Two Federal Agents in Silk Road Case Face Fraud Charges

I encourage everyone with interest in the overall story to actually read the complaint. It&#x27;s astonishing.<p>It appears that these two Federal agents were doing far, far more than just grabbing some excess bitcoins that were lying around and they figured nobody would miss. It reads more like a purposeful organized crime effort, involving setting up dummy shell companies, forging letters from the government, being involved in pitching investments in shady offshore bitcoin startups, etc.<p>They also allege that these agents were turning around and selling insider info on the investigation to DPR in exchange for hundreds of thousands of dollars in bitcoin. They allege an agent just basically strong armed some random guy (&quot;RP&quot;) who was a customer of CoinMKT and stole $297,000 or so from him, using the Federal Government search and seizure docs to do so but then just transferring the money into his personal checking account.<p>The agent was doing shady transactions via Venmo and got flagged and had his account suspended, so he contacted them as a DEA agent to get the account reinstated. When they got suspicious (because he had been using his personal email address before going &quot;official&quot;) and contacted his supervisors he tried to start a criminal investigation of Venmo as &quot;a suspicious money remitter&quot; through his office.<p>They allege that the other agent was responsible for the wholesale theft of bitcoin from Silk Road and its various vendors, after they managed to apprehend someone (&quot;CG&quot;) who was an administrator at Silk Road. This agent signed Federal warrants seizing the assets of Mt Gox, meanwhile transferring millions of dollars in bitcoin into his own account.<p>Reading this is thoroughly jaw-dropping: <a href="http:&#x2F;&#x2F;www.justice.gov&#x2F;sites&#x2F;default&#x2F;files&#x2F;opa&#x2F;press-releases&#x2F;attachments&#x2F;2015&#x2F;03&#x2F;30&#x2F;criminal_complaint_force.pdf" rel="nofollow">http:&#x2F;&#x2F;www.justice.gov&#x2F;sites&#x2F;default&#x2F;files&#x2F;opa&#x2F;press-release...</a>

I have often thought that Aaron Greenspan&#x27;s attitude towards California money transmission law was a little aggressive, <a href="http:&#x2F;&#x2F;www.aarongreenspan.com&#x2F;writing&#x2F;20141022&#x2F;the-common-sense-approach-to-offsetting-money-transmission-risk&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.aarongreenspan.com&#x2F;writing&#x2F;20141022&#x2F;the-common-se...</a> , like, this guy is ranting about obscure laws and there is no way that the government would <i>really</i> abuse this legislation to shut down reasonable businesses.<p>Then, in this complaint, I read<p>&quot;&quot;On March 4, 2014, FORCE asked one of his co-case agents on the Baltimore Silk Road Task Force to run a query in a law enforcement database for Venmo, saying that he wanted to collaborate &#x27;on a suspicious money remitter, Venmo Inc. Venmo has since registered with FinCEN, but I want to know if they have state money license remitting licenses in California and New York. Can you check? If not, I want to seize their bank accounts (need to identify them) a la BRIDGES and [M.M.&#x27;s] seizure warrants for Mt. Gox.&quot;&quot;<p>Wow. Nope. Aaron Greenspan is exactly right about the effects of this legislative mess.

I wonder if the government buried this until after the Ulbricht trial was over. The fact that two of the investigators were corrupt and stealing funds could have derailed the case.

Bitcoin seems to make everyone crazy. I guess if you&#x27;re prone to theft and dishonesty, it must be tough to look at a folder on some confiscated PC with files worth tens or hundreds of thousands of dollars and not take them. Seems like everyday police corruption, like how drug dealers busted with thousands of dollars suddenly have a evidence locker inventory with zero cash.<p>I&#x27;m glad the system is working, at least to the point of catching these guys. You can&#x27;t stop human nature, but at least you can punish the guilty.

<a href="http:&#x2F;&#x2F;www.justice.gov&#x2F;sites&#x2F;default&#x2F;files&#x2F;opa&#x2F;press-releases&#x2F;attachments&#x2F;2015&#x2F;03&#x2F;30&#x2F;criminal_complaint_force.pdf" rel="nofollow">http:&#x2F;&#x2F;www.justice.gov&#x2F;sites&#x2F;default&#x2F;files&#x2F;opa&#x2F;press-release...</a>

What a terrific example of how Bitcoin&#x27;s transparency is one of its greatest assets.

It will be interesting to see <i>how</i> they allegedly got the bitcoins, since I expect that will come out in the indictment and trial.

This is an excellent demonstration of the value and transparency the blockchain provides.

Now that blockchain analysis tools are getting better, I wonder if we&#x27;ll be seeing more and more criminal activity exposed.<p>For example, someone linked to this wallet&#x2F;transaction in a reddit thread, which appears to show one of the $100k payoffs: <a href="http:&#x2F;&#x2F;www.walletexplorer.com&#x2F;wallet&#x2F;08363b86122e340c" rel="nofollow">http:&#x2F;&#x2F;www.walletexplorer.com&#x2F;wallet&#x2F;08363b86122e340c</a><p>Even just six months ago it would have been hard piece that information together, but Wallet Explorer makes it clear as day.

Basically the same MO as in drug cases - part of the briefcase-o&#x27;-cash (or drugs, or what have you) goes into evidence, part goes into the agents&#x27; pockets.

So we&#x27;re just going to ignore the rather awesome fact that there was &quot;Special Agent Force&quot; who was reckless and didn&#x27;t abide by the rules, but got the criminals in the end? It sounds like a graphic novel or something.

So much for bitcoin being anonymous... (Yes I know it can be anonymous if one is careful but as it is commonly used it is not and this needs to be remembered).

How many bad apples until people declare the whole batch spoiled?