October 2, 2013

Defendant Charged With Drug Trafficking, Hacking, Money Laundering

Prosecutors in New York today said that federal agencies have taken over the Silk Road, a sprawling underground Web site that has earned infamy as the “eBay of drugs.” On Tuesday, federal agents in San Francisco arrested the Silk Road’s alleged mastermind. Prosecutors say 29-year-old Ross William Ulbricht, a.k.a “Dread Pirate Roberts” (DPR), will be charged with a range of criminal violations, including conspiracy to commit drug trafficking, and money laundering.

A screen shot of the Silk Road Web site, taken Oct. 23, 2013.

A screen shot of the Silk Road Web site, taken Oct. 2, 2013.

The Silk Road is an online black market that as late as last month was hosting nearly 13,000 sales listings for controlled substances, including marijuana, LSD, heroin, cocaine, methamphetamine and ecstasy. Much like eBay sellers, merchants on the Silk Road are evaluated by previous buyers, who are encouraged to leave feedback about the quality of the seller’s goods and services.

The Silk Road is not available via the regular Internet. Rather, it is only reachable via the Tor network, an anonymity network that bounces its users communications across a distributed network of relays run by volunteers all around the world.

That is, it was until this week, when FBI agents arrested its alleged proprietor and seized the Web servers running the site. The feds also replaced the Silk Road’s home page with a message saying that the site had been seized by the FBI, Homeland Security Department and the Drug Enforcement Administration.

According to a complaint unsealed this week, Ulbricht alone controlled the massive profits generated from the operation of the business. The government alleges that Ulbricht also controlled and oversaw all aspects of the Silk Road, including: the maintenance of the computer infrastructure and programming code underlying the Silk Road Web site; the determination of vendor and customer policies; decisions about what could be sold on the site; and managing a small staff of online administrators who assisted with the day-to-day operations.

The Silk Road didn’t just sell drugs. For example, the complaint identifies 801 for-sale listings under “digital goods,” which included banking Trojans, pirated content, and hacked accounts at Netflix and Amazon. The “forgeries” section of the Silk Road featured 169 ads from vendors of fake driver’s licenses, passports, Social Security cards, utility bills, credit card statements, car insurance records, and other forms of identity documents.

An ad for heroin on the Silk Road. Notice this seller has 97 feedback points.

An ad for heroin on the Silk Road. Notice this seller has 97 feedback points.

Another popular section of the Silk Road included 159 listings for generic “Services,” mostly those listed by computer hackers offering such services as hijacking Twitter and Facebook accounts of the customer’s choosing. Other classified ads promised the sale of anonymous bank accounts, counterfeit bills, firearms and ammunition, and even hitmen for hire.

FBI investigators said that on or about March 29, 2013, Ulbricht contacted a Silk Road seller “Redandwhite” to see about hiring him to to take out another Silk Road user — someone going by the nickname “FriendlyChemist” — who was threatening to release the identities of thousands of users of the site.

From the government’s complaint: “Asked what sort of problem FriendlyChemist was causing him, DPR responded in a message dated March 30, 2013, ‘[H]e is threatening to expose the identities of thousands of my clients that he was able to acquire….[T]his kind of behavior is unforgivable to me. Especially here on Silk Road, anonymity is sacrosanct.'” As to the murder-for-hire job he was soliciting, DPR commented that “[i]t doesn’t have to be clean.”

Later that same day, redandwhite sent DPR a message quoting him a price of $150,000 to $300,000, “depending on how you want it done, ‘clean’ or ‘non-clean’.

On March 31, DPR began haggling over the price, responding: “Don’t want to be a pain here, but the price seems high. Not long ago, I had a clean hit done for $80k. Are the prices you quoted the best you can do? I would like this done asap as he is talking about releasing the info on Monday.”

DPR, allegedly using the nickname "altoid" seeks to hire a tech expert for the Silk Road via bitcointalk.org

DPR, allegedly using the nickname “altoid” seeks to hire a tech expert for the Silk Road via bitcointalk.org

According to investigators, the two ultimately settle on a price of $150,000, and that Ulbricht paid for the transaction using Bitcoins — an anonymous virtual currency — sending the would-be hit man 1,670 bitcoins for the arranged hit. Bitcoin currency rates fluctuate quite a bit from day to day, but historic sites that track Bitcoin rates show that one bitcoin around that date in late March 2013 was worth about USD $90, meaning investigators believe Ulbricht paid approximately $150,300 for the hit.

