Two US special agents have been charged with allegedly stealing thousands of dollars in bitcoins from the Silk Road marketplace while they were investigating the site.
The US Department of Justice (DoJ) has filed proceedings against two men, Carl Force, 46, a special agent with the Drug Enforcement Administration (DEA), and Shaun Bridges, 32, a special agent with the US Secret Service.
Both men were part of the Silk Road task force set up by the FBI to investigate illegal activity in the Silk Road marketplace, and ultimately shut it down.
This work required Force to go undercover and communicate with Ross Ulbricht, aka Dread Pirate Roberts, who was recently found guilty of operating the site and faces a 20-year prison sentence.
However, while carrying out this work, Force and Bridges are alleged to have used their access to Silk Road to divert large amounts of money from the site into their personal bitcoin accounts.
Specifically, the DoJ said that Force created several online personas that he used on Silk Road to engage in “a broad range of illegal activities” that helped him make money.
These included making bitcoin transactions as part of his investigation that he then failed to report and instead transferred to his own account.
The rap sheet contains several more notable allegations. The DoJ said that Force allegedly sold information about the government’s investigation to the target of the investigation, presumably Ulbricht. Force also invested in and worked for an unnamed digital currency exchange company while serving as a DEA agent.
He also used his government job to force another unnamed digital exchange company to freeze a customer’s account and then transfer the money to his own account. He even sent an unauthorised subpoena to an online payment service directing it to unfreeze his personal account.
Meanwhile, Bridges is said to have diverted $800,000 in digital currency that he gained control of during the Silk Road investigation to his own personal account.
The DoJ said he moved the funds to Tokyo-based bitcoin exchange Mt Gox before moving them on to his own account hosted in the US. Days later he issued a $2.1m seizure warrant against Mt Gox, after his money was safely transferred.
Both men were due to appear before judges on Monday to hear the charges against them.
Ken Westin, senior security analyst at Tripwire, said it was clear that the agents involved had believed their technical skills would help them pull off the "perfect crime".
"The investigators in this case were knowledgeable and had a deep level of expertise with bitcoin and were in a position of authority to help themselves to a sizeable amount of the crypto currency," he said.
"Both of the agents went through multiple steps to hide their transactions and activities and abused their authority throughout to work the system.
"Believing that the anonymity of bitcoin would cloak their activities, it was when they tried to convert those funds and move them into bank accounts, some offshore, that they were caught."
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