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In 2015, former United States Drug Enforcement Agency (DEA) agent Carl Mark Force IV pleaded guilty to stealing more than $700,000 worth of Bitcoin during the Silk Road investigation.
Now it appears that the agency did little to change its policies towards handling seized cryptocurrency assets in at least the two years following.
The US Department of Justice this month released a redacted version of the Audit of the DEA’s Income-Generating Undercover Operations, which includes a section particularly focused on the DEA’s processes regarding virtual currency from 2015 to 2017.
"During our review of virtual currency activity in [Attorney General Exempt Operations], the DEA’s management of virtual currency-related activities was insufficient due to inadequate headquarters management, lack of policies, inadequate internal control procedures, insufficient supervisory oversight, and lack of training,” reads the report.
“While [the Silk Road] investigation was not an AGEO, we are concerned that following this incident the DEA did not implement additional internal controls specifically related to investigations involving virtual currency,” it adds.
Although redactions impede part of the section, the report goes on to claim that only two employees at DEA headquarters were focused on the agency’s Virtual Currency Initiative, and that there was no formal guidance to follow regarding translations. It also seems to indicate that a supervisor could not provide proper oversight.
Following communication from the Inspector General’s office, the DEA issued a Virtual Currency Investigative Guide in February 2018, but it was “not meant to be policy, but rather guidance that can be swiftly updated to account for the volatile environment of Dark Web activity.”
Ultimately, that didn’t satisfy the Inspector General.
“We recommend that the DEA evaluate the resources devoted to administrative oversight of investigations involving virtual currency and establish policies setting firm internal controls, risk mitigation and deconfliction techniques, and appropriate record keeping practices,” the report concludes.