Bitcoin or bust? Brazen $40M cryptocurrency heist apparently never happened

The crime described by federal authorities last year — a bitcoin heist of more than $40 million that left even experts flummoxed – would have been one of the most audacious and technically sophisticated cyber crimes in the short history of the supposedly fraud-proof crypto currency.

But by the time its purported mastermind, Ted Price, 32, of Hatfield, was sentenced to less than three months of incarceration Tuesday – time he already has served — all those outsize claims had vanished into the digital ether.

As it turns out, there was no stolen bitcoin. Prosecutors blamed Price for exaggerating his technical prowess. And the amount he allegedly stole – a sum investigators once estimated to be in the millions – was pegged in court Tuesday as barely more than $150, tied to an entirely separate crime.

The story of what happened between then and now highlights the challenges and potential pitfalls authorities face as they confront complex crimes involving rapidly developing technologies as public concern over high-tech hacking schemes continues to grow.

Prosecutors, Price, and his lawyer all declined to comment after his sentencing hearing in federal court in Philadelphia.

To be fair, it was Price himself who first led Homeland Security Investigations agents to believe he might have been the crackerjack hacker whom they originally portrayed in court filings.

Under investigation for burglary last year, he purportedly boasted during an hours-long confession that he had developed a malware program that would surreptitiously divert bitcoin into his own account by disrupting the transactions of other users.

He also claimed during the same rambling July 2017 admission that he had developed hacking exploits for foreign governments, and was prepared to evade capture with the use of a private plane and a fake passport in the name of the actor Jeremy Renner.

Price's lawyer, Catherine C. Henry, has maintained that he was high on oxycodone at the time and that his long history of drug abuse and mental-health problems, including stints in inpatient psychiatric treatment, should have cast doubt on his claims.

Yet, with only Price's word and his laptop bag — filled with 105 printed pages of publicly available strings of alphanumeric code known as bitcoin keys — prosecutors charged him that month with an alleged $40 million heist, despite having no evidence of missing money.

But they quickly showed signs of hesitation.

Within days, they withdrew their initial charge and refiled the case based on counts tied to dozens of stolen credit-card numbers – also found in his laptop bag – that he said he had bought from hackers on the dark web, and a $150 purchase that Price made on Amazon using a credit card belonging to his girlfriend's father. Price later would plead guilty to those charges, which were the basis for his sentence Tuesday.

Still, authorities never fully backed off their initial allegations involving the bitcoin theft, and used them as grounds to justify Price's incarceration for nearly three months after they withdrew their initial charge. They said at the time that they feared he might flee the country as they continued to investigate, and suggested that more charges could be forthcoming.

"The government is unsure of the true extent of financial resources [available to Mr. Price] beyond the approximately $40 million in fraudulently obtained bitcoin," Assistant U.S. Attorney Lesley Bonney wrote in court filings last year.

From the start, though, Henry, the defense lawyer, doubted the claims in her client's confession: If he had access to millions in electronic money, why did he first come to the attention of police in Northampton Township, Bucks County, for a petty theft at the home of his girlfriend's parents? What's more, she said at the time, Price was unemployed and living with his parents – hardly the expected accommodations for a crypto-currency millionaire.

Bucks County investigators referred the case to federal authorities when Price's boasts of technological wizardry outstripped their own understanding. (He pleaded guilty to state burglary charges in March and received a time-served sentence there as well.)

Even on Tuesday, prosecutors refused to definitively say whether they now believed that Price's bitcoin heist had been a hoax. When asked after his sentencing, Bonney and her co-counsel, David J. Ignall, declined to comment, as did a spokesperson for Homeland Security Investigations.

The closest the prosecutors came in court to addressing those past allegations came as U.S. District Judge Timothy J. Savage questioned whether it was necessary to keep Price on computer monitoring during the additional two years of probation he imposed.

"Does he really have the [technical] capabilities to make us think that he was that good?" the judge asked.

Bonney still described Price as a risk, citing his use of the dark web to buy stolen credit card numbers from hackers. But ultimately, she replied: "Some things were magnified by the defendant, most certainly."