DH Exclusive | Did Karnataka police sit on key info on 2016 bitcoin heist?
Karnataka police appear to have delayed escalating notorious hacker Sriki's case to national agencies, even after learning that he was involved in the Bitfinex cryptocurrency exchange hack in 2016, considered to be the largest cryptocurrency heist at the time.
Though Sriki was arrested in December 2020 and a charge sheet with his confession of the Bitfinex hack was filed in February 2021, the Basavaraj Bommai administration informed the Interpol wing of CBI only on April 28, 2021.
The CBI's Interpol was informed two weeks after international agencies and blockchain analytics firms tracked the transfer of the long-dormant, blacklisted bitcoins from cold wallets to newly-created wallets.
According to the charge sheet filed by Bengaluru police, Sriki boasted to be the first person to have hacked Bitfinex twice.
Bitfinex was first hacked in 2015, and then in 2016.
The second hack, in 2016, "was a simple spear phishing attack which led two Israeli hackers, working for the army, get access to the computers of one of the (Bitfinex) employees," according to his statement in the charge sheet.
Two Israeli brothers - Eli Gigi and Assaf Gigi - were arrested in 2019 for their alleged role in the Bitfinex hack. Eli, according to reports, was in the Israel Defense Forces before his arrest. However, authorities were not able to recover all the 1.19 lakh bitcoins from them and suspected the role of others in the hack.
Sriki has also detailed the manner in which the Bitfinex hack was executed and how he routed the bitcoins from the exchange to his own bitcoin address.
The Bitfinex hack had alerted international authorities as 1.19 lakh bitcoins were stolen. All the coins were blacklisted by the exchange, forcing hackers to store a majority of them in cold wallets, while a small amount of the coins were moved over five years. Bitfinex had also announced a reward of $400 million - equal to 30 per cent of the net worth of 1.19 lakh bitcoins that were worth around $1.34 billion in 2020 (around $7 billion today) for information about the hackers.
On April 14, 2021, the stolen bitcoins started moving for the first time in five years and moved over $750 million worth bitcoins, exceeding Rs 5,580 crore. Over 30 transactions took place involving over 11,000 bitcoins shortly after bitcoins reached an all time high of around $65,000 per coin. Many of the transactions were to newly-created wallets.
A chronology of the events starting from Sriki's arrest in December 2020 till the first charge sheet filed against him in February 2021 suggests that investigators were aware of his role in the Bitfinex hack, months before CBI Interpol was alerted.
DH reached out to senior police officials, including the state police chief Praveen Sood to ascertain the reasons for the delay in alerting CBI Interpol. They were unavailable for comment.
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