UK officer stole 50 Bitcoin during Silk Road 2.0 investigation

A former officer of the National Crime Agency has been sentenced to prison for stealing 50 Bitcoin — now worth $5.9 million — seized from the co-founder of the defunct online black market Silk Road 2.0.

The Crown Prosecution Service said on Wednesday that Paul Chowles, an ex-operational officer with the National Crime Agency who was part of a team investigating Silk Road and Silk Road 2.0, was sentenced to five-and-a-half years’ imprisonment for stealing 50 Bitcoin (BTC).

In May, Chowles pleaded guilty to charges of theft, transferring criminal property, and concealing criminal property.

Paul Chowles was sentenced to over five years in prison for stealing 50 Bitcoin seized in a criminal investigation into Silk Road 2.0. Source: Crown Prosecution ServiceSilk Road 2.0 was a successor of the original Silk Road and was spun up a month after the FBI took down the online black market and arrested its founder, Ross Ulbricht, in October 2013. It lasted a year until it was shut down by the FBI.

Chowles tried to cover tracks with crypto mixer

Chowles was the lead in extracting and analysing data from devices owned by Silk Road 2.0 co-founder, Thomas White.

The NCA had seized 97 Bitcoin from White when he was arrested in November 2014, but 50 BTC — worth a total of roughly $79,000 at the time — were transferred from his wallet in May 2017 to another address.

The Bitcoin was then sent through the crypto mixing service Bitcoin Fog in an apparent attempt to obscure its origins.

Chainalysis said its tools helped identify that some of the funds were converted to cash at exchanges or put on crypto-enabled debit cards, which allowed them to be more easily spent.

Chainalysis’ tool shows the flow of the stolen 50 BTC through various stages. Source: Chainalysis“Within the NCA, Paul Chowles was regarded as someone who was competent, technically minded and very aware of the dark web and cryptocurrencies,” said CPS special crime division specialist prosecutor Alex Johnson.

“He took advantage of his position working on this investigation by lining his own pockets while devising a plan that he believed would ensure that suspicion would never fall upon him,” Johnson said.

Silk Road 2.0 co-founder alerted cops to Bitcoin theft

The CPS said that the National Crime Agency investigation team assumed White had used his skills to somehow access his wallet and transfer the Bitcoin, and wrote it off as untraceable.

However, White told police that someone else had moved the Bitcoin and said he knew it had to be someone from within the NCA, as it was the only authority with the keys to his crypto wallet.

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Merseyside Police officers met with the NCA, a meeting that Chowles attended, to go over its investigation of White. Police launched an investigation into the stolen Bitcoin and later arrested Chowles.

Chowles kept notes of White’s crypto accounts

Police found a phone that linked Chowles to an account used to transfer Bitcoin, which also had internet search history for a crypto exchange, according to the CPS.

“Several notebooks were also discovered in Chowles’ office, which contained usernames, passwords, and statements relating to White’s cryptocurrency accounts,” the agency added.

Chowles used two crypto-enabled debit cards to spend a total of around 109,425 British pounds ($146,580), but the CPS calculated that he benefited financially to the tune of around 613,150 British pounds ($821,345).

The CPS said it would pursue confiscation proceedings against Chowles.

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