A former National Crime Agency officer has been sentenced to five-and-a-half years in prison for stealing 50 Bitcoin—now valued at $5.9 million—that had been confiscated from a co-founder of the now-defunct darknet marketplace, Silk Road 2.0.
The Crown Prosecution Service announced on Wednesday that Paul Chowles, a former operational officer involved in the Silk Road and Silk Road 2.0 investigations, admitted in May to charges of theft, transferring criminal property, and concealing criminal property.
Silk Road 2.0 emerged as a successor to the original Silk Road, launching just a month after the FBI shut down the notorious online black market and arrested its founder, Ross Ulbricht, in October 2013. The second iteration operated for about a year before it too was taken down by the FBI.
Chowles attempted to cover his tracks by using a crypto mixer to obscure the origin of the stolen funds
Chowles led the effort to extract and analyze data from devices belonging to Silk Road 2.0 co-founder Thomas White.
When White was arrested in November 2014, the National Crime Agency seized 97 Bitcoin from him. However, in May 2017, 50 BTC—worth around $79,000 at the time—were transferred from White’s wallet to another address.
The stolen Bitcoin was then funneled through the crypto mixing service Bitcoin Fog in an apparent attempt to conceal its origin.
According to Chainalysis, its blockchain analysis tools helped trace the movement of the funds, revealing that some were either cashed out through cryptocurrency exchanges or loaded onto crypto-enabled debit cards for easier spending.
“Within the NCA, Paul Chowles was seen as a capable and technically skilled officer, with strong knowledge of the dark web and cryptocurrencies,” said Alex Johnson, specialist prosecutor with the CPS Special Crime Division.
“He exploited his role in the investigation for personal gain, carefully crafting a scheme he believed would keep him above suspicion,” Johnson added.
Silk Road 2.0 Co-Founder Reported Bitcoin Theft to Authorities
According to the Crown Prosecution Service, the National Crime Agency team initially believed that Thomas White had somehow regained access to his wallet and moved the Bitcoin himself, ultimately dismissing the funds as untraceable.
However, White informed police that he wasn’t responsible for the transfer and insisted it had to be someone within the NCA, the only agency with access to his crypto wallet’s keys.
Merseyside Police, while reviewing their investigation into White, met with the NCA—at a meeting attended by Chowles. This led police to launch a separate investigation into the missing Bitcoin, which ultimately resulted in Chowles’ arrest.
Chowles maintained records of White’s cryptocurrency accounts
According to the Crown Prosecution Service, investigators found a phone linking Chowles to the account used in the Bitcoin transfer, which also contained internet search history related to a cryptocurrency exchange.
Additionally, several notebooks were discovered in Chowles’ office containing usernames, passwords, and financial records tied to Thomas White’s cryptocurrency accounts.
Chowles used two crypto-enabled debit cards to spend approximately £109,425 ($146,580), but the CPS estimated his total financial gain at around £613,150 ($821,345).
The CPS stated it will initiate confiscation proceedings against Chowles.
