The High Court of Karnataka has granted regular bail to Srikrishna Ramesh alias Sriki and Robin Khandelwal, accused nos. 1 and 3 in the Enforcement Directorate’s cryptocurrency-related money laundering case, holding that their continued custody could not be justified when the trial was nowhere near commencement.

Justice S Vishwajith Shetty passed the order on 30 September 2026 on two petitions filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The accused are facing proceedings in ECIR/BGZO/01/2021, registered on 5 January 2021 by the ED’s Bengaluru Zonal Office for offences punishable under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002. Their bail plea had been rejected by the Principal City Civil and Sessions Judge and Special Judge for PMLA cases, Bengaluru City.

Both men were arrested on 8 May 2026 and remanded to judicial custody. The prosecution complaint was subsequently filed on 6 July 2026 against six persons, but the special court has not yet taken cognizance. The ED has alleged that Sriki generated proceeds by hacking cryptocurrency exchanges, online poker and gaming platforms, and that Khandelwal, an accountant, was involved in laundering the funds.

A pre-cognizance case with 8,103 pages

While deciding the bail petitions, the High Court focused on the stage and volume of the case. It noted that the record before the trial court runs to 8,103 pages and the prosecution has cited ten witnesses. With the maximum punishment under PMLA being seven years, the court considered the likelihood of a long wait before the trial could begin.

“The present case is at pre-cognizance stage before the Trial Court. Learned Counsel for the petitioners has brought to the notice of this Court that documents in the present case runs upto 8103 pages and 10 charge-sheet witnesses have been cited. Therefore, chances of trial being completed and case being disposed of in the near soon is very remote,” the court observed.

The court drew support from Supreme Court decisions in P. Chidambaram v. Directorate of Enforcement, Manish Sisodia v. Directorate of Enforcement, Padam Chand Jain v. Enforcement Directorate and Arvind Dham v. Directorate of Enforcement, where bail was granted after considering the period of custody, the documentary nature of the evidence and the improbability of trial concluding within a reasonable time. In V. Senthil Balaji v. Deputy Director, Directorate of Enforcement, the Supreme Court had said: “bail is the rule, and jail is the exception.” It also warned that PMLA’s stringent bail provisions cannot become a tool to keep an accused in prison for an unreasonably long time, particularly when the right to speedy trial under Article 21 of the Constitution is at stake.

ED’s shifting-proceeds objection rejected

The ED opposed bail by relying on statements recorded under Section 50 of PMLA and the twin conditions in Section 45, which require the court to be satisfied that the accused is not guilty and is unlikely to commit an offence while on bail. The agency argued that the entire proceeds of crime had not been traced and that the accused, if released, might shift or misuse those proceeds.

The High Court was not persuaded. It pointed out that the current ECIR was registered in 2021, while the arrests were made only on 8 May 2026. If the accused had hidden sale proceeds and intended to shift or misuse them, they had ample opportunity to do so before arrest. The court also recorded that no allegation had been made that the accused misused bail conditions in any of the predicate-offence cases.

“There is no allegation against the petitioner that they have misused the bail conditions in any one of the cases registered for the predicate offences. Therefore, the apprehension now expressed by the learned Counsel for the respondent as aforesaid, does not appeal to the mind of this Court,” it said.

The court further observed that although the complaint alleged accused no.1 had acquired proceeds of crime, no material had been collected from him during investigation establishing such acquisition in any form. Khandelwal’s bank account, in which sale proceeds were deposited to the tune of about ₹53.05 lakh, had already been frozen by investigators.

Prior bails, cooperation and parity

Before the present ECIR, the accused had been enlarged on bail in the predicate-offence cases registered between 2017 and 2020. In an earlier ECIR, ECIR No.4/2020, which was based on similar allegations, the ED did not arrest them. After the complaint was filed in that case, they appeared before the trial court on summons and were granted regular bail.

In the present ECIR, the court found that the accused had cooperated throughout the investigation and appeared before the investigating officer whenever summoned. They were nonetheless arrested in May 2026, more than five years after the case was registered. The High Court also noted that accused no.2 had already been granted regular bail by the same court on 14 July 2026 in Crl.P.No.9320/2026.

Allowing both criminal petitions, the court directed that the petitioners be released on bail on a personal bond of ₹1 lakh each with two sureties of the like amount, to the satisfaction of the jurisdictional court. The bail is subject to conditions requiring them to appear regularly before the trial court unless exempted, refrain from tampering with prosecution witnesses, avoid similar offences and not leave the trial court’s jurisdiction without permission.

With the prosecution complaint still awaiting cognizance and a long trial ahead, the order restores the liberty of the two accused while the money laundering prosecution remains pending before the special court.