470 BTC Stolen in a Nearly Buried 2015 Drug Case
In India, after the Ahmedabad branch of the Narcotics Control Bureau (NCB) raided a narcotics ring, investigators seized 470 bitcoins from the group’s bitcoin wallets. The raid on the group of online drug traffickers occurred in early 2015. At some point in June of the same year, an NCB investigator named Satyendra Kumar Singh “froze the accounts.” Roughly one year later, NCB authorities requested a status report on the coins and quickly realized the wallets no longer held any Bitcoin.
The true “owners” of the Bitcoin landed in custody for online drug distribution. According to a senior NCB official, the suspects from the initial case—the drug dealers, not the thieving law enforcement officer—sold “banned psychotropic drugs,” specifically “anti-depressants and stimulants.” They sold through an online “platform” that law enforcement kept under wraps. And, following the pattern of many online “platform” dealers, this anti-depressant and stimulant trafficking group received payment in the form of Bitcoin.
People knew the online platform as “Provizer Pharma.” An online pharmacy that sold prescription medication to customers across the world. Unlike some legitimate online pharmacy companies, Provizer Pharma never required prescriptions. Yet, somehow, the State of Texas almost bought sodium thiopental from the pharmacy.
During the raids, police found nine Bitcoin wallets and “accounts” with a combined balance of, at the time of this update, $712,546. Acting at the request of the NCB, still in an official capacity, Singh secured the accounts. The reasoning for holding them for an indefinite period of time was never made known to the press.
In July 2016, NCB Director General RR Bhatnagar explained a first for the Narcotics Control Bureau: they identified two separate “darknet syndicates” in the country and prepared to seize 500 bitcoins from one of them. “For the first time, we have detected drug traffickers using the darknet and Bitcoin for running the illegal drug racket in India,” he told a local news outlet. (Pti. “Narco Trade via Darknet, Bitcoin Reported in India for First Time.” The Indian Express. 17 July 2016. Web. 06 May 2017.)
Confusingly, another source from within the NCB made statement that made headlines at the time but seemingly contradicted the timeline or the 2015 seizure. Referring to the upcoming Bitcoin seizure of one of the drug syndicates mentioned by Director General RR Bhatnagar, the Bureau spokesperson said the following:
“While criminal probe agencies have seized a variety of assets like cash and immovable assets in their respective investigations all these years, Bitcoins have never been frozen as part of the tainted assets seizure. Bitcoin is equivalent to about Rs 1 crore in the Indian currency. The NCB is moving in that direction.” (Pti. “Narcotics Control Bureau to Seize 500 Bitcoins Used in Drug Trafficking.” http://www.hindustantimes.com. 23 Oct. 2016. Web. 06 May 2017.)
The NCB made the case difficult to follow, but law enforcement often uses somewhat confusing tactics in the investigation. Especially when they know the press will spread news and it will reach the data of a potential target.
This NCB theft has been called ‘India’s first bitcoin misappropriation case” by news outlets. “After the accused got bail from the Gujarat high court in 2016, the NCB sought a report on the status of the bitcoin accounts and learned that Singh authorized the unfreezing of the accounts in July 2016 through a signed and stamped letter on an NCB letterhead,” a spokesperson explained. “As no such authorization was given in the case, Singh came under the scanner and an internal inquiry was begun against him,” the official continued. According to the NCB, Singh partnered with one of the defendants to get the 470 bitcoins. Deepak Mangukiya, one of the accused, split 50 percent of the proceeds with the NCB officer.
After the NCB confirmed Singh’s involvement, they suspended. In the beginning of April 2017, the NCB announced that “a team led by inspector S R Tandel was given investigation of the case.” “Singh and Mangukiya have been arrested and their remand secured up to April 13. The investigation will focus on the transactions and Singh’s role,” the spokesperson said. The rest of the case remains a mystery.
Law enforcement may not routinely steal Bitcoin in India, or for the matter, anywhere. However, it is not an unknown crime. The two (known) corrupt agents in the Silk Road case, Call Force and Shaun Bridges, both received prison sentences for the same crime.