The Karnataka government refused sanction to prosecute police officers accused of taking kickbacks in the Bitcoin fraud, prompting the state CID's Special Investigation Team to close four police cases while a private cyber expert continues to face charges.

मुख्य बिंदु (Key Takeaways)

  • Government rejected prosecution sanction for police officers
  • SIT filed closure reports against four officers
  • Private cyber expert remains under investigation

The Karnataka Bitcoin fraud saga has taken a political‑legal turn as the Congress‑led state government denied the prosecution sanction (PSO) for four police officers, leading the Special Investigation Team (SIT) of the CID to file closure reports. The move, recorded in early July 2026, underscores how high‑level political decisions can steer the course of a complex cyber‑crime probe.

Background and Formation of the SIT

When the Congress party assumed power in June 2023, it set up a dedicated SIT to probe alleged large‑scale corruption involving the Bengaluru Central Crime Branch (CCB), senior police officials, and politicians linked to multiple hacking cases of “Sriki” during the previous BJP regime (2019‑2023). The team was tasked with reviewing the forensic handling of seized digital assets and ensuring accountability.

Charges Against Police Officers and Their Closure

In January 2024, a First Information Report (FIR) named Deputy Superintendent of Police Sridhar Pujar, Inspectors Prashanth Babu, S R Chandradhar and Lakshmikanthaiah for alleged kickbacks, document destruction, and tampering with evidence seized from hacker Sriki. After the government refused to grant a prosecution sanction, the SIT filed “B” closure reports in the courts, effectively ending criminal proceedings against these four officers.

Continued Action Against the Cyber Expert

Unlike the police, private cyber expert K S Santhosh Kumar remains under scrutiny. He was initially engaged by the CCB to trace stolen Bitcoins, but investigations revealed that he illicitly accessed the crypto‑wallet of the hacker’s accountant, Robin Khandelwal, and transferred Bitcoin worth INR 1.83 lakh to his own wallet. This breach prompted the Enforcement Directorate (ED) to include him in a separate money‑laundering probe.

Implications and Future Outlook

The episode highlights the fragile balance between political authority and independent investigative bodies in India’s fight against cyber‑financial crimes. Denial of prosecution sanction may delay accountability, while the persistence of charges against the cyber expert signals a tougher stance on digital fraud. As cryptocurrency‑related scams rise, robust cyber‑security frameworks and transparent legal processes become essential to safeguard public trust.