"We have arrested Kirit Paladiya who is the mastermind of the conspiracy," said Deputy Inspector General of CID crime Dipankar Trivedi while speaking to the media.
According to the police authorities, Paladiya stole 176 bitcoins worth over Rs 9 crore from his partner, Shailesh Bhatt.
Also, Amreli's Superintendent of Police Jagdish Patel, Amreli local Crime Branch inspector Anant Patel and two other constables have been arrested for being involved in the case.
Meanwhile, seven policemen involved in the case are still on the run.
According to Shailesh Bhatt's complaint, a CBI officer, Sunil Nair, in February had called and warned him to stop dealing in crypto-currencies as it had been banned by the government.
Bhatt's complaint mentioned that Nair had taken Rs 5 crore from him for not filing the case.
During questioning, Bhatt had told that he, along with Paladiya, was kidnapped by Amreli police soon after their arrival in Gandhinagar on February 11.
His complaint stated that he was taken to a farmhouse wherein inspector Anant Patel and some other policemen assaulted him to make him transfer 176 bitcoins and Rs 32 crore to the police.
But, according to DIG Trivedi, Paladiya asked Bhatt to transfer the coins onto his account so that he could forward the same to the police authorities on the context of saving their own lives.
"Later on, we got to know that Paladiya never really had the intention of transferring the bitcoins but to keep it in his possession," the DIG added.
Paladiya sold 34 bitcoins from the 176 he had in his possession. After selling, he transferred 15 percent of the money (Rs 1.32 crore) to his accomplices in the police department which included Jagdish Patel, Anant Patel and several other constables; and another 15 percent (Rs 1.32 crore) to middlemen.
DIG Trivedi also informed the media that the name of former Bharatiya Janata Party MLA, Nalin Kotadia, came up during their investigation. (ANI)