Faced with questions over the “disappearance” of 31 Bitcoins, the Bengaluru police now say they had been deceived by the alleged hacker Srikrishna Ramesh into believing — and publicly announcing — that they had seized the cryptocurrency worth Rs 9 crore from his personal electronic wallet.
The police’s central crime branch unit issued the statement on Saturday night in the wake of suspicions of corruption in handling the Bitcoins supposedly found with the hacker in January.
These allegations have rocked the BJP government in Karnataka over the last few days.
The opposition Congress has demanded answers on the whereabouts of more than 5,000 Bitcoins linked to the alleged hacker and accused the police of carrying out a massive cover-up.
The Bengaluru crime branch police stated in an official note that an “account claimed by the accused as his personal account” with 31 Bitcoins in it was actually a “live wallet of an exchange” for which Ramesh, alias Sriki, did not have a private key. The police said they then realised that the 26-year-old had misled them into believing they had seized 31 Bitcoins.
“It is stated that neither any Bitcoins were transferred from the account of Ramesh, nor any bitcoin was lost. It is a fact that for the purpose of investigations of crypto currency, it was felt necessary to open a Bitcoin account. Accordingly, a government order dated 08.12.2020 to open a Bitcoin account was obtained,” the police statement said.
“During the process of seizing, the accused, Ramesh showed a BTC wallet which contained 31.8 BTC. The wallet password was changed in the presence of cyber experts, government panchanamas and the entire procedure was recorded under mahazar and submitted to court,” it said.
“Subsequently, court permission was obtained to use the password to transfer the said Bitcoins to a police wallet account. Upon reaching the said wallet shown by the accused Srikrishna, it showed 186.811 Bitcoins” (instead of the seized 31 Bitcoins), police said.
“On enquiry, cyber experts opined that the said account claimed by the accused as his personal account, was in fact a live wallet of an exchange and the accused did not have a private key for this. Hence, the said account was left untouched and as a result, no Bitcoins were transferred to the police wallet,” says the police statement.
Ramesh was arrested by the Bengaluru crime branch police in November 2020 in a case of buying drugs from the dark net using Bitcoin. After the arrest, he told the police that he was a hacker.
In January, the police had announced the seizure of 31 stolen Bitcoins from Ramesh’s possession but the seizure was not shown when multiple chargesheets were filed in February against the hacker.
The Bengaluru police have also rejected Congress allegations linking the Ramesh to a bitcoin heist at the British Virgin Islands based Bitfinex exchange in 2016 and the alleged movement of over 14000 of the stolen bitcoins in December 2020 and April 2021 — which has been traced by blockchain analysts.
“The claim made on Whale Alert (a social media account) that 14,682 stolen bitfinex bitcoins were transferred is completely unsubstantiated. There is nothing to suggest that it had originated from Bangalore,” the crime branch police has stated.
Despite Ramesh’s arrest getting wide publicity “no foreign law enforcement agencies or any foreign companies have approached the Bangalore Police about any hacking, as claimed by the accused,” the police have stated.
“The accused made a series of claims of high volume hacking without any specific details. Preliminary investigation was conducted to ascertain the veracity of claims. The examination of digital evidence by cyber experts revealed that the majority of claims were unsubstantiated,” the Bengaluru police has stated..
Since Ramesh has claimed that he has hacked many crypto currency websites the matter was brought to the notice of the CBI Interpol units through proper channels on April 28, 2021 the Bengaluru police have stated. The details of the crime branch cases against Ramesh have also been provided to the Enforcement Directorate, the police said.