FBI shuts alleged online drug marketplace, Silk Road - Printable Version

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FBI shuts alleged online drug marketplace, Silk Road - Easy Skanking - 10-03-2013

Quote:FBI shuts alleged online drug marketplace, Silk Road

By Emily Flitter

NEW YORK | Wed Oct 2, 2013 2:33pm EDT

(Reuters) - U.S. law enforcement authorities have shut down "Silk Road," an anonymous Internet marketplace for illegal drugs like heroin and cocaine and criminal activities such as murder for hire, and arrested its alleged owner.

The Federal Bureau of Investigation said Wednesday it arrested Silk Road owner, Ross William Ulbricht, 29, known online as "Dread Pirate Roberts," in San Francisco on Tuesday, according to court filings.

Ulbricht, who holds an advanced degree in chemical engineering, appeared in federal court on Wednesday and a bail hearing was set for Friday.

His lawyer Brandon LeBlanc, a public defender, declined to comment.

Federal prosecutors in New York charged Ulbricht with one count each of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy, the filing said.

"Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the Internet today," FBI agent Christopher Tarbell said in the criminal complaint.

The site was used by "several thousand drug dealers" to sell "hundreds of kilograms of illegal drugs," he said.

The site, which has operated since early 2011, also offered tutorials on hacking ATM machines, contact lists for black market connections and counterfeiters, and guns and hit men for sale, according to the charges.

More than 900,000 registered users of the site bought and sold drugs using the digital currency Bitcoin. In recent media reports about the growing popularity of Bitcoin, the Silk Road website has emerged as part of a darker side to the use of digital currencies.

Through the site, according to the charges, users could buy drugs and have them shipped to an address. Investigators, posing as regular users on Silk Road, made more than 100 purchases of drugs, which were shipped to the New York area.


According to the complaint, Ulbricht, who shortened his alias from Dread Pirate Roberts to DPR when posting on Silk Road's forums, operated the site from San Francisco.

At times, he used computers at Internet cafes to access the servers running the website, which employed several technological tools to mask the location of its servers and the identities of its administrators and users.

The complaint described other aspects of Ulbricht's online presence: In a Google+ profile, he described himself as a fan of libertarian economic philosophy and posted videos from the Ludwig von Mises Institute, an Auburn, Alabama-based economics institute.

Reached by phone in Austin, Texas, Ubricht's parents said they had not known what their son was doing in San Francisco.

"He is a really stellar, good person and very idealistic," said Ulbricht's mother, Lyn Lacava. "I know he never meant to hurt anyone."

Ulbricht's father Kirk confirmed his son had received a master's in material sciences from Pennsylvania State University. His thesis was titled: "Growth of EuO Thin Films by Molecular Beam Epitaxy."

"He did amazing research on crystals and exotic materials they hoped would have some use for humans," Ulbricht said. "But it was very theoretical stuff."

The complaint against Ulbricht describes a darker side. During one correspondence with a Silk Road user, Ulbricht tried to call out a hit on another user with whom he had a dispute. That user, known online as "FriendlyChemist," was threatening to expose the identities of thousands of Silk Road users unless Ulbricht sent him money.

"I wouldn't mind if he was executed," Ulbricht wrote, offering personal details about his foe, including the fact that he was a married father of three, and the names of the city and province where he lived.

In a later post, Ulbricht wrote: "He is threatening to expose the identities of thousands of my clients."

"This kind of behavior is unforgivable to me. Especially here on Silk Road, anonymity is sacrosanct."


During the raid, authorities seized $3.6 million worth of bitcoin, which was used instead of cash or credit cards to complete transactions on Silk Road.

The charges against Ulbricht said his website generated sales of more than 9.5 million bitcoin, roughly equivalent to $1.2 billion.

Authorities seized the currency by taking control of the digital "wallets" Silk Road used to store bitcoin.

In a corresponding civil asset forfeiture action, prosecutors claimed Silk Road and Ulbricht were liable to the government for the value of all transactions involving drug tracking and computer hacking, as well as for money laundering penalties, and a final amount would be determined at trial.

The raid on Wednesday was not the first time the U.S. government has made arrests related to Silk Road.