The government’s complaint states that the hit wasn’t carried out, but it also doesn’t seem that FriendlyChemist was the source of investigators’ break in this case. That would come on July 23, 2013, when investigators gained access to a Silk Road server and made a complete copy of the data on the machine.

Nicholas Weaver, a researcher at the International Computer Science Institute (ICSI) and at University of California San Diego, said the information contained on the server seized by investigators indicates that Ulbricht/Dread Pirate Roberts routinely failed to heed his own advice to fellow Silk Road users: Prominent on the Silk Road site were links to tutorials DPR penned which laid out the technologies and techniques that users should adopt if they want to keep off the radar of federal investigators.

“This shows me that the head of the Silk Road wasn’t using [encryption] for all his communications, because [the government] wouldn’t have all of this information otherwise, unless of course he stored his encryption key on the server that was seized,” Weaver said. “Either [the government] got his encryption key off of this server or another server that they were able to access, or he wasn’t using encryption at all.”

The complaint also suggests that in June 2013, Ulbricht accessed a server used to control the Silk Road site from an Internet cafe that was 500 feet from the hotel he was staying at in San Francisco.

“In other words, he wasn’t even using Tor to administer the Silk Road,” Weaver said. “Given that, it’s amazing that he was able to keep this site running for three years.”

Other rookie mistakes also contributed to DPR’s identification as Ross William Ulbricht. In 2011, a person using the nickname “Altoid” posted a comment to the Bitcoin Talk forum trying to get users there to visit the Silk Road. Later in the year, Altoid posted again on the Bitcoin Talk forum, this time seeking an “IT pro” in the Bitcoin community to help with Silk Road administration. In that comment, he posted his Gmail address, the contents of which were later subpoenaed by federal investigators.

Finally, DPR tripped himself up when he ordered some fake IDs from an international Silk Road vendor and had them sent to his residence. The fraudulent IDs were intercepted at the border by customs agents working with the U.S. Department of Homeland Security, which paid a visit to the address to which the documents were to be delivered. The agents noted that while Ulbricht refused to answer any questions about the alleged purchase, one of the identity documents was a California driver’s license bearing Ulbricht’s photo and true date of birth, but with a different name.

Ulbricht's LinkedIn profile, as described by the government's complaint.

Ulbricht’s LinkedIn profile, as described by the government’s complaint.

A number of folks on Twitter, Reddit and other communities are linking to several identities on social media platforms that match up with timelines in the government’s complaint, including this profile on LinkedIn, and this page at Google Plus. According to page 24 of the government’s complaint, Ulbricht graduated from the University of Texas with a bachelors degree in Physics in 2006. From 2006 to 2010, he attended graduate school at the University of Pennsylvania School of Materials Science and Engineering.

The government’s investigation into the Dread Pirate Roberts and Silk Road officially began back in November 2011, when law enforcement agents began making a series of more than 100 individual undercover purchases of controlled substances from Silk Road vendors. Now, many of those vendors — and their customers — have to be wondering how long it may be before investigators come knocking on their doors.

“If I were a seller on the Silk Road, I’d be terrified right now,” Weaver said. “Any buyer that didn’t use encryption now has their Silk Road messages seized. The FBI may have the sellers’ shipping addresses for their customers, and for the sellers, the FBI knows the Bitcoin payout addresses, so then it’s a matter of tracing the Bitcoin wallets from there.”

Weaver pointed to research by Sara Meiklejohn, a graduate student at the University of California, San Diego who’s been analyzing the role of bitcoin and anonymity on the Silk Road. Meiklejohn’s study, A Fistful of Bitcoins: Characterizing Payments Among Men with No Names —  to be released in October 2013 at the ACM Internet Measurement Conference in Barcelona, Spain — lays out different methods that could be used to tie Bitcoin wallets to specific individuals.

According to a press release sent out by the office of the U.S. Attorney for the Southern District of New York, Ulbricht will be presented in San Francisco today. He is charged with conspiracy to traffic in narcotics, computer hacking conspiracy, and money laundering.

The ICSI’s Weaver said that if convicted on the drug charges alone, Ulbricht is facing life in prison.

