SIT on the money trail in bitcoin scam: were ‘diverted’ bitcoins cashed out in local banks?

SIT close to tracing money trail of stolen bitcoins in India; investigation show bitcoins may have been encashed in local banks. High profile beneficiaries may have cashed out via circuitous route.

The Special Investigation Team (SIT) probing the bitcoin scam is close to identifying a money trail that may finally establish that bitcoins were indeed forcefully stolen, diverted into wallets and encashed. If the SIT is successful in this, it would for the first time provide clinching evidence of a “scam” in the case. 

Investigation of several officials posted with the Parappana Agrahara prison where hacker Srikrishna Ramesh alias Sriki was lodged in and Central Crime Branch and other source-based information, has reportedly given SIT officials leads that bitcoins, so “diverted” from Sriki, may have been encashed in local Indian banks, through a web of transactions. 

Till now, it was believed that if the bitcoins were indeed diverted and encashed they would have happened overseas, making tracking down these transactions difficult. However, establishing a money trail from bitcoins to individuals may be easier if they were cashed here, sources said. 

A source privy to the investigation said they have leads that suggest even high profile beneficiaries cashed out their bitcoins through a circuitous route in local banks. 

Sriki was first arrested by the Central Crime Branch (CCB) in a drug peddling via darknet case. Later, they found out that he was a hacker. It is believed that he had stolen several bitcoins from Bitfinex, a major Bitcoin exchange. These blacklisted coins were moved while he was in judicial custody, leading to allegations that several individuals forced him to divert these stolen bitcoins to their wallets. 

According to sources in the know, a few people who had taken bitcoins from Sriki had moved the same to different wallets with his help and later moved them to another Bitcoin trading exchange. The coins were also broken into different wallets. The coins which were moved from the wallet to Bitcoin exchanges were further pushed into bank accounts in India and cashed. 

A senior official said the SIT can now try to reverse engineer from the end point bank transactions to the bitcoins and then to hacker Sriki. “It is a complex process, but since the end point seems to be local banks, it is not impossible,” the official said.