 2020. Sriki, a drug peddler and hacker allegedly used bitcoins to purchase drugs and distributed them among his clients; allegedly some of them are influential politicians and business people.

Sriki has links with crypto cybercrimes including ransomware attacks, money laundering and more. He is also accused of hacking the Karnataka government’s e-procurement portal and siphoning off INR 11.55 Cr.

Later, Sriki reportedly admitted to having carried out an attack targeting the Bitfinex cryptocurrency exchange, from which he claimed to have stolen 2,000 Bitcoins.

Moreover, CCB claimed that it recovered 31 Bitcoin valued at INR 9 Cr from Srikrishna. However, the claim was later retracted.

Kharge earlier as an opposition leader also urged the government to disclose where the Bitcoins were seized from.

With the growth in the crypto ecosystem across 2021-22, India became a hotbed of crypto frauds and most of the probes into these alleged scams have reached nowhere yet.

In 2022, the Nagpur Police arrested 11 people in connection with a crypto scam that allegedly duped $5.36 Mn (INR 40 Cr) from would-be investors. In another case in 2021, four persons were arrested in Kerala’s Kannur district for allegedly running a ponzi scheme masked as a cryptocurrency investment scheme.

Beside, there were other high-profile cases such as the Amit Bhardwaj-led GainBitcoin scam, The Bitconnect fraud, among others.

In India, crypto regulation is yet to come out. However, the government had imposed taxes on crypto transactions last year, a 30% tax on income from crypto transactions and a 1% TDS on such transactions.

Further, in December, Minister of State for Finance Pankaj Chaudhary said that India’s long-pending crypto policy will be finalised after international collaboration and
risk evaluation are done.

Later, the Economic Affairs Secretary Ajay Seth said India is working with the Financial Stability Board (FSB) to reach a consensus on regulating cryptocurrencies during the country’s G20 presidency itself.