Two US federal agents are being charged after stealing thousands of bitcoin during their investigation of the illicit Silk Road cryptocurrency marketplace.
Former Secret Service agent Shaun Bridges and DEA agent Carl Force are being charged with wire fraud, money laundering and falsifying government documents for stealing Bitcoin.
The two agents were part of a Baltimore-based task force, and charged with building a relationship with Silk Road owner Ross Ulbrich (aka Dread Pirate Roberts). However, they used their status as federal agents to “mislead, pressure and personally profit from their activities during the investigation” without attracting the attention of their superiors, according to a TechCrunch report from Vanbex Group chief exec Lisa Cheng.
The Baltimore task force gained administrator access to the Silk Road marketplace after the arrest of a Silk Road employee Curtis Clark Green. Bridges allegedly used the administrative access to take sizeable amounts of bitcoin from Silk Road accounts, and move them to bitcoin exchange Mt. Gox and exchanged to US dollars. This gave him time to set up an LLC and open a bank account so he could send the funds back to America.
Bridges wired bitcoin to his bank account nine times in a three month period, ending up with $820,000. Afterwards, the agent signed a seizure warrant against Mt. Gox, confiscating $5 million and shutting down the exchange for “acting as a money services business without a license, unlawfully allowing people to exchange bitcoins to fiat currency,” Cheng’s report added, an act Bridges himself had committed himself days before.
Bridges’ theft prompted Ulbricht’s ‘kill for hire’ requests that are part of the case against him, as the Silk Road owner assumed that the bitcoin had been stolen by an employee.
At the same time, Carl Force reached out to Mark Karpeles asking him to back a sale of 250 bitcoins over LinkedIn. While he admitted to being an agent, Force told Karpeles he was seeking other employment. After the Mt.Gox seizure, the agent sent a mocking email to the exchange’s CEO, noting that he ought to have partnered with Karpeles when he had the chance.
Force also worked as a ‘compliance office’ for coinMKT, another bitcoin exchange, where he had invested in $110,000 worth of bitcoin. The agent ran illegal criminal history checks against users of the exchange, and seized funds as part of a faked federal investigation. Once he moved the bitcoins to his personal Bitstamp account, however, Bitstamp became suspicious and froze the account after noticing the agent was attempting to withdraw $80,000 into his personal bank account using a private browser.
Once Bitstamp spoke to Bridges, Force’s accounts were unfrozen, and he was able to transfer the money to his personal accounts, making several real estate purchases, paying off his mortgage, and transferring some to off-shore accounts.
The two agents stole millions of dollars in digital currency, using a number of exchanges, processors and accounts in an attempt to hide their trail. But neither Bridges nor Force properly understood the transparent and traceable nature of bitcoin transactions, and were ultimately caught out.
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