Federal Agents Indicted in Baltimore For Alleged Bitcoin Investigation Fraud

Television episodes of good cops who go bad, or police officers who skim money from the investigations they are conducting, are common, and perhaps even cliché. But federal agents in Baltimore are under investigation for doing just that, while conducting one of the most publicized criminal investigations in recent memory.

The Investigation into the Agent’s Activities

Two DEA agents were involved in the investigation of “Silk Road,” a marketplace that sold drugs online, mainly through the use of bitcoins, an online currency that, because it’s anonymous, tends to lend itself to being the currency of choice in less savory endeavors. Bitcoins are not regulated by federal banks. Although at one time it was generating $200 million in revenue, Silk Road is defunct today.

The agents charged with these crimes in fact helped obtain indictments against Silk Road founders and officials. But now, they are charged with wiring themselves $800,000 of bitcoins, and with trying to extort Silk Road administrators. In fact, one of the officers is alleged to have been involved in a theft that led to a charge of murder-for-hire against Silk Road’s founder.

There is also some concern that the alleged misdeeds by these agents could jeopardize the ability to obtain convictions on the charges against Silk Road founders.

Like a movie, the allegations state that the agents told Silk Road that they had inside government information, which would be useful to Silk Road’s owners, but that it would cost money for them to give it up. In one instance, they apprehended a Silk Road administrator, who allegedly informed the agents how to access Silk Road accounts. Mysteriously, thousands of bitcoin dollars disappeared from the accounts soon afterward. The agents then pretended to kill the informant in return for a bounty, which was paid by the Silk Road founder.

One agent is even charged with starting his own online currency investment company, using his position to seize digital currency of others, and then transferring their funds into his accounts under the auspice of legal authority.

Plans May Have Put Funds in Agents’ Own Pockets

These plans were never authorized by the agent’s respective departments–they are alleged to have done that on their own, and then pocketed the money when Silk Road’s owners paid them. They were discovered when the agent’s official records, which are filed in every police investigation, contained gaps and holes in information.

The agents were arrested and charged with wire fraud and money laundering. The case highlights the difficulties and technological challenges in today’s crime scene. With anonymity and use of underground online marketplaces, criminals can often come and go at ease. Officers are being trained to properly investigate these crimes, but like the real world, the allure of money can be a huge influence on investigating agencies.

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