In its first arrest, a special investigation team of the Karnataka police probing alleged illegal Bitcoin payments made to officials by hacker Srikrishna Ramesh alias Sriki has taken into custody Harwinder Singh, who allegedly received illegal funds from the hacker.
Singh, who hails from Delhi, was earlier this year named an accused in a money-laundering case by the Enforcement Directorate on account of his allegedly receiving Rs 60 lakh of funds that was part of Rs 1.05 crore hacked and stolen from the state government’s e-procurement portal on July 1, 2019, by Sriki, 28.
Singh is also alleged to have facilitated the laundering of funds stolen by Sriki. Rs 11.5 crore was stolen from the portal in two hacks–Rs 1.05 crore on July 1 and Rs 10.5 crore on July 9.
The Karnataka CID, which initially investigated the e-procurement cell hacking, filed a chargesheet against Sriki and 11 others in December 2021 but did not name Singh as an accused in the hacking and money-laundering case. However, a parallel money-laundering investigation by the ED, in which a chargesheet was filed this year, named Singh among the 19 accused.
The CID and ED investigations of the flow of money following the hacking of the e-procurement portal revealed that hacker Sriki and his associates Sunish Hegde, 36, Hemanth Mudappa, 33, and Prasidh Shetty, 26, had set up an elaborate laundering system for the transfer and collection of the stolen funds during the preparations for the cyber heist.
In a voluntary statement given to the CID following his arrest (in 2020), Sriki stated that the initial hack was done by him alone with a network that he had created for money-laundering, while the second hack, and subsequent attempts at stealing nearly Rs 35 crore, were done at the behest of Hegde, a civil contractor and businessman.
The CID’s and the ED’s investigations of the flow of money in the first hack revealed that the stolen money was transferred to the account of a chips and soft drinks firm in Bulandshahr, Uttar Pradesh, called Nimmi Enterprises and run by one Vinit Kumar.
The investigations found that Sriki was put in touch with Vinit Kumar, 31, by a New Delhi businessman, Sushil Chandra, 50, an acquaintance with whom he communicated on the Wickr messaging app. Chandra allegedly identified Nimmi Enterprises for laundering the stolen funds through Harwinder Singh.
According to the ED investigation, the Rs 1.05 crore that was transferred to the Nimmi Enterprises account by the hacker was re-routed to the accounts of Singh in Punjab (Rs 60 lakh); Amar Narwal, brother-in-law of the Nimmi Enterprises owner (Rs 36 lakh); and to Krishna Pal Yadav, an associate of the Nimmi Enterprises owner (Rs 7 lakh).
Out of the Rs 60 lakh transferred to the account of Harwinder Singh, Rs 40 lakh was allegedly transferred to Sushil Chandra and others. The money was to be siphoned back to the hacker gang through cryptocurrency and hawala routes.
Out of the Rs 1.05 crore stolen from the government portal, the ED recovered Rs 30.76 lakh as proceeds of crime from Nimmi Enterprises and the other conduits.
In the case of the second theft of Rs 10.5 crore, the money trail took the CID and the ED to a Nagpur-based NGO, Udaya Grama Vikas Sanstha, and multiple firms to whom the stolen funds were relayed for hawala transfer back to the hackers.
According to an ED seizure report of August 2021, Rs 1.13 crore from the stolen Rs 10.5 crore was recovered from the bank accounts of the NGO (Rs 74 lakh) and other entities.
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The alleged Bitcoin scam involving Sriki and his associates have been at the centre of a political controversy with the Congress saying that top leaders of the state BJP and police officials received kickbacks in cryptocurrency after the arrest of the hacker and his associates in 2020, when the saffron party was in power.
On June 30 this year, the police created the SIT to probe the Bitcoin cases from the BJP’s tenure.
In statements given to the police, Sriki claimed that he had given away Bitcoins that were in his possession to the police following his arrest in 2020. “I understood the case scenario that even if I do not give them the Bitcoins, they can use forensic methods to find the Bitcoins, after a talk with the investigating officer. So post-consultations, I voluntarily accepted [sic] to give away the Bitcoins which I had kept in various wallets in different cryptocurrencies,” reads a statement attributed to Sriki. The statement is part of the chargesheet filed in one of the cases booked against the hacker in 2021.