The FBI has officially shut down the website known as “Silk Road”, an online storefront where customers could purchase everything from illegal drugs to a wide range of guns to users seeking murder-for-hire employment.
The site’s alleged owner, 29-year-old Ross William Ulbricht, who went by the online moniker “Dread Pirate Roberts”, was arrested in San Francisco on Tuesday. He appeared in federal court on Wednesday and will have a bail hearing on Friday.
Prosecutors in New York charged him with one count each of narcotics trafficking conspiracy, computer hacking conspiracy, and money laundering.
Additional charges are still coming in against Ulbricht. One example is an indictment filed in federal court in Maryland on Tuesday. According to the report, Ulbricht is charged with ordering a hit against an employee who took a delivery of a kilogram of cocaine valued at $27,000.
The employee came under suspicion by Silk Road staff after he was arrested by law enforcement authorities. In communications with an undercover law enforcement agent posing as a drug smuggler, Ulbricht asked that the suspected employee be beaten and forced to return the money.
Soon after this conversation, though, Ulbricht changed his mind.
“Can you change the order to execute rather than torture?” he asked in January.
His reasoning was that the employee “was on the inside for a while, and now that he's been arrested, I'm afraid he'll give up info.” Ulbricht agreed to pay $40,000 up front for the deal and another $40,000 when the hit was completed. During the negotiations, he noted that he had “”never killed before, but it is the right move in this case.”
On February 4, Ulbricht transferred the first half of the payment into a bank account controlled by the undercover agent. On March 1, he sent over the remaining half after seeing a staged photo that depicted the body of the employee who the undercover agent said had died of asphyxiation and heart rupture after being tortured.
“I'm pissed I had to kill him . . . but what's done is done,” Ulbricht allegedly wrote after receiving the image. “I just can't believe he was so stupid. I just wish more people had some integrity.”
While this was the first hit Ulbricht ordered, it wasn’t his last. Two months later, he ordered a $150,000 hit on a Silk Road user by the name of “FriendlyChemist”. His reasoning: the user had hacked into a large Silk Road drug user’s computer and stolen data from it, including usernames, addresses, and order information.
He then sent a sample of this information to Ulbricht to prove the legitimacy of his hack, and threatened to publish the data unless he was paid $500,000.
“This kind of behavior is unforgivable to me,” Ulbricht told a Silk Road user named redandwhite, according to the complaint. “Especially here on Silk Road, anonymity is sacrosanct.”
Ulbricht eventually requested that redandwhite carry out the hit, adding “it doesn't have to be clean.”
There is no proof if this second hit was ever carried out. Authorities in White Rock, British Columbia where FriendlyChemist allegedly lived with his wife and three children, have no record of homicide occurring around the time in which redandwhite confirmed the hit was carried out (March 2013).
So, just how big was this site? Silk Road had more than 900,000 registered users on it. The reason why it was able to get so big was due in large part to the fact that transfers were completed using the digital currency Bitcoin, which made it easy for users to place their order sans cash / credit card, and thus operate with complete anonymity.
For additional security, the site employed various technological tools to mask the location of its servers and the IDs of its administrators and users.
Investigators posing as regular users on Silk Road allegedly made 100+ purchases of drugs via the site over the course of a few months. Everything they ordered was able to be shipped to various addresses in the New York area without any hold-up.
“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.
Ulbricht’s parents were contacted by Reuters and asked to comment on his arrest.
“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 spoke of his son having received a Master’s degree in material sciences from Penn State. “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.”
Ulbricht supposedly operated the site out of various internet cafes in the San Francisco area. During the raid, authorities claim to have seized 3.6 million bitcoin by seizing the digital “wallets” Silk Road used to store the digital currency.
Charges against Ulbricht allege that his site generated sales of more than 9.5 million bitcoin, equivalent to $1.2 billion.
Following the shutdown of Silk Road, the price of the Bitcoin digital currency dropped on Wednesday, falling to $129 from over $140 a day before, according to a website for trading bitcoins, Mt.Gox.
Earlier, the currency traded as low as $110.
Story via: reuters.com, arstechnica.com
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