Boom in Cryptocurrency Marks the Return of Bitcoin Kidnappings in India
December 22, 2020Bitcoin, the world’s biggest cryptocurrency, continues to emerge as a popular choice of ransom for kidnappers.
On Dec. 19, a gang of kidnappers in the southern Indian state of Karnataka demanded a ransom of 100 Bitcoin worth INR 170 million ($2.3 million) in exchange for an eight-year-old boy. The boy, kidnapped while on a walk with his grandfather on Dec. 17, was the son of a prominent businessman who had invested in Bitcoin. However, before the transaction could take place, the minor was rescued by the state police and six accused were arrested.
Cryptocurrency is a form of digital currency of a block that includes all the transaction details, and a chain to secure the block, which forms a blockchain. Since 2018, Bitcoin has been used in at least three different cases of kidnapping and extortion in India.
In 2019, three Bitcoin traders in the northern Indian city of Jaipur were held captive after kidnappers pretended to be selling them Bitcoins at a more attractive price than the market value. In 2018, a businessman from the western Indian state of Gujarat was caught in a cryptocurrency scam worth $3 billion, where he pretended to be kidnapped and held himself for ransom.
“Bitcoin is money that cannot be seized, unlike cash, by authorities. If the same money was in a bank account, it could be frozen, but you can only access the Bitcoin once the owner gives you a password,” Sidharth Sogani, the CEO of a firm that researches and analyzes blockchains, told VICE World News. However, the Bitcoin expert adds, the money is traceable once the criminal has transferred it into another account to spend it.
Bitcoin is generally considered the de-facto currency of dark net dealings, and often used to trade drugs and illicit weapons.
The first widely reported instance of a kidnapping that used cryptocurrency for ransom was in 2015, when a Canadian native was abducted from Costa Rica for a $500,000 ransom. Since then, similar kidnappings have been reported in 12 countries.
Over the last year, the value of Bitcoin has surged from INR 500,000 (about $7,000) to INR 1.7 million ($22,500). Multiple factors, mainly the state of economic recession triggered by the pandemic, have contributed to increasing the value of Bitcoin.
Bitcoin, along with other cryptocurrencies, have been on the rise since the Indian government demonetized INR 500 ($6) and 1000 ($13) notes in November 2016. This led to a surge in black market dealers finding ways to launder their illegal money, prompting many to invest in Bitcoin.
Due to the lack of regulation, the Reserve Bank of India (RBI), India’s financial authority, banned the trade of Bitcoin and other cryptocurrencies in 2018 over the lack of regulation. However, this ban was overruled by the Supreme Court in March this year. While talks of banning Bitcoin continue, the value of Bitcoin increased by 44 percent while it was still banned, and is currently at its highest.