That was my question as well, it talks about protecting bob in case richard is a thief, but what if richard is just a spy.  This is a known issue for drk coin, which is why there are 8 middle men, ensuring that the probability of all 8 being controlled by the same entity is low. What if 1/3rd of the cloak network is sitting at the nsa?

So bob shuffles his coins locally removing their origin, but then he sends to richard to send to alice for drugs, and richard narcs on him.