From the
New York Times:
On the so-called dark web, drug dealing and other illicit sales have thrived in recent years, the authorities have said, through hidden websites like Silk Road and hard-to-trace digital currencies like Bitcoins.
On Monday, the government charged that in the shadows of an undercover investigation of Silk Road, a notorious black-market site, two federal agents sought to enrich themselves by exploiting the very secrecy that made the site so difficult for law enforcement officials to penetrate.
The agents, Carl Mark Force IV, who worked for the Drug Enforcement Administration, and Shaun W. Bridges, who worked for the Secret Service, had resigned amid growing scrutiny, and on Monday they were charged with money laundering and wire fraud. Mr. Force was also charged with theft of government property and conflict of interest.
The complaint can be found
here. It alleges that in the course of their investigation into the Silk Road site, the agents obtained hundreds of thousands of dollars in bitcoins which they then deposited into their personal accounts.
Thanks for the reporting, Michael! Two interesting legal ramifications of this development:
ReplyDelete(1) Ross Ulbricht was not informed of Force and Bridges's activities, both of extracting bitcoins from the Silk Road website and of the faked murder-for-hire of Curtis Clark Green (the Silk-Road-employee-turned-government-witness whose account was used to extract the bitcoin), until five weeks before Ulbricht's trial (http://www.forbes.com/sites/sarahjeong/2015/03/31/force-and-bridges). Prosecutors successfully moved to keep the information sealed, since the government was conducting an ongoing grand jury investigation of Force, and nothing about either Force or Bridges made it into Ulbricht's trial (http://www.nytimes.com/2015/03/31/nyregion/silk-road-case-federal-agents-charges.html). Ulbricht recently moved for a new trial, arguing that the prosecutors' failure to provide allegedly exculpatory evidence within a reasonable timeframe deprived him of due process and a fair trial.
(2) The CEO of the defunct bitcoin exchange Mt. Gox, Mark Karpeles, recently posted a series of emails between him and Force (https://www.reddit.com/r/Bitcoin/comments/30tgkv/undercover_agents_working_on_silk_road_case/cpw6zwg, https://imgur.com/a/ecQ5T). Karpeles has implied that these emails show that Force instigated the multi-million dollar civil forfeiture of Mt. Gox assets which directly led to the exchange's bankruptcy as retaliation for Karpeles's refusal to conduct potential money-laundering activities with Force (https://www.reddit.com/r/Bitcoin/comments/30xb6s/courtesy_of_mark_karpeles/cpwpxf2). Additionally, the bitcoins which Force and Bridges extracted from the Silk Road website and deposited into a Mt. Gox account (http://www.ibtimes.com/silk-roads-ulbricht-paid-rogue-dea-agent-100k-investigation-details-indictment-1864142) appear to have been the basis of two sworn affidavits asserting probable cause to believe Karpeles was the leader of the Silk Road website, which instigated a federal law enforcement investigation of Karpeles that also may have served as retaliation for Karpeles's refusal to deal with Force (http://www.forbes.com/sites/sarahjeong/2015/03/31/force-and-bridges).
As a prosecutor, perhaps you'd be willing to shed more light on how Ulbricht could possibly establish that Force and Bridges's actions were exculpatory. Or as a legal academic, perhaps you'd be willing to expound upon your previous post about the legal history of civil asset forfeiture (http://smithblawg.blogspot.com/2013/10/deodand.html) and how you think it should apply to, or how it could effect, Smart Property (https://en.bitcoin.it/wiki/Smart_Property)?
Keep up the good work!