Silk Road Shut Down, Founder Arrested, $3.6M Bitcoins Seized

[NettiWelho]

http://uk.reuters.com/article/2013/10/0 ... TR20131002
http://arstechnica.com/tech-policy/2013 ... e-roberts/
http://www.reddit.com/r/SilkRoad/commen ... ring_when/
http://yro.slashdot.org/story/13/10/02/ ... oin-seized
http://www.huffingtonpost.com/2013/10/0 ... 30750.html

(Reuters) - U.S. law enforcement authorities have shut down Silk Road, the web marketplace for illegal drugs like heroin and cocaine as well as criminal activities including murder for hire, and arrested its alleged owner, the Federal Bureau of Investigation said on Wednesday.

The FBI arrested Silk Road owner Ross William Ulbricht, 29, known as "Dread Pirate Roberts," in San Francisco on Tuesday, according to court filings.

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

"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. According to Tarbell, the site was used by "several thousand drug dealers" to sell "hundreds of kilograms of illegal drugs."

The site, which had 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.

Authorities also seized $3.6 million worth of digital currency 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 Bitcoins, roughly equivalent to $1.2 billion.

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, who used Silk Road under the name Casey Jones, and charged him in state court with drug possession. The Drug Enforcement Agency seized units of the digital currency Bitcoin, which Hughes allegedly used to purchase drugs from the online market.

Bitcoins, which have 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.

Rather unexpected development. Also value of bitcoin might take a beating over this.

[Simon_Jester]

How is that unexpected? I mean, if you set up a website and let people sell drugs on it, it's kind of common sense that sooner or later the narcs are going to come after you.

[Edi]

How is that unexpected? I mean, if you set up a website and let people sell drugs on it, it's kind of common sense that sooner or later the narcs are going to come after you.

Impact on Bitcoin may be unexpected, the other part not so much.

[Grumman]

Also value of bitcoin might take a beating over this.

That would probably be seen as a happy side effect. Whether it's Wikileaks or Silk Road, the people most likely to use Bitcoins are people the US government doesn't like.

[NettiWelho]

How is that unexpected? I mean, if you set up a website and let people sell drugs on it, it's kind of common sense that sooner or later the narcs are going to come after you.

Over 3 years of succesful operation says something about how hard it was to track them down. But what I found out most amazing is that the site was appearantly actually hosted in US.
Also, as far as these drug-selling tor sites go as far as I've understood that this is actually only the 2nd big site to be taken down(first one had had serious security issues with the way they handle the payments, leading to arrests) with 2 more that I am aware of appearently still in operation.

[General Zod]

How is that unexpected? I mean, if you set up a website and let people sell drugs on it, it's kind of common sense that sooner or later the narcs are going to come after you.

Just about everyone and their mother could find the website, but the security was supposed to be top of the line. It's kind of surprising that it took them this long to break through it, though.

[Tony Stark]

Any word of how it was tracked?

[Mr Bean]

How is that unexpected? I mean, if you set up a website and let people sell drugs on it, it's kind of common sense that sooner or later the narcs are going to come after you.

Just about everyone and their mother could find the website, but the security was supposed to be top of the line. It's kind of surprising that it took them this long to break through it, though.

The security was top of the line by all reports. But nothing stops a good hummit search of everyone and their brother until you find a player and flip them to your side. There's lots of guesswork as to how they broke the ring but I've got my money down on they got an admin or moderate player and forced them to get the keys to the network months ago and have been monitoring all this time to pull in enough data to ID the rest.

[NettiWelho]

http://www.reddit.com/r/SilkRoad/commen ... iscussion/

Now, onto how he got caught...

An agent involved in the investigation ("Agent-1"), found the first few references to SR on the internet from somebody only identified as "altoid", attempting to promote the site in its beginning days, in January of 2011.
In October of the same year, a user also going by the name of "altoid" made a posting on Bitcoin Talk titled "a venture backed Bitcoin startup company", which directed interested users to "rossulbricht at gmail dot com".
That email address is what led to DPR's downfall.
---
After identifying "altoid", they started connecting the "DPR" identity to Ulbricht pretty quickly.
Ulbricht's Google+ page and YouTube profile both make multiple references to the a website dubbed the "Mises Institute". DPR's signature on the SR forums contained a link to the Mises Institute.
DPR cited the "Austrian Economic theory" along with the works of Ludwig von Mises and Murray Rothbard, all of which are closesly associated with the Mises Institute.
Server logs show that someone logged onto the SR administration panel from San Fransisco around the same time that Ulbricht was staying in San Fransisco.
Multiple fake IDs were intercepted by U.S. Customs & Border Patrol while on their way to an address which Ulbricht was living at the time. These IDs all carried photos of Ulbricht but had false names and details. This was around the same time that DPR stated in a message that he was acquiring some fake IDs to buy new servers.
When questioned by Homeland Security about the fake IDs, he refused to answer any questions but then stated that anyone could purchase such things using "Silk Road" and "Tor".
The address which Ulbricht was staying at was being rented in cash and he was living with housemates who knew him under a name which corresponded with one of the fake IDs.
He posted on StackOverflow using his real name, inquiring about how to use curl/PHP to grab things off Tor, before quickly changing the name to "frosty" (with a fake email: frosty@frosty.com)

