In what could possibly be the first case of embezzlement of funds involving digital currency bitcoin in India, officials of the Ahmedabad zonal unit of the Narcotics Control Bureau (NCB) have accused one of their own officers of helping an accused to unfreeze his bitcoin account, The Times of India reported.

In 2015, the agency had cracked a case in the Indian city of Surat in which a platform run by youths allegedly promised to send banned psychotropic drugs (anti-depressants and stimulants) to US based customers. The NCB unearthed nine bitcoin accounts with a Bengaluru-based firm, containing 470 bitcoins (approximately $570k according to current exchange rate on Bitstamp). The accounts were frozen by NCB investigator Satyendra Kumar Singh at that time.

Latest investigation has revealed that Singh collaborated with one of the accused, Deepak Mangukiya, to unfreeze the accounts. According to the details provided by TOI, Singh had called the Bengaluru-based firm, verifying the affidavit by Mangukiya where he had forged the signatures of his four partners and the letter from the NCB. After the accounts were unlocked, the bitcoins were transferred to other accounts and encashed by the accused. Singh allegedly received half of the value.

"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 had authorized the unfreezing of the accounts in July 2016 through a signed and stamped letter on an NCB letterhead. As no such authorization was given in the case, Singh came under the scanner and an internal inquiry was begun against him," said a crime branch official.

Following the revelation, Singh was suspended by the agency and a formal complaint was filed with crime branch. A senior crime branch official told TOI that inspector S R Tandel was given investigation of the case. Both Singh and Mangukiya have been arrested and their remand secured up to April 13.