Bitstamp Tip led to ‘Dread Pirate’ Agent Probe, U.S. Says

The U.S. first learned that one of its agents might be looting the very black-market business he was investigating after a U.K. bitcoin exchange reported suspicious trades.

The report came from Bitstamp, federal prosecutors said in court papers unsealed on Tuesday. The government opened a separate probe and alerted the judge who presided over the trial of Ross Ulbricht, the founder of the illegal Silk Road Internet emporium. He was convicted by a New York jury in February of running a criminal enterprise that catered to hackers and drug traffickers.

The agents, charged on Monday with pocketing hundreds of thousands of dollars in digital money, were part of a Baltimore task force whose investigation led to separate murder-for-hire and drug charges there against Ulbricht. They deny wrongdoing.

The lead undercover agent in Baltimore, then with the U.S. Drug Enforcement Administration, is accused of creating fictitious identities, including “French Maid,” to extort and negotiate with Ulbricht, who used the moniker “Dread Pirate Roberts” while running Silk Road. Carl Force, 46, threatened to provide information about Ulbricht to the government and also offered to sell Ulbricht information about the U.S. investigation, prosecutors said.

A second agent, Shaun Bridges, 32, who worked for the U.S. Secret Service as a computer forensics expert, allegedly stole $820,000 in bitcoins that he got control of during the investigation.

The Ulbricht case is U.S. v. Ulbricht, 14-cr-068, U.S. District Court, Southern District of New York (Manhattan).