In India, criminals are now extorting bitcoin from their victims

Gaining popularity.
Gaining popularity.
Image: Reuters/Jim Urquhart
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Criminals in India now want bitcoin as ransom.

Nine rogue police officers in the western Indian state of Gujarat were arrested on April 08 for kidnapping a businessman and extorting 200 bitcoins from him in February, besides Rs32 crore ($49,12,000) in cash.

A bitcoin is valued at around Rs4.43 lakh in India today, taking the total value of the cops’ bitcoin demand to Rs9 crore.

The businessman said he was taken to an unidentified location and forced to transfer the 200 bitcoins into another digital wallet. Authorities are now probing if the transaction did take place.

Virtual currency-related crime has been on the rise in India ever since digital coins began gaining popularity. But so far most of these incidents have been limited to hacking or fraudulent online transactions.

This spike comes at a time when the Reserve Bank of India (RBI) is shutting the door on cryptocurrencies. The central bank has forbidden lenders from dealing with virtual currency exchanges, tightening the noose around the industry. The banking regulator’s stringent action stems from fears that bitcoin and its ilk could be used in illegal activities. Instead, it is now looking to launch its own digital coin.

“Internationally, while the regulatory response to these tokens are not uniform, it is universally felt that they can seriously undermine the AML (anti-money laundering) and FATF (Financial Action Task Force) framework and adversely impact market integrity and capital control,” RBI deputy governor BP Kanungo said at a press conference last week. The AML and FATF are internationally accepted sets of rules under the aegis of organisations like the International Monetary Fund and World Bank to help prevent financial crime.

The Indian government, too, has issued advisories, strongly cautioning people against investing in virtual currencies.