The former intelligence officer stole 50 Bitcoin before sending it to a cryptocurrency ‘mixing’ service
Former National Crime Agency officer Paul Chowles stole 50 Bitcoin which had been seized as criminal property during an investigation into online crime on the dark webopen image in gallery
Former National Crime Agency officer Paul Chowles stole 50 Bitcoin which had been seized as criminal property during an investigation into online crime on the dark web (CPS)
A former National Crime Agency officer who stole Bitcoin seized from the operator of an illegal dark web marketplace has been jailed for five-and-a-half years.
The NCA was investigating the Silk Road 2.0 site – which allowed users to buy drugs and other illicit goods after the original Silk Road was shut down by the FBI in 2013 – and arrested Liverpool-based Thomas White in 2014.
Intelligence officer Paul Chowles took the details of White's "retirement wallet" and stole 50 Bitcoin before sending it to a cryptocurrency "mixing" service called Bitcoin Fog to obscure the source, prosecutors said.
Chowles, 42, appeared in Liverpool Crown Court having pleaded guilty to one count of theft, one count of transferring criminal property, and one count of concealing criminal property.
Prosecutor Craig Hassall said the Bitcoin Chowles stole was worth just under £60,000 (around US$80,000) at the time of the theft in May 2017 and is now worth over £4 million, though Chowles had realised nearly £145,000.
Chowles was dismissed by the NCA this month for gross misconduct after his guilty pleas, having been arrested in 2022.
Prosecutor Craig Hassall said the Bitcoin Chowles stole was worth just under £60,000 at the time of the theft in May 2017 and is now worth over £4 million, though Chowles had realised nearly £145,000open image in gallery
Prosecutor Craig Hassall said the Bitcoin Chowles stole was worth just under £60,000 at the time of the theft in May 2017 and is now worth over £4 million, though Chowles had realised nearly £145,000 (Getty Images)
The NCA initially thought White, who was jailed in 2019 for over five years, had managed to access his Bitcoin wallet and remove the 50 missing Bitcoin, Hassall said.
The remaining 47 Bitcoin in White's wallet were sold by the NCA for roughly £500,000, and the funds paid towards a 1.5 million-pound confiscation order made against White.
But police and the NCA began to investigate after White said he was not responsible for moving the 50 Bitcoin, and usernames and passwords linked to White's cryptocurrency accounts were found in Chowles' notebooks when he was arrested.
Judge David Aubrey said Bitcoin worth nearly £470,000 was seized from Chowles, telling him: "Had you not been arrested, you would have continued to reap the rewards of your wrongdoing."
Detective Chief Inspector John Black, from Merseyside Police's Force Intelligence Bureau, said: "We know criminals have sought to use cryptocurrency as a way to launder money from illegal activities including drug dealing and fraud.
"It will be extremely disappointing to everyone that someone involved in law enforcement could involve themselves in the very criminality they are tasked with investigating and preventing.
"This case should illustrate in the starkest terms that nobody is above the law. When it became clear that one of the NCA’s own officers had stolen Bitcoin, our officers conducted extensive enquiries to unearth a trail of evidence that Chowles had attempted to hide. This was supported fully by the NCA.
"He took advantage of his position on this investigation to line his own pockets while devising a plan that he believed would cover his tracks. He was wrong.
"I want to reassure the public that Merseyside Police have specialist officers with the experience and expertise to track the movement of funds designed to avoid detection.
"Above all, our officers have the determination to make sure criminals do not profit in any way from breaking the law while other honest and hard-working members of the public work to provide for their families."
Thomas White took over site after FBI shut it down, and admitted money-laundering and making indecent images of children
Thomas White, 24, has been jailed for five years and four months for running the Silk Road site on the dark web
Thomas White, 24, has been jailed for five years and four months for running the Silk Road site on the dark web (PA)
A self-taught computer expert who was the “guiding mind” behind an international online black market in illegal drugs has been jailed for five years and four months.
Thomas White was a teenager when he took over the Silk Road site on the dark web after it was shut down by the FBI, as well as for possessing hundreds of indecent images of children.
Sentencing him at Liverpool Crown Court, Judge Thomas Teague QC said: “You traded in illicit drugs and facilitated the trading by others in such drugs through the medium of a clandestine online marketplace, Silk Road.
“It had sophisticated security arrangements to minimise the risk of detection by law enforcement agencies and users made and received payments in bitcoin.”
White, using the name StExo, began using the dark web marketplace in 2013 to buy a prescription drug used for sleeping disorders, and then entered into an agreement with user MedsforBitcoin, in India, to become a distributor in exchange for a discount, said David Jackson, prosecuting.
The agreement was a “stepping stone”, Mr Jackson said, and White upgraded from a buyer’s to a vendor’s account.
He sold items including drug-testing kits and MDMA, before going on to advise on security and create back-ups of vendor pages and forums in case the site was taken down.
In October 2013 the FBI shut down the site and arrested Ross Ulbricht for running it.
White then collaborated with another user to set up Silk Road 2.0.
Mr Jackson said: “The Crown say this defendant was the guiding mind behind the site whereas Mr Benthall provided the technical knowhow.”
White took up the mantle of Dread Pirate Roberts but once the site was up and running again he began to reduce his active involvement.
Silk Road 2.0 continued to operate until November 2014 but the court heard the defendant had announced his retirement in messages in January 2014, when he was 19.
Judge Teague said: “From the beginning of 2014 you reduced your personal involvement in running Silk Road, no doubt in the hope of avoiding Ross Ulbricht’s fate, however the authorities caught up with you.”
White, 24, who gave up after one term of an accounting degree, pleaded guilty last month to supplying MDMA, money laundering and making indecent images of children.
National Crime Agency (NCA) detectives Garry Tancock and Paul Chowles, who led the investigation, said that among the encrypted data found on White’s computers, some had been hacked from Nasa, the FBI and Ashley Madison – a website billed as enabling extramarital affairs.
It is not believed that White himself hacked the data.
Nicholas Johnson QC, defending, said: “What we are dealing with is a young man, aged 19, sitting in his student accommodation in Liverpool, who has a degree of sophistication so far as the internet was concerned, and thereby helped to facilitate the setting up of a marketplace which others then joined up to and carried out their own drug trafficking.”
Support free-thinking journalism and attend Independent events
Support free-thinking journalism and attend Independent events
The court heard White had worked as an engineer since his arrest and had tried to make a “positive contribution” to society.
The NCA said White was believed to own 50 bitcoins, now worth around £192,000.
Reporting by PA