According to local media reports, the Indian state of Karnataka government has ordered an investigation into a Bitcoin scam. Karnataka is the tech hub of India and is known as the “Silicon Valley of India” because of its role as the nation’s leading software exporter.
In a recent media interaction, Priyank Kharge, an Indian politician from the Indian National Congress and Serving as the Cabinet Minister in the Government of Karnataka, said that the government will initiate an investigation into the Bitcoin scam. Recently, Karnataka has got a newly elected Congress-ruled government in the state.
Kharge has pledged the Bitcoin probe as the government’s sixth guarantee to the people. He said that for the investigation, the probe team would take the help of the experts from the cybercrime division. Sources familiar with the matter reveal that the government is aiming to unearth big names associated with the scam.
The minister’s comment followed a recent arrest made by Karnataka police in a case associated with a Bitcoin scam. Reportedly, the 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.
Sources suggest that he has involvement in several crypto cyber crimes including ransomware attacks, money laundering, and more. Additionally, he is accused of hacking the Karnataka government’s e-procurement portal and siphoning off INR 11.55 Crore ($1,394,531.99). 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.
Interestingly, CCB claimed that it recovered 31 Bitcoin valued at INR 9 Crore ($1,086,648.30) from Sriki but the claim was later retracted. Kharge has shown significant interest in the case since the start. Even as an opposition leader, he had urged the government to disclose where the Bitcoins were seized from.
Much like the rest of the world, with the rapid growth in the crypto ecosystem across 2021-22, India has been emerging as a hotbed of crypto frauds and scams. However, most of the probes into these alleged scams have reached nowhere yet.
Last year, the Indian police arrested 11 people in Nagpur in a crypto scam case that allegedly duped $5.36 million (INR 40 Cr) from deceived investors. In another case in 2021, four persons were arrested in Kerala for allegedly running a Ponzi scheme masked as a cryptocurrency investment scheme. Besides, there have been several other high-profile cases namely the GainBitcoin scam, The Bitconnect fraud, among others.
While the Indian authorities are working on crypto regulations, there is no specific deadline as of now. However, in December, Minister of State for Finance Pankaj Chaudhary said that India’s long-pending crypto policy will be finalized after international collaboration and risk evaluation are done.
The country had prioritized crypto regulations at the top of the chart during its G20 presidency this year. 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.
Additionally, the government imposed taxes on crypto transactions last year, a 30% tax on income from crypto transactions, and a 1% TDS on such transactions. Reportedly, India has collected more than $19.2 million in tax revenue from cryptocurrency transactions under its current tax regime.