“The drug trafficking counts include the weights of the drugs, which makes me think that the government wants to throw the book at this guy,” Weaver said, noting that those weights carry mandatory sentences. “The drug charges alone have a 30 year mandatory minimum.”

The government notes in its complaint that most of the drug pushers on the Silk Road sold packets of drugs for individual use (for an example of this, check out the 13 packets of heroin that a cyber fraudster ordered off of the Silk Road in July and had sent to my home in a botched attempt to frame this reporter). But Weaver said the government can apparently aggregate many different individual drug charges because he acted in a role to help facilitate those sales. For example, getting busted for possessing or selling one kilogram of heroin carries a sentence of 10 years to life.

“That’s why I think those weight numbers are in the complaint against him,” Weaver said. “They’re hoping these will trigger mandatory minimum sentences.”

The government also announced today that pursuant to this action, it has seized approximately 26,000 Bitcoins worth roughly $3.6 million, in what it’s calling the largest ever seizure of Bitcoins.

A copy of the complaint is available here (PDF). Apologies for not hosting it on my site, but when I did that earlier, the mad rush from Reddit readers melted my site.

Update, 3:02 p.m. ET: An earlier version of this story incorrectly stated that Ulbricht was charged with attempted murder. While the government’s complaint lays out that alleged conspiracy, it does not state that he was charged with attempted murder….yet.

Update, 5:47 p.m. ET: As Reuters reports, the price of Bitcoin digital currency dropped today, falling to $129 per bitcoin from $140 a day before.

Update, 11:52 p.m. ET: The law blog Popehat has got a great analysis of the charges against Ulbricht, and has even dug up a separate complaint (PDF) against Ulbricht released Oct. 2 by the U.S. District Court for the District of Maryland that levies many of the same charges, including attempted murder. According to this indictment, Ulbricht allegedly ordered what appears to be a separate hit. It looks like this is the other hit job Ulbricht allegedly copped to in the transcript quoted in the main story above: Investigators produced a chat log showing Ulbricht saying a previous hit he ordered only cost $80,000, and in this Maryland complaint says Ulbricht made two payments of $40,000 for this hit job. In this case, the “hit man” Ulbricht allegedly hired was an undercover federal agent.

138 thoughts on “Feds Take Down Online Fraud Bazaar ‘Silk Road’, Arrest Alleged Mastermind

  1. me

    I was trying to hit your site when you had that reddit meltdown…Wondered if you were under DDoS again or something…lol

    I’m blown away by the details of this dude and his hits and stuff, that’s insane! I don’t know how you can live life like that (I’d be constantly checking over my shoulder looking for the hits against me!)

  2. Hurrah

    BTW, the feds made a actual error: there is no “University of Pennsylvania School of Materials Science and Engineering.” Ulrich went to Penn State (Pennsylvania State University), which is in Happy Valley, PA. The University of Pennsylvania is a very different institution, and is in Philadelphia.

  3. SK

    Its just an incredible story. I know I accounted for one hit from Reddit to your site yesterday, but that court document made for an incredible read. It was actually fascinating to see how the Feds tracked down DPR and how sloppy he seemed to be in the early days.

  4. brb

    Does this indicate that Tor is not as secure / anonymous as people think? With the govt running many Tor nodes, and financing its development, this story concerns me. Not that people like this don’t deserve justice, but there are legitimate uses for Tor.

    1. Just Curious

      In order of your paragraph:

      (1) Yes, it does mean that. There have been some interesting studies done lately on the traceability of tor nodes, though generally you’d probably need to be specifically interesting for them to bother with anything of that nature. If you’re that specifically interesting to the US government, then it probably would not be in your best interest to rely ONLY on tor. Tor is not meant to be a be-all end-all anyway, nor is it meant to act as a substitute for hygiene (this goes for everyday users, activists, etc).

      (2) It probably should, but there are ways to mitigate this to some extent. As I said, it’s not an end-all be-all solution. One of the reasons the feds sponsor tor is because it is useful to them as well — not just defensively. Chances are the more you use it the more likely you are to come across either an evil node or a questionable node (I differentiate these somewhat; demonstrably some nodes sniff; demonstrably some nodes are run by the government; these do not always overlap; there are ways to limit your exposure to known bad nodes but you cannot protect yourself from all bad nodes).