[Irbis]

It's kind of surprising that it took them this long to break through it, though.

Who said it took them long? I'd guess they had the whole operation under watch and only made arrest when they had reasonable leads to get others, delay in itself means little.

[Broomstick]

They also probably wanted to gather sufficient evidence to make a conviction reasonably likely once they got around to prosecution.

[Atlan]

They also probably wanted to gather sufficient evidence to make a conviction reasonably likely once they got around to prosecution.

Can't access it right now, becuase Spacebattles is being laggy as all hell, but someone over there posted a link to the charges. If only half of that stuff sticks Ulbricht is hilariously fucked. The Feds did their homework on this joker.

[NettiWelho]

They also probably wanted to gather sufficient evidence to make a conviction reasonably likely once they got around to prosecution.

Can't access it right now, becuase Spacebattles is being laggy as all hell, but someone over there posted a link to the charges. If only half of that stuff sticks Ulbricht is hilariously fucked. The Feds did their homework on this joker.

Most of it isn't as incriminating as appears on the first sight...

[FireNexus]

http://www.baltimoresun.com/news/maryla ... 6223.story

They got him, essentially, in the early part of this year when he ordered a hit on a former employee through an undercover FBI agent. That seems to be how they got access to the server (they got a full image in July) and the delay was primarily building a solid case that could tie him to the site beyond a reasonable doubt. The "routine inspection" of a package of fake ids from Canada accomplished that.

I think the best part is that all of this guy's voluntaryist dribble was disproven by his need to "use" murder-for-hire to maintain the functioning of the market, once to silence an employee and once to get rid of an extortionist. The extortion and security issues are perfect examples of why a regulatory framework is needed for successful commerce.

Two attempted murders for a multi-million (maybe billion) dollar drug operation with thousands of customers over the course of multiple years is certainly an impressively low level of violence, however.

[Napoleon the Clown]

Probably because of a fairly low amount of face-to-face interaction. Less likely to get knifed in an alley if you're never in an alley to begin with, ya know? Go to Wal Mart on Black Friday and you'll probably get jostled real good, maybe a bruise or two. If you're really unlucky you might get trampled. Go and shop online? Carpal tunnel, unless you fall off your chair or something. Same deal here.

Being around shady people is dangerous, but this guy's business methods largely got rid of that, based off the information here. I'm not surprised at the minimum of violence simply because there was a minimum of opportunities for violence to arise. If he had had ongoing face-to-face interaction I'd be impressed, but this is basically eBay Drugs.

[energiewende]

I think the best part is that all of this guy's voluntaryist dribble was disproven by his need to "use" murder-for-hire to maintain the functioning of the market, once to silence an employee and once to get rid of an extortionist. The extortion and security issues are perfect examples of why a regulatory framework is needed for successful commerce.

Assuming this is a complete list, he never killed anyone to take their stuff or force them to do business with him, only to stop the government from sending him to the isolation unit of a supermax for the rest of his life (which is probably what will happen now). If the government's drug regulations had not existed he would not have had to have killed anyone. So this hiring of hitmen should be viewed as more of a counter-regulatory mechanism.

Two attempted murders for a multi-million (maybe billion) dollar drug operation with thousands of customers over the course of multiple years is certainly an impressively low level of violence, however.

Which is why I'm very ambivalent about this. Most drug-related deaths are caused by the distributors and customers being idiots who don't know how to play by the rules, those rules and enforcement mechanisms being in place because the government denies the use of the professional justice system. Silkroad made you play by the rules and if you didn't, you simply never were allowed to begin your transaction, rather than being murdered as an example to others. So granting that there is no strategy likely to actually win the drug war in the near future, if I were the government I would be trying to help this guy put the rest of the drug middlemen out of business.

