Karnataka High Court Grants Bail to Cryptocurrency Scam Accused Despite ₹401 Crore Proceeds of Crime
The Karnataka High Court granted bail to Srikrishna Ramesh, alias Sriki, and Robin Khandelwal in a money-laundering investigation conducted by the Directorate of Enforcement on October 7, 2026. Justice S Vishwajith Shetty rejected the ED's arguments that the accused posed a flight risk or might tamper with evidence related to proceeds of crime estimated at ₹401 crore.
The two men were arrested on May 8, 2026, in connection with a cryptocurrency scam the ED registered in 2021. Their detention had stretched for months as the investigation accumulated 8,103 pages of documents and involved 10 witnesses named in the charge sheet. The sheer volume made a speedy trial extremely remote, according to the court's reasoning.
Detention without prospect of trial
Justice Shetty's decision rested on a practical assessment of how long the criminal process would take. Under Indian criminal procedure, prolonged detention of accused persons without a reasonable prospect of trial completion within a defined period raises constitutional concerns about the right to a speedy trial. The judge weighed this principle against the ED's concerns about bail conditions.
The Directorate of Enforcement had opposed the bail petitions, contending that releasing Ramesh and Khandelwal would enable them to misuse their freedom and potentially shift or conceal the proceeds of crime. The agency argued that the scale of the alleged fraud warranted continued custody to prevent further criminal activity or destruction of evidence.
Justice Shetty dismissed this reasoning. The court observed that if the accused had intended to move or hide the proceeds of crime, they had ample opportunity to do so before their arrest in May 2026. The fact that they had not taken such steps during the intervening months suggested that the risk of flight or evidence tampering was not as acute as the ED contended.
Money-laundering prosecutions and detention
The bail order comes as India's financial crime investigation agencies face scrutiny over the length and complexity of money-laundering prosecutions. The Prevention of Money Laundering Act, 2002, grants investigators broad powers to seize assets and detain suspects, but courts have grown more attentive to ensuring that these powers do not result in indefinite pre-trial detention. The requirement to establish a prima facie case and demonstrate that bail conditions alone are insufficient to ensure the accused's presence and cooperation has become a more rigorous test in recent years.
Cryptocurrency-related fraud cases present particular challenges for investigators. The digital nature of the transactions, the involvement of multiple platforms, and the technical complexity of blockchain records often generate voluminous documentation. Tracing the flow of funds across exchanges, wallets, and conversion points requires painstaking analysis and expert testimony. A case involving ₹401 crore in alleged proceeds would naturally accumulate thousands of pages of transaction records, bank statements, and digital forensics reports.
The ED's investigation into this 2021 cryptocurrency scam reflects the agency's expanding focus on virtual asset fraud. As cryptocurrency adoption has grown in India, so too has the incidence of scams involving digital currencies. Many of these schemes operate by promising unrealistic returns, collecting funds from investors, and then disappearing or converting the money into other assets. The ED's mandate under the PMLA is to trace the proceeds of such crimes and prevent their laundering into the formal financial system.
Ramesh and Khandelwal's arrest came after the ED had already gathered preliminary evidence linking them to the scam. The subsequent accumulation of 8,103 pages of documents suggests the investigation expanded significantly after their custody began. This is not unusual in money-laundering cases, where investigators often need to examine years of financial records and cross-reference multiple accounts and entities.
The bail order does not specify what conditions Justice Shetty imposed on Ramesh and Khandelwal's release. Standard bail conditions in money-laundering cases typically include a requirement to report periodically to the investigating officer, a prohibition on leaving the jurisdiction without court permission, and a direction not to tamper with witnesses or evidence. Some courts also impose conditions restricting the accused's access to bank accounts or requiring them to furnish additional security.
Trial proceeds without custody
For the ED, the bail order means the investigation must proceed without the accused in custody. The agency will continue gathering evidence, interviewing witnesses, and preparing its case for trial. The 10 charge-sheet witnesses identified so far will need to be examined and cross-examined, a process that can take many months or even years in complex financial crime cases.
Ramesh and Khandelwal now face trial on money-laundering charges while at liberty. The ED will press forward with its investigation and prosecution, while the accused will have the opportunity to prepare their defense outside custody. Justice Shetty's order does not prejudge the merits of the case or suggest that the ED's allegations lack substance. Rather, it reflects a judicial judgment that detention was no longer justified given the procedural realities ahead.
The order is expected to set a precedent for other bail applications in complex, document-heavy money-laundering cases. Courts across India will likely cite Justice Shetty's reasoning when assessing similar petitions, particularly where the volume of evidence and number of witnesses make a speedy trial unlikely.
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