November 30, 2017 | By Stone Tillotson
A former Secret Service Agent, Shaun Bridges, was recently given additional time in prison after pleading guilty to stealing Bitcoins from a government wallet. The wallet was seized as part of the 2015 take-down of Silk Road, an online marketplace for dealing illicit substances and contraband. Bridges already was serving a prison sentence for an earlier theft from the same digital wallet. At the initial time of the theft, his ill-gotten Bitcoins were worth approximately $350,000 but dramatically rose in value over the following year to nearly $820,000 -- or 234% of the initial value. The rise and Bridges' own greed seemed to have instigated the second theft, however Bridges appeared repentant in court (as noted by his judge in the case), leading to a concurrent sentence. Regardless of his motives, Bridges will serve the better part of a decade in a federal penitentiary.
IISP Analyst Stone Tillotson: "The meteoric rise in Bitcoin value has fueled these kinds of dodgy stunts at an increasing rate. When cryptocurrency exchanges fold with all-too-common frequency, the simple loss of private keys permanently seals off their e-coin wallets. Also, the theft and sequestering of e-coins -- as in this case -- remove crypto-currencies from the digital economy, and those losses exert a deflationary pressure on a currency's overall value. Why is this a concern? Digital currencies are, by virtue of design, much more susceptible to deflationary pressure than their non-'e' counterparts. Basically, once a currency is hot, there's no pressure valve for the steam. As Bridges himself realized, the proceeds of his theft more than doubled in a year, prompting his relapse. It's easy to see how this funnels into the self-sustaining spiral, hence, the dramatic rise in value that we're now seeing. Since the total number of Bitcoin -- most cryptocurrencies in general, for that matter -- is invariant on a day-to-day basis, this means the gains of any theft becomes more valuable over time, and the theft itself by virtue of removing coins from circulation also makes itself more valuable. Indeed, Bridges' original $350,000 haul in 2015 would now be worth $198 million at the time of this writing, and sadly, that kind of money often exerts a corrupting influence."
For further reading
- News release: U.S. Attorney's Office, District of Northern California: https://www.justice.gov/usao-ndca/pr/former-secret-service-agent-sentenced-scheme-related-silk-road-investigation
- Security Week: http://www.securityweek.com/more-prison-time-ex-federal-agent-who-stole-bitcoins
- ArsTechnica: https://arstechnica.com/tech-policy/2017/11/ex-agent-corrupted-by-silk-road-sentenced-to-2-additional-years/
- Investopedia: https://www.investopedia.com/terms/d/deflationary-spiral.asp