Boom in Cryptocurrency Marks the Return of Bitcoin Kidnappings in India

Bitcoin, 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, is 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 people were arrested for their alleged role in the kidnapping.

Bitcoin is a form of digital currency that offers its users a degree of anonymity. 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 Bitcoin 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, Sogani added, the money is traceable once the criminal has transferred it into another account to spend it. 

Bitcoin is not regulated by a central authority and found early application as the currency of choice for drug traders on the dark net.

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 to $22,500 from a low of $4,000 in March.

In 2018, the Reserve Bank of India (RBI), India’s financial authority, banned the trade of Bitcoin, citing the risks of financial instability. This ban was overruled by the Supreme Court in March.

Follow Shamani on Instagram and Twitter.