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DEA Agents Stole Bitcoins from Silk Road

The Internet was once a pirate’s dream. You could download porn, steal music, and buy illegal drugs, all in your underwear at 4 a.m.

BitcoinWell, actually you can still do all those things, but the drug part got a lot stickier two years ago when the feds shut down the Silk Road, the premier site for cannabis, cocaine, ecstasy, and most other controlled substances.

Now two federal agents at the heart of the Silk Road investigation face allegations they stole digital funds from the site’s owner, Ross Ulbricht (also known as the Dread Pirate Roberts) while investigating him. It’s a development that demonstrates just how dirty the G-men can get when pursuing the “war on drugs.”

Carl Force, 46, a special agent with the DEA, and Shaun Bridges, 32, a special agent with the U.S. Secret Service, were charged in March with wire fraud, money laundering, and other federal crimes over their alleged theft of bitcoins during the investigation that led to Ulbricht’s arrest in 2013.

Convicted on drug trafficking charges

Ulbricht was convicted last year on drug trafficking charges. He still faces charges that he tried to arrange a murder-for-hire using bitcoins.

The allegations suggest the two agents were crooked and saw a chance to make off with what they thought was untraceable currency. Bitcoins are a popular digital method of paying for goods and services on the internet, especially in illicit transactions.

Bitcoins were the currency of choice on the Silk Road, and when agents closed the black market, they seized $33 million worth of them. Before that happened, Force devised a scheme to extort bitcoins from Ulbricht.

Force, a lead agent on the case, was the main contact between fellow investigators and Ulbricht. Force allegedly created fake online accounts and anonymous personas, then used some of them to sell inside information to Ulbricht and others to extort Ulbricht by offering to withhold evidence in return for money. Force managed to scam at least $100,000 from Ulbricht, according to prosecutors.

Complex plan to extort funds

DrugsBridges, meanwhile, allegedly organized a complex scheme to divert funds from the Silk Road at roughly the same time. Prosecutors say Bridges masterminded a massive theft of more than $820,000 worth of bitcoins from the Silk Road using the administrative password of Curtis Clark Green, an employee turned government witness.

When Ulbricht traced the thefts to Green’s account, he allegedly ordered a hit on the man. Bridges, Force, and Green then faked Green’s death to trap Ulbricht. He has yet to be tried in that case.

Bridges allegedly funneled bitcoins from the Silk Road into accounts at the Mt. Gox bitcoin exchange. The money was then transferred to private accounts owned by an investment company Bridges created.

The Silk Road was, to some, a stain on the good name of the internet, while to others it was a sometimes brutal experiment in truly free markets. It never took over the marijuana industry: Cannabis smokers still like to buy their product the old-fashioned way. But it offered hope of a revolution in the way we get our drugs.

What happened in this case should be instructive. The fact that at least two high-ranking federal agents used the investigation as an opportunity to pull off a scam of their own is all the evidence anyone should need that the war on drugs is a lost cause.

About Matt Brooks

Based in San Francisco, Matt is a journalist who has specialized in marijuana policy for more than five years. He provides regular news coverage on marijuanaandthelaw.com and californiamarijuanamarket.com.

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