How Pune Police Personnel Repurposed to Fight Crypto Crimes
WITHOUT ANY tech support or expertise, police officers in Pune recently embarked on a major cryptocurrency scam, tracing crypto wallets containing 237 bitcoins worth Rs 533 crore. But it was not easy for the team.
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Blockchain technology is said to be anonymous, but Bhagyashree Navtake, Deputy Commissioner of Cyber Cell Police of Pune, has used the same technology to catch crypto crooks. “The best thing about the blockchain is that every transaction is recorded on a distributed database and is immutable, meaning it cannot be changed or modified,” Navtake said.
Navtake, an IPS officer from Maharashtra cadre of Latur, was transferred to Pune cyber cell in October 2020. She knew little about the crypto world as crime in this area of cyber world was increasing. “After joining the DCP cyber cell in Pune, a major crypto scam came to light,” she said referring to the Bharadwaj case in which two cyber experts were arrested for stealing cryptocurrency. as they helped police with two crypto scam cases in 2018.
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In 2018, a Special Investigations Team (SIT) from the Economic Crimes Wing (EOW) of the Pune Police investigated two of the many cases linked to a Ponzi cryptocurrency scheme registered in the country at the era. Among the 17 people arrested were mastermind and brothers Amit and Vivek Bharadwaj. The brothers, through their multiple companies, allegedly deceived thousands of people across the country by promising high returns on cryptocurrency investments.
The cyber crime cell had on March 12, 2022 arrested two experts – Pankaj Ghode, 38, and Ravindranath Patil, 45, and a former IPS officer from the Jammu and Kashmir cadre. Ghode and Patil had assisted the Pune Police SIT in investigating two cases of a multi-million dollar bitcoin Ponzi scheme in 2018.
Police alleged that Ghode and Patil diverted a significant portion of cryptocurrency funds from the wallets used by the defendants in the 2018 cases to their own wallets and those of their accomplices. The two reportedly prepared fake screenshots of blockchain wallets to funnel cryptocurrency.
Tracing the crypto wallets was the most difficult aspect of the case. “Blockchain is a fairly new technology, unlike other cyber crimes which can be hacked either by brute force or by password breaking mechanism, but crypto wallets are hard to crack,” Navtake told The Indian Express.
Cryptocurrencies are stored in crypto wallets. These wallets can be offline (hardware) or online (web). Crypto wallets are only accessible via what is called a private key, the cryptographic equivalent of a password. What makes crypto wallets indestructible is the underlying blockchain technology which is crypto-secured, meaning it is encrypted and cannot be hammered through any technology.
“Most cybercriminals trade their digital assets on major cryptocurrency exchanges, and it could be Binance, Coinbase, WazirX, etc. These exchanges have a large trading volume, which makes it easier to facilitate trades,” said Navtake.
The exchanges mentioned above are KYC compliant, so users will need to submit their KYC documents and some of them also track IP addresses, which can make it easier to find crypto thieves.
But, without any technical advice, it is impossible to crack down on wallets. “I started reading about crypto every day, understanding what blockchain is,” Navatake said, adding that his engineering background gave him an edge in understanding crypto.
Without any outside help, his team consisting of Inspector Ankush Chintaman and Sub-Inspector Angat Nemane, who is also a computer engineer, learned cryptography from scratch and gained knowledge on blockchain tools to trace the wallet addresses. She mostly learned everything online. “We approached a few portfolio recovery companies. But we couldn’t afford to spend Rs 2-3 crore just on some blockchain tools… So we had no choice but to take matters into our own hands,” she said.
Now the hunt has begun
The IPS agent began to search for sources of funds. The fund was traded from WazirX. “By contacting WazirX, we were able to obtain the KYC of individuals and that is how we recovered Rs 6 crore of cryptocurrencies in Ethereum, Ripple and four others,” she added.
It all now comes down to tracing crypto wallets containing 237 bitcoins, which have been identified by the cybercrime branch, but recovery is the most difficult procedure.
Navtake said the defendant getting bail is a major hurdle in such cases. “The defendant is released on parole and immediately transfers all the funds to different wallets. This becomes quite problematic for us.
The defendant in the Bharadwaj scam case had kept most of the crypto in hardware wallets. “He won’t give us his private key. The investigation is ongoing and we are also in the process of recovering the hardware wallet.
“A strict law is essential”
Navtake has trained its team on blockchain recovery tools. She wants every investigative agency to have a specialized blockchain team because “crypto scams are only going to increase in the future.”
“Without strict laws and regulations, it becomes exceedingly difficult to catch cyber criminals,” she told The Indian Express.
One of the most difficult aspects of any crypto investigation is whether the wallet address is from a foreign country. “Crypto crooks send their assets to different wallets based in Russia, Korea, etc. How do you catch these people?” she asked. Due to regulatory challenges, Navtake said the Cyber Police team was only able to charge the accused under Sections 409 and 467 of the Indian Penal Code. “If we had a tough crypto law, we would be able to bring even tougher charges against the accused,” she added.