Hacked Bitfinex coins’ move linked to Sri Krishna?


Political circles in Karnataka are abuzz with claims that several police officials and politicians, including two top Bharatiya Janata Party (BJP) functionaries, are beneficiaries of the bitcoins hacked by Sri Krishna, allegedly diverted to their accounts for a cover-up. However, even the Opposition Congress has not explicitly made this allegation on record.

Movement of large caches of hacked, stolen, and blacklisted bitcoins from the 2016 Bitfinex hack — one of the largest bitcoin heists in the world — when Sri Krishna, who claimed to be part of the Bitfinex hackers’ group, was in custody is being speculated as an indication of this “scam”. However, there is no evidence beyond Sri Krishna’s own claims, for his links to Bitfinex hack.

14 transactions flagged

On November 30, 2020, Whale Alert, a blockchain tracker and analytics service, flagged 14 transactions where 5,045.48 bitcoins from the Bitfinex hack were moved to unknown wallets. Sri Krishna was in the custody of the Central Crime Branch of Bengaluru police on that day. On April 14, 2021 when Sri Krishna was in judicial custody, Whale Alert flagged 69 transactions where 10,057.47 bitcoins were moved to unknown wallets. This has been the biggest tranche of transactions of Bitfenix coins since the hack. The total worth of the bitcoins moved in these two tranches is said to be nearly ₹5,000 crore. “Whether some of the transferred bitcoins were from Sri Krishna should be a matter of an independent investigation,” said Randeep Singh Surjewala, AICC general secretary in charge of Karnataka, at a press conference in New Delhi on Saturday.

Sri Krishna in his voluntary statement in police custody, which has no evidentiary value in a court of law, claims he was part of the group that hacked Bitfinex in 2016 when 1,19,756 bitcoins were hacked and stolen. In his statement, Sri Krishna claims “the exchange was hacked twice” and in fact he was “the first person to do so” and the “second hack was led by two Israeli hackers working for the army”. He further said he transferred 2,000 bitcoins into his personal account, but “blew it up on luxurious lifestyle”. He also said the cost of bitcoins at the time of the hack was around $100-$200 which was split in two ways with his friend Andy from the U.K. In another instance in his statement, he said, in November 2018, he “downloaded the acknowledgement for the BTC transaction of 510 BTC” which was from a “Bitfinex exchange from the hacking group I was part of and later those funds were transferred to the Netherlands to my friend’s account”.

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No digital footprints

However, the forensic analysis of the electronic gadgets recovered from Sri Krishna found no digital footprints linking him to the Bitfinex hack, the police claim. The chargesheet filed against him, which charges him for hacking 10 poker websites and three other bitcoin exchanges, doesn’t charge him for the alleged Bitfinex hack. The police even speculated that Sri Krishna may have been making tall claims of his hacking exploits in his statements seeking notoriety, as they claim “despite best efforts” they haven’t been able to find evidence to substantiate most of his claims. “Even by his statement, he has spent the bitcoins he stole from Bitfinex,” an official pointed out.

Meanwhile, political circles are abuzz with reports of investigative agencies of the United States of America tracking the Bitfinex hack alerting their Indian counterparts of the November 2020 and April 2021 tranches of transactions being linked to the country. However, there has been no confirmation on this.

The city police ruled out these as “speculations” and said they had alerted the Interpol through the Central Bureau of Investigation on April 28, 2021, and are yet to receive any response.

The police dismissed links to the Bitfinex hack and the reported recent transactions of the hacked coins. “The claim made on Whale Alert that stolen bitcoins were transferred is completely unsubstantiated. And there is nothing to suggest it had originated from Bengaluru,” the statement said. The police further said representatives of Bitfinex company had neither shared any details of the alleged hack nor sought any information so far.

Since 2016, the hackers have been moving the stolen coins trying to launder them — several transactions both before and after the November 30, 2020, and April 14, 2021, tranches. In June 2019, Israeli brothers Eli Gigi and Assaf Gigi were reportedly arrested for the hack following the movement of stolen Bitfinex coins worth $1.5 million. However, Israeli authorities have not confirmed the link to the Bitfinex hack, media reports suggest. A report by Elliptic, a London-based blockchain analytic firm, on May 13, 2021, said that 21% of the stolen bitcoins have been moved, and only 4% have been laundered or exchanged.

(This is the first of a two-part series on bitcoin scam)



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Sagar Biswas

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