Millions in Cryptocurrency Vanished as Agents Watched Helplessly

Gary Harmon grinned as he lounged in a bathtub full of dollar bills surrounded by scantily clad women. The moment, captured in a photo on his cellphone, could be part of his undoing. To US prosecutors, it’s evidence that he suddenly came into a lot of money.

The prosecutors accuse Harmon of a very unusual crime: remotely swiping Bitcoin stored on a computer device the government had already seized in another case, brought against his older brother, Larry. As authorities watched helplessly, 713 digital tokens—then worth almost $5 million—were somehow spirited away from the “hardware wallet” they were holding in ...