UK NCA officer jailed for stealing bitcoin from darknet criminal he previously helped investigate

A former officer with Britain’s National Crime Agency (NCA) has been jailed after stealing bitcoin from a darknet drugs trafficker whom he helped investigate.

Paul Chowles, 42, was on Wednesday sentenced to five and a half years in prison by Liverpool Crown Court after previously pleading guilty to theft, transferring criminal property and concealing criminal property.

Chowles had contributed to a joint investigation by the NCA and the FBI into the Silk Road marketplace which led to the arrest of Thomas White, a man from Liverpool, who launched Silk Road 2.0 shortly after the FBI shut down the original in 2013.

White was among several individuals in Britain who were convicted as part of the operation against Silk Road. He was arrested in November 2014, when Chowles led the NCA’s work analyzing devices seized from White and extracting both data and cryptocurrency from those devices.

This work led to police seizing 97 bitcoin from White, but in 2017 while White was in custody 50 of those bitcoin — worth at that time nearly £60,000 ($80,000) and around £4.4 million ($5.9 million) today — mysteriously disappeared from White’s “retirement wallet.”

White denied he had accessed the wallet himself and told investigators he suspected someone inside the NCA had withdrawn the funds, noting the agency was holding the private keys for his wallet. By late 2021, investigators believed the lost bitcoin was untraceable and wrote off the loss.

However, following an investigation by Merseyside Police, Chowles was discovered to have secretly accessed White’s wallet and attempted to launder the pilfered bitcoin through darkweb exchanges into other public addresses he controlled. The police found Chowles had also converted the bitcoin into cash using Cryptopay debit cards and said he had benefited in excess of £613,000 ($820,000) from the theft.

“Police recovered an iPhone which linked Chowles to an account used to transfer Bitcoin as well as relevant browser search history relating to a cryptocurrency exchange service. Several notebooks were also discovered in Chowles’ office which contained usernames, passwords, and statements relating to White’s cryptocurrency accounts,” stated Merseyside Police.

Detective Chief Inspector John Black of Merseyside Police’s intelligence bureau said: “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,” Black added.

A spokesperson for the NCA said the agency understood and fully shared “the concern this case will cause the public we serve” and stressed that Chowles had been “sacked for gross misconduct.”

Alex Johnson, a specialist prosecutor with the Crown Prosecution Service, said: “Within the NCA, Paul Chowles was regarded as someone who was competent, technically minded and very aware of the dark web and cryptocurrencies. 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. 

“Once he had stolen the cryptocurrency, Paul Chowles sought to muddy the waters and cover his tracks by transferring the Bitcoin into mixing services to help hide the trail of money,” added Johnson. “He made a large amount of money through his criminality, and it is only right that he is punished for his corrupt actions.”