Silk Road Investigators Charged With Bitcoin Laundering

The case of the Silk Road online illegal drug marketplace has found itself back in the news, as criminal accusations tied to the bitcoins that funded the site have been tangled up in another criminal matter.

Former Drug Enforcement Administration officer Carl Mark Force IV and former Secret Service officer Shaun Bridges have been charged with money laundering and fraud, according to The New York Times, which reported the details of the case that was revealed in Federal Court in San Francisco on Monday (March 30). Force and Bridges are both ex-federal agents who were on the investigation team that took down the Silk Road site and cracked the identity of the criminal mastermind of the bitcoin-funded illegal online drug ring.

According to the criminal complaint documents obtained by The Times, Force “stole and converted to his own personal use a sizable amount of bitcoins [uncovered in the case]. …Rather than turning those bitcoin over to the government, Force deposited them into his own personal accounts.” Force was also charged with theft of government property and conflict of interest. Force, 46, was expected to appear in court yesterday, as was Bridges, 32, The Times reported.

The Times’ report indicates that Force resigned in May 2014 when he began being investigated, and Bridges “abruptly resigned” March 18 when he became aware of the investigation against him. Due to the nature of the Silk Road marketplace, the website was investigated in multiple cities, which is where the most recent charges against the ex-federal agents stems from.

A federal jury convicted Ross Ulbricht of seven criminal charges on Feb. 4 stemming from the site that the federal government says ran the massive online illegal drug trade that brought in billions of dollars for selling heroin, cocaine and crystal meth. The Silk Road site was shut down in October 2013 when Ulbricht was caught logging into the Silk Road website in a San Francisco public library.

The dark website ran on the Tor network, a hidden section of the Internet, and the site only accepted bitcoin as payment. Ulbricht, who faces life in prison for all the federal charges, awaits sentencing in May — though his lawyer has filed for an appeal on the case. Ulbricht’s lawyer claimed throughout the trial that his client did start the Silk Road site, but as an economic experiment that he later passed off. The lawyer claims his client was framed as the mastermind behind the illegal activity conducted on the site at the time the Feds arrested Ulbricht.

While Ulbricht’s fate may not change as a result of this case, according to the latest lawsuit against the two federal agents, it begs the question if some of those seized bitcoins were kept for the benefit of the agents’ personal use. Following the Silk Road trial, the federal government also auctioned off 50,000 bitcoins that were recovered from the case, but these new allegations may reveal that there were more than that seized during the investigation.