A federal police officer has appeared in court accused of pocketing a cryptocurrency fortune allegedly seized from an online drug-trafficking ring.
William Wheatley is facing a committal hearing in the Melbourne Magistrates’ Court this week, accused of theft, dealing with property suspected to be the proceeds of crime, and using information to dishonestly benefit himself.
The suspended federal police officer was first charged in December 2022 by the now-replaced Australian Commission for Law Enforcement Integrity.
According to court documents, Mr Wheatley allegedly stole 81.616 Bitcoin from a cryptocurrency wallet identified amid an investigation into drug and steroid trafficking using the postal system in January 2019.
Giving evidence, Cyber Crime Squad Detective Sergeant Deon Achtypis said he was called in to assist following a raid, conducted as part of Operation Viridian, on a Hoppers Crossing home on January 25, 2019.
The court was told the search was being led by the Icarus Taskforce, a joint venture by Victoria Police and the Australian Federal Police, with the search allegedly uncovering large quantities of “steroid-type” substances.
“Detective Sergeant Mark Newlan informed me they were at an address they believed was an illegal steroid dealer,” Detective Achtypis said.
“They had found a live computer … and required cyber crime.”
He said his team uncovered evidence on an encrypted email service that drug orders had been placed and payment was sent through the Bitcoin cryptocurrency.
A short time later, the detectives found a Trezor-brand hardware cryptocurrency wallet and turned it over to the Icarus detectives.
Three weeks later, Detective Achtypis told the court, a magistrate approved the Icarus Taskforce’s application to “rebuild” access to the digital wallet.
He said he gained access on February 14 and found that 81.616 Bitcoin had been moved from the wallet shortly after 5pm on January 29 – four days after the device was seized.
Anyone with the “seed phrase”, a minimum 12 random word code, could have rebuilt the wallet access, he said.
The amount, then worth about $450,000, was transferred to two further digital wallets before he could no longer trace its movements, Detective Achtypis said.
Today the same amount of bitcoin would be worth more than $6.3 million.
Investigators initially believed the money had been moved by an accomplice of the drug traffickers, but the case was reopened in 2021 after new tracing tools raised the prospect a police member may have been involved.
Detective Achtypis said he learned one of the “IP addresses of relevance” was linked to the then-AFP headquarters in Melbourne and he “could not conceive of any valid business reason” why that would be the case.
“I formed the opinion that a police member may have been involved in the movement of the cryptocurrency,” he said in a written witness statement.
A Wales-based cryptocurrency investigator, Craig Gillespie, told the court he was engaged by the Australian Commission for Law Enforcement Integrity to “track and trace” the funds.
He confirmed between January 29 and April 11, 2019, 28 transactions were made from the third wallet on various cryptocurrency platforms.
According to Mr Gillespie, some transactions were allegedly traced to withdrawals made into Mr Wheatley’s bank account between 2019 and September 2022.
Also called to give evidence, AFP officer Jesse Wyatt said he was the only federal police officer who attended the Hoppers Crossing search on January 25.
He told the court when the cryptocurrency wallet was located he did not know what the “metallic device” was, but contacted Mr Wheatley, who he described as a “specialist” in the AFP’s cyber crime division.
“Hey mate, you ever seen one of these? Maybe a cryptocurrency thing,” he wrote in a text message read to the court.
Mr Wheatley’s lawyer, Luke Barker, told the court the case against his client was “circumstantial” and they would be disputing alleged actions attributed to his client.
The committal hearing, before Magistrate Malcolm Thomas, continues.