Earlier this year, authorities in South Carolina arrested Eric Daniel Hughes, known on Silk Road as "Casey Jones," and charged him in state court with drug possession. The Drug Enforcement Agency seized units of bitcoin, which Hughes allegedly used to purchase drugs from the online market.

Bitcoin, which has been around since 2008, first came under scrutiny by law enforcement officials in mid-2011 after media reports surfaced linking the digital currency to Silk Road.

It's plain to see that the government hates competition in drug dealing and in an alternate currency. This sucks.

To refute some of the article, I have never seen anything remotely having to do with killers for hire. It was mostly about drugs, parphenalia and a few hacking tools.

They took down one site, and it doesn't look good for Dread Pirate Roberts, but there are still other similar sites.

RE: FBI shuts alleged online drug marketplace, Silk Road - SiLVa - 10-03-2013

I only looked at the site once or twice, never purchased anything though. I didnt trust it. Figured it'd only be a mtter of time before they shut it down.
Sucks that it happened though. I wouldve thought the guy was smart enough to live somewhere he couldnt be touched. Its as if he wasnt worried about being caught or arrested.

RE: FBI shuts alleged online drug marketplace, Silk Road - Easy Skanking - 10-03-2013

More info about why he got caught:


...Earlier this summer, the Silk Road’s administrator calling himself by the Dread Pirate Roberts pseudonym gave his first extended interview to Forbes over the same Tor anonymity network that has hosted the Silk Road and its users since the site’s creation in early 2011...

...This is supposed to be some invisible black market bazaar. We made it visible,” says an FBI spokesperson, who asked not to be named. “When you interviewed [Ulbricht], he said he would never be arrested. But no one is beyond the reach of the FBI. We will find you.”

The FBI hasn’t yet revealed how it managed to track down Ulbricht in spite of his seemingly careful use of encryption and anonymity tools to protect his identity and those of his customers and vendors who visited Silk Road as often as 60,000 times per day. The FBI spokesperson declined to offer details about the investigation, but told me that “basically he made a simple mistake and we were able to identify him.”

One clue mentioned in the criminal complaint against Ulbricht was a package seized from the mail by U.S. Customs and Border Patrol as it crossed the Canadian border, containing nine seemingly counterfeit identification documents, each of which used a different name but featured Ulbricht’s photograph. The address on the package was on 15th street in San Francisco, where police found Ulbricht and matched his face to the one on the fake IDs.

The complaint also mentions security mistakes, including an IP address for a VPN server used by Ulbricht listed in the code on the Silk Road, mentions of time in the Dread Pirate Roberts’ posts on the site that identified his time zone, and postings on the Bitcoin Talk forum under the handle “altoid,” which was tied to Ulbricht’s Gmail address...

Lessons to be learned:
Don't boast and don't give interviews.
Keep completely separate identities.
Always fake any location identifiers.

RE: FBI shuts alleged online drug marketplace, Silk Road - CharliePrime - 10-03-2013

I am confident Silk Road will open back up under new management.

RE: FBI shuts alleged online drug marketplace, Silk Road - SiLVa - 10-04-2013

(10-03-2013, 10:34 PM)CharliePrime Wrote: I am confident Silk Road will open back up under new management.

Yeah, most likely under control of the FBI using Ulbricht as a rat to get to all the real drug dealers.

RE: FBI shuts alleged online drug marketplace, Silk Road - CharliePrime - 10-04-2013

If so, a legitimate version will arise.

Government violence is no match for the power of human creativity and hard work.

RE: FBI shuts alleged online drug marketplace, Silk Road - Easy Skanking - 10-04-2013

As I said, there are other pre-existing sites that serve the same function but have kept a lower profile. Maybe their operators are wise enough not to give interviews to Forbes magazine and taunt the FBI.

RE: FBI shuts alleged online drug marketplace, Silk Road - pax681 - 10-05-2013

yeah sheep marketplace and a few others sell the same mad variety of things

RE: FBI shuts alleged online drug marketplace, Silk Road - mothandrust - 12-24-2013

(10-04-2013, 04:15 PM)CharliePrime Wrote: Government violence is no match for the power of human creativity and hard work.
just wanted to post that again.
vive la revoltion!