FBI Spy Hunter Stole $1M Crypto From His Own Target, Feds Say

A former FBI supervisory special agent has been accused of doing something investigators spend years warning others about: exploiting access to cryptocurrency seed phrases that were never meant to leave an active counterintelligence case. According to prosecutors, roughly $1 million in digital assets disappeared from wallets tied to a foreign intelligence target, not through a sophisticated exploit, but through someone who already knew exactly where the keys were.

Both counts stem from cryptocurrency that prosecutors say he quietly removed from wallets belonging to an adversarial foreign intelligence target. Yaroch spent roughly eight years handling national security investigations in the FBI’s Boston Division before moving into a supervisory position at FBI headquarters in early 2025.

That assignment placed him inside the Counterintelligence and Espionage Division with access to highly restricted intelligence systems. Cases involving cryptocurrency routinely require investigators to secure wallet credentials as evidence, making chain-of-custody and internal access controls just as important as the blockchain itself.

Investigators say the alleged theft did not rely on advanced blockchain tricks or hidden exploits. Possession of valid recovery phrases is effectively ownership in cryptocurrency. Once those words are entered into compatible wallet software, transactions appear legitimate onchain because the network cannot distinguish an authorized owner from someone who improperly obtained the credentials.

Yaroch told investigators he became frustrated watching the government fail to act against the target’s cryptocurrency activity and decided to “take matters into his own hands,” according to the affidavit. He also claimed he never communicated with anyone connected to the wallets and stressed that most of the funds remained parked in wallets under his control rather than being widely spent.

The investigation began with Yaroch walking through the door himself rather than agents tracking blockchain activity back to him. On July 28, he contacted a Justice Department National Security Division employee over Signal before meeting in person. According to the affidavit, he became emotional, admitted making “very poor decisions related to cryptocurrency wallets,” and described the situation as “eating him up inside.” The DOJ employee advised him to retain counsel and immediately report himself.

Yaroch then contacted FBI headquarters and informed security personnel that he had “screwed up.” Agents arrived at his residence later that evening to recover government property and place him on administrative leave. He briefly surrendered a written list of wallet recovery phrases before withdrawing consent. According to investigators, he then stated, “I fu**ed up,” before invoking his right to remain silent. The FBI terminated his employment two days later, the same day he was arrested.

With Yaroch’s consent, the FBI transferred approximately $925,426 from the Kraken and Suilend accounts into government-controlled wallets on July 31. Another $165,582 remained inside the Kraken account because the balance had already been converted into U.S. dollars and could not be recovered through the same cryptocurrency transfer process.

Investigators also found airline reservations for Yaroch, his wife and child to travel from Washington to Lisbon on Sept. 3 before returning Sept. 11. The phone reportedly contained powers of attorney prepared in mid-June authorizing Portuguese lawyers to handle tax and registration matters. Agents also identified earlier trips this year to Germany, Portugal and Grenada that allegedly were never disclosed despite security clearance reporting requirements.

Yaroch denied planning to move the cryptocurrency overseas, telling investigators the Portugal trip was intended only to visit friends.

The FBI said it moved quickly after learning of the allegations, terminating Yaroch and opening a full criminal investigation. The case now heads into federal court in Alexandria, where prosecutors will seek an indictment unless the matter is resolved through another avenue.