Over 3 years of succesful operation says something about how hard it was to track them down. But what I found out most amazing is that the site was appearantly actually hosted in US.

And why did he live in the US? He became pretty rich so he could have bounced around the world more or less at will. He probably overestimated how safe he was.

[Broomstick]

Assuming this is a complete list, he never killed anyone to take their stuff or force them to do business with him, only to stop the government from sending him to the isolation unit of a supermax for the rest of his life (which is probably what will happen now).

Oh, OK, that's makes murder perfectly fine, then. Could you sound more like a fuckwit? Are you seriously justifying murder-for-hire on the basis that he wanted to avoid jail time?

If the government's drug regulations had not existed he would not have had to have killed anyone. So this hiring of hitmen should be viewed as more of a counter-regulatory mechanism.

He never "had" to kill anyone. No one forced him to do that. As you yourself pointed out, he has the wealth to flee to a country that does not extradite to the US. Sorry, no, murder is NOT OK.

Most drug-related deaths are caused by the distributors and customers being idiots who don't know how to play by the rules,

Please provide a cite that the majority of drug-related deaths are due to murders during transactions as opposed to overdose or diseases associated with drug use.

And why did he live in the US? He became pretty rich so he could have bounced around the world more or less at will. He probably overestimated how safe he was.

Uh... gee... because it was his home? He'd lived there all his life? Some people actually do like it here.

I do agree it is puzzling he didn't try to flee, but perhaps he wasn't aware the Feds were so close to arresting him.

[NettiWelho]

He never "had" to kill anyone. No one forced him to do that. As you yourself pointed out, he has the wealth to flee to a country that does not extradite to the US. Sorry, no, murder is NOT OK.

The first "hit" appearently was some sort of a scam or extortion attempt, the extorter threatened to release the personal information of thousands of silk road users and demanded half a million USD money to keep quiet, threatening enourmous social and economic damage for normal people who have never done any harm. The police supposedly checked if anyone had gone missing from the place where the hit was ordered and appearently no one was harmed. Perhaps indicating that the extorter and the hitman were maybe even the same person?

That does not make it ok under the law to order a hit though, but I think it should be taken into consideration. He couldn't just run for the hills because others would still be on the way of harm.

The second hit was orchestrated by the authorities from start to finish, they arrested one of the moderators, leaked the information of arrest and then proceeded to offer hitman services to the site operator.

And no-one has so far been known to have died over this.

Please provide a cite that the majority of drug-related deaths are due to murders during transactions as opposed to overdose or diseases associated with drug use.

Please provide a cite that the majority of drug-related overdose and disease is not a direct result of the prohibition.

[Lord Revan]

And why did he live in the US? He became pretty rich so he could have bounced around the world more or less at will. He probably overestimated how safe he was.

Uh... gee... because it was his home? He'd lived there all his life? Some people actually do like it here.

I do agree it is puzzling he didn't try to flee, but perhaps he wasn't aware the Feds were so close to arresting him.

tbh alot if not most real life "master criminals" aren't all that bright, I wouldn't be supriced if he thought he had the fed totally fooled until he got knock on his door from the fed (or local cops working with the feds).

[Alyeska]

He never "had" to kill anyone. No one forced him to do that. As you yourself pointed out, he has the wealth to flee to a country that does not extradite to the US. Sorry, no, murder is NOT OK.

The first "hit" appearently was some sort of a scam or extortion attempt, the extorter threatened to release the personal information of thousands of silk road users and demanded half a million USD money to keep quiet, threatening enourmous social and economic damage for normal people who have never done any harm. The police supposedly checked if anyone had gone missing from the place where the hit was ordered and appearently no one was harmed. Perhaps indicating that the extorter and the hitman were maybe even the same person?

That does not make it ok under the law to order a hit though, but I think it should be taken into consideration. He couldn't just run for the hills because others would still be on the way of harm.

The second hit was orchestrated by the authorities from start to finish, they arrested one of the moderators, leaked the information of arrest and then proceeded to offer hitman services to the site operator.

And no-one has so far been known to have died over this.

Please provide a cite that the majority of drug-related deaths are due to murders during transactions as opposed to overdose or diseases associated with drug use.

Please provide a cite that the majority of drug-related overdose and disease is not a direct result of the prohibition.

You have the facts of both "hits" completely wrong.

