A criminal complaint unsealed in the U.S. District Court for the Eastern District of Virginia accuses former Federal Bureau of Investigation supervisory special agent Patrick Steven Yaroch of diverting nearly $1 million in cryptocurrency from accounts the FBI had been monitoring and moving the funds into wallets under his control.
The filing says Yaroch later used part of the money in DeFi, and investigators also recovered ChatGPT conversations in which he asked how to handle the $1 million and how to plan a move to Europe. He eventually told the FBI and the Department of Justice what he had done, saying the matter was weighing on him.
The FBI said Yaroch has been fired and stated that the bureau holds its employees to the highest ethical standards and will not tolerate that kind of conduct. The case is still being heard in the Eastern District of Virginia.
Investigators say he memorized the seed phrase and moved the funds in stages
Yaroch, 37, had worked out of the FBI's Boston field office since 2017 and focused on national security matters, especially intelligence and counterintelligence work involving what the article described as a hostile state.
According to an affidavit filed by a federal agent, Yaroch gained access during the investigation to cryptocurrency accounts used by people linked to that target. The alleged theft began in late 2024 or early 2025, while he was still assigned to Boston. Rather than downloading or copying the file, he allegedly viewed the seed phrase through FBI internal systems, committed the words to memory, created a personal wallet and then transferred the assets into it over time.
He later admitted to making about 10 to 12 transfers. The funds were eventually consolidated in a personal wallet he controlled, with a total value close to $1 million.
The money was not liquidated all at once. Investigators say Yaroch mixed the stolen crypto with his own funds. Part of it was placed in a Kraken account, and another part was routed through a Slush wallet into the DeFi protocol Suilend to earn interest. He later said one reason he picked Suilend was that he liked its droplet-shaped logo.
As a supervisory special agent, Yaroch held Top Secret and Sensitive Compartmented Information, or SCI, clearances. He was also at the GS-14 level and earned between $180,000 and $230,000 a year. The FBI initially considered whether he had been compromised, but Yaroch told investigators he had not directly interacted with any foreign entity or individual connected to the accounts, and the article says there is no evidence of that at this stage.
His explanation was that he had grown frustrated with what he saw as the FBI being unable or unwilling to disrupt the use of the accounts. In his view, the assets were supporting hostile activity while the bureau remained limited to intelligence collection rather than seizure or disruption. He said that frustration led him to act on his own.
ChatGPT conversations and Portugal travel plans became part of the case
Material recovered from Yaroch's phone added another layer to the complaint. Investigators extracted ChatGPT chat logs showing that on May 28, 2026, he asked how to invest or spend $1 million. On June 4, he followed up by asking about the feasibility of leaving the United States for a European country with $1 million.
Based on details he provided about being 37, having a young family, wanting to retire around age 40 and preferring a slower vineyard or agricultural lifestyle, ChatGPT suggested places including Cilento in Italy and Portugal's Douro region, with Portugal presented as a preferred choice.
At the same time, Yaroch booked flights from Washington to Lisbon or Porto for Sept. 3 to Sept. 11, 2026, traveling with his wife and child. The complaint also says he signed a power of attorney for a Portuguese lawyer on June 15, 2026, covering tax identification, customs and financial matters, and personally went to the tax office to collect a password. The article described those steps as typical preparation for buying property or seeking long-term residency.
Investigators also cited several overseas trips in 2026 that Yaroch did not report to the FBI, including travel to Germany and Portugal in May and a trip to Grenada from late June into early July. Prosecutors viewed those actions as potential signs of flight risk or asset relocation.
Yaroch said the situation was "eating at" him and that he wanted to say it out loud. On July 29, 2026, he self-reported to the Department of Justice and the FBI, handing over a paper with the seed phrase and a Trezor hardware wallet. The FBI fired him on July 31 and arrested him the same day.
When he was taken into custody, he also told agents, "I know I probably can't go, but I hope my wife and kids can still go to Portugal as planned."
He now faces charges of interstate transportation of stolen goods and receipt of stolen goods. The case remains pending in the Eastern District of Virginia.
The case has raised questions about internal controls around digital assets
The article argues that the case points to problems far beyond the alleged theft itself. One issue is the degree of access investigators can have once a target is placed under monitoring. Even when crypto assets are self-custodied rather than held on an exchange, control can still be lost if investigators obtain a seed phrase or private key during a case.
It also referenced a separate Justice Department case from last year involving Chen Zhi, founder and chairman of Cambodia's Prince Group. In that matter, authorities allegedly seized 127,000 BTC, then valued at about $15 billion. The bitcoin had been stored in non-custodial wallets under Chen's control, with the private keys held personally, yet U.S. authorities still obtained the keys through multiple means, according to the article.
The report also says seed phrases and similarly sensitive data can be stored in FBI office systems and case files as evidence, making them available to agents working on an investigation. That creates the possibility that anyone who sees the information could memorize it, move the assets and later attempt to cash out elsewhere.
Another question raised in the article is how an institution with advanced investigative and blockchain tracking capabilities did not immediately identify an insider theft. When the nearly $1 million was moved on-chain, the FBI's monitoring teams may well have captured the transfer, the article said, but analysts could have interpreted it as movement by the hostile target itself rather than by an internal actor.
The article adds that if Yaroch had not voluntarily come forward, the FBI might not have caught him quickly, because the transactions took place on-chain and were not initially tied to his real-world identity.
Not the first case involving U.S. federal agents and crypto theft
The Yaroch matter is not presented as an isolated event. The article points to multiple cases over the past decade in which U.S. federal law enforcement officials were accused or convicted of abusing their positions to take cryptocurrency.
One of the best-known examples came out of the Silk Road investigation in 2015. Carl Mark Force IV, a special agent with the Drug Enforcement Administration, and Shaun W. Bridges, a special agent with the U.S. Secret Service, were both accused of stealing bitcoin during the case.
Force, according to the article, communicated with Silk Road founder Ross Ulbricht while undercover and used false identities. He received and concealed cryptocurrency obtained during the investigation and moved it into personal accounts. He also froze assets in an exchange account through his official authority and transferred about $300,000 into his own account, misappropriating more than $700,000 worth of crypto in total. He later pleaded guilty and received a prison sentence of six and a half years.
Bridges, after gaining control over bitcoin tied to Silk Road, transferred more than 20,000 BTC, then valued at $800,000, into Mt. Gox and then to his own investment account, attempting to obscure the trail through a series of transactions. He was sentenced to 71 months for money laundering and obstruction of justice. In 2017, he received an additional 24 months in another case involving the theft of about 1,600 BTC from a government wallet, and he was ordered to forfeit a large amount of bitcoin.
The article notes that those cases took place in bitcoin's earlier years, when regulatory and tracking tools were less developed than they are now. Once investigators had access to private keys or control over an account, the temptation to misuse that access was substantial. The Yaroch case has brought that same risk back into focus.
Case still pending
The article closes by saying the matter is another reminder that crypto's anonymity and irreversibility can test law enforcement institutions as much as they test the public. Even with high-level clearances and internal monitoring systems, human risk remains.
Patrick Steven Yaroch has been fired by the FBI and arrested. His criminal case is still pending in the Eastern District of Virginia.