And nobody said that Bitcoin invented money laundering (and all of the rest), but it certainly provided a streamlined mechanism--which the CIA/NSA could believe would be a good honeypot for such activity.
At least for large amounts it's not really a streamlined process. You still need to trust somebody to exchange the stolen funds for fiat, or cash out step by step, like you would do with stolen bank accounts. I believe crypto is much more useful for small fishes in the criminal world actually. Those who don't have the money to set up shell companies or open shady businesses for example.
Only advantage in such cases is that you (as the criminal) have more time, if you're operating with banks then you'll have to be fast, while so you can move the coins around a bit. But time also runs against you, as it gives time to the prosecutors to analyze the blockchain and reach out to exchanges to freeze funds. You'll have thus to do complex mixing/privacy coin operations which are not much less complex than movements with cash. In the end, I believe there are some advantages but also disadvantages.
The theory that some government agency could have created both Bitcoin and sites like Silk Road to hunt these small fishes would be more convincing thus for me. But as you wrote this would be quite counterproductive as it would be working only for some time before the criminals know about the honeypot.
There are some special cases, for example a government agency of an openly criminal and corrupt state like North Korea could have indeed incentives to create such a currency, but not to catch criminals but because they do have the means to launder the money stolen via crypto convincingly and in a streamlined process.
And far from being some kind master plan, I could totally see this being some kind of brain fart by a single CIA/NSA employ screwing around that got out of control.
Yes, as I wrote, that's not impossible. But I still believe it is not enough to convince me that a government agency would be a really important part in the "Satoshi puzzle". In my opinion the likelihood for government involvement is far less than 10%. It's much more likely for me that Satoshi came out of the same cypherpunk community as Todd, Back, Maxwell, Chaum and so on.
Fun fact.. Satoshi is in this picture but it’s not Peter Todd.
I've missed the hype about that pic, can you give me a link or more info?