A US Navy engineer wanted to be paid $100,000 in crypto for selling military secrets to a foreign country, report says

The Los Angeles-class submarine USS Annapolis (SSN 760) pulls into Submarine Base New London in Groton, Connecticut, after returning from a scheduled six-month deployment.
US Navy submarine. Getty Images

An American nuclear engineer working for the US Navy, together with his wife, was charged with attempting to share military secrets on submarine technology with a foreign country in exchange for $US100,000 ($AU136,856) worth of monero, a type of cryptocurrency, court documents unsealed on Sunday showed.

Jonathan Toebbe, 42, an engineer with access to restricted information, allegedly tried to sell nuclear propulsion information to an unidentified country last year, according to the documents. The New York Times was first to report the case.

There is no proof that that the foreign country obtained any information. The plot unraveled after Toebbe began communicating with an undercover FBI agent who was luring him.

The investigation on the engineer began in December 2020 when the FBI gained access to a package that had been sent to another country containing classified materials postmarked in April 2020, documents said.

“Please forward this letter to your military intelligence agency. I believe this information will be of great value to your nation,” Toebbe said in the letter, according to the court documents. “This is not a hoax.”

It is unclear why it took some time for the FBI to obtain the package and how exactly the agency obtained it, such as whether it was surrendered or intercepted.

Closely following the package’s instructions, the FBI engaged in an encrypted conversation with Toebbe in which he requested payment in cryptocurrency, according to the documents. Cryptocurrencies have been at the center of recent illicit activities from money laundering to terrorism financing, because transactions are either anonymous or very difficult to trace.

The FBI agent then convinced Toebbe to meet in person. When he declined, a dead drop – a coordinated handoff to avoid face-to-face meetings – was agreed upon in West Virginia. His wife Diana Toebbe, a high school teacher, served as his lookout while he left an SD card concealed inside a peanut butter sandwich in a plastic bag, according to the court documents.

‘Please remember I am risking my life for your benefit and I have taken the first step. Please help me trust you fully,” he said, according to court documents.

Once the FBI agent got the package, he sent Toebbe the payment to gain his trust. Subsequent dead drops took place in Pennsylvania and Virginia in which SD cards were wrapped in a Band-Aid wrapper and a chewing gum package. By August 2021, Toebbe was paid $US100,000 ($AU136,856) in cryptocurrency by the FBI.

On October 9, the couple was arrested in their Maryland home by the FBI and the Naval Criminal Investigative Service. They are scheduled to appear in a federal court in West Virginia on October 12.