One hit was against an employee of Silk Road who stole from the website. The second hit was against a hacker that stole from the website. Nothing was setup by the feds. No one arrested. In the incident of the employee, the hitman turned out to be the FBI. But they were never involved previously and didn't setup any of the incidents.

http://arstechnica.com/tech-policy/2013 ... d-torture/

[Napoleon the Clown]

As far as drug-related deaths go, I'd think it depends on the drug. There's no way in hell someone's gonna die from smoking too much weed, for example. Do something stupid that results in death, sure. But the toxicity of marijuana is so insanely low that there's no way to smoke enough of it to die. Even if you could smoke it fast enough you'd pass out long before it threatened to kill you.

Heroine or any of the nastier drugs, however, can be OD'd on. I'm honestly not interested enough to look up statistics for how many of the deaths related to drugs are because of engaging in dangerous activities while under the influence (driving included), overdosing, disease, etc. vs deaths caused by dealing with criminal elements.


Netti, how the hell is making it legal gonna stop people from overdosing? I can see an argument regarding disease transmission, but to say that it could possibly reduce how often people OD is a pretty big claim. Addicts aren't known for deciding to follow the directions on how much to use in a specified time frame.

[NettiWelho]

Netti, how the hell is making it legal gonna stop people from overdosing? I can see an argument regarding disease transmission, but to say that it could possibly reduce how often people OD is a pretty big claim. Addicts aren't known for deciding to follow the directions on how much to use in a specified time frame.

If all the drugs were regulated the same way as alcohol all drugs would come eitheir pure or diluted with a safe substance and packaged in single use sizes. Information about the drug and its dangers as well as consumption and/or dosage recommendations and other harm reduction could be done.

Just because you can kill yourself with it does not mean its dangerous. You can kill yourself with drinking too much water, or vodka.

What matters is can it kill you accidentally just because its impure or measurement error while dosing OR entire another substance than advertized. Such worries are mostly gone with proper regulation and safety.

[Alyeska]

Netti, how the hell is making it legal gonna stop people from overdosing? I can see an argument regarding disease transmission, but to say that it could possibly reduce how often people OD is a pretty big claim. Addicts aren't known for deciding to follow the directions on how much to use in a specified time frame.

If all the drugs were regulated the same way as alcohol all drugs would come eitheir pure or diluted with a safe substance and packaged in single use sizes. Information about the drug and its dangers as well as consumption and/or dosage recommendations and other harm reduction could be done.

Just because you can kill yourself with it does not mean its dangerous. You can kill yourself with drinking too much water, or vodka.

What matters is can it kill you accidentally just because its impure or measurement error while dosing OR entire another substance than advertized. Such worries are mostly gone with proper regulation and safety.

Certain drugs are so addictive and damaging to the human body they cannot be self regulated. Ever wonder why narcotics which are legal for prescription aren't sold over the counter? Even in countries that decriminalize drug use, they don't make it legal to purchase the shit.

[NettiWelho]

Netti, how the hell is making it legal gonna stop people from overdosing? I can see an argument regarding disease transmission, but to say that it could possibly reduce how often people OD is a pretty big claim. Addicts aren't known for deciding to follow the directions on how much to use in a specified time frame.

If all the drugs were regulated the same way as alcohol all drugs would come eitheir pure or diluted with a safe substance and packaged in single use sizes. Information about the drug and its dangers as well as consumption and/or dosage recommendations and other harm reduction could be done.

Just because you can kill yourself with it does not mean its dangerous. You can kill yourself with drinking too much water, or vodka.

What matters is can it kill you accidentally just because its impure or measurement error while dosing OR entire another substance than advertized. Such worries are mostly gone with proper regulation and safety.

Certain drugs are so addictive and damaging to the human body they cannot be self regulated. Ever wonder why narcotics which are legal for prescription aren't sold over the counter? Even in countries that decriminalize drug use, they don't make it legal to purchase the shit.

Then make less harmful alternatives available for prices capable of beating black market alternatives! The current substance scheduling lineup does not conform to their real health, harm and medicinal effects.

[Alyeska]

Then make less harmful alternatives available for prices capable of beating black market alternatives! The current substance scheduling lineup does not conform to their real health, harm and medicinal effects.

You don't seem to get it. Less harmful alternatives exist. Some people still get hooked on this nasty shit. Why? Because some times the nasty shit is actually cheaper. Because it produces a more effective high. Who the fuck knows why some people take some drugs. You can't magically create a pill to solve everything. And you can't legalize every drug. Thats just as much a disaster as the war on drugs.