      Tor is best if you use it for specific purposes and don’t use it all the time from the same location on the same computer. I believe the figures as they stand now are, a given tor user can be found within 3-6 months of use given various static factors (stuff your browser reports about your machine, etc). And this doesn’t include malicious stuff, man in the middle stuff, or specific targeted software like what was used on that child porn node, or things like CIPAV; your computer can betray you whether you use tor or not).

      (3) One of the few things I like about this case is, for I believe the first time I’ve seen in a court document, a federal agent has admitted there are legitimate uses for tor. While I am not a fan of this particular federal agent’s tactics/cases in some instances (look up Sabu/Monsegur’s case; he is/was the main agent involved), it was nice to see at least some nod to that fact coming from the US federal government. On the flip side, I find it kind of sad that I feel any need to nod at a federal agent for saying such a thing in a country where free speech is supposed to be free. Dark days.

      TL;DR: Tor is probably plenty safe for most people unless they’re really pissing someone off; even then it’s probably more or less sufficient unless you’re pissing them off for an extended period of time and you have poor opsec.

    1. greg

      As an old world dweller I have no ideea whom reputation might point this redandwhite alias.

      1. SK

        I second this. Who is this RedAndWhite reference? Brian? Can you offer any insight? RedAndWhite seems to be synonymous with Lord Voldemort at this rate.

  5. Lamarr

    The good old Reddit hug never fails to show its love.

  6. not me

    readandwhite -http://en.wikipedia.org/wiki/Hells_Angels

  7. CooloutAC

    so they were selling drugs out in public on their website. no wonder they got busted. Didn’t they realize after Jacob Applebaum fled the country to germany at one point that maybe TOR network is being watched by the authorities? Thats crazy lol.

  8. CooloutAC

    Pretty amazing story BK. They could make a movie on this one wow.

    1. DefendOurFree

      If I read this in a book, or saw it in a movie, I wouldn’t find the plot believable. Yet, here it is in real life.

  9. Name (required)

    Sad story, sad news, lesson learned, for creators of new silk road please always use encryption and delete all transaction details and adress after successfull transaction, its no point to store any details or logs. Plus maintain the server just locally not remotly.

    1. SeymourB

      Or you could learn to avoid performing illegal acts altogether.

      I know, that’s crazy talk…

      1. Name (required)

        In police state like USA everything is illegal. I am glad that i dont have to live there so I can live my life without gov spying on me.

        1. Some other name (Also required)

          Don’t worry, our government is spying on you anyway. In fact, because you don’t live here, it’s perfectly legal and probably encouraged. Enjoy your weekend.

          1. Name (required)

            Your gov doesn’t even know where my country is on map :D.

  10. Just Curious

    This guy got arrested because he was a kid who wanted to be a criminal. In fact a lot of people who get busted doing online things are kids who the feds paint as super-criminals. Teens and 20-somethings have grown up to believe in and desire supervillain/OG status. Feds want this and pursue this to advance their own careers and to justify the expansion of their powers.

    Some may indeed get away with a lot, and many get busted having fleeced quite a lot, but from what I have seen, there are very few actual professionals roaming around doing things. This guy got in over his head and then acted like the movies/books/media probably dictated people in such a situation “should act”. I think it’d make sense not to conflate American society’s desire to appear ‘tough’ and ‘gangsta’ and attribute it to people just because they do things that seem ‘tough’ or ‘gangsta’. Clearly this guy did not really know what he was doing. Being dissociated from it by it being online if anything only probably made it seem more like a game.

    It always makes me sad when people like this get busted — not because they do not deserve ‘justice’ or ‘jailtime’ but because I think in a lot of cases a great many of them are not hardened, and prison tends to harden them or make it impossible to do anything better with their lives. This story in particular bothers me because this is probably one of the most intelligent of these types I’ve seen arrested, and he obviously had a great amount of potential (and I understand his economic/philosophical leanings — when I say this I do not mean ‘working for the man’; he’d have done quite well in any entrepreneurial endeavour; he was a 20-something attempting what he probably thought of as economic activism, from all indications. And when you do things like he did for a while it tends to change you in a temporary sense… until you’re alone and it ends and then you go back to yourself and wonder ‘what the hell happened?’ — but by then it’s too late.

    I’m reminded of the story of Max Ray Butler, when I talk about lost opportunities. He broke some laws, he snitched (I am not a crook, tm Nixon, but I don’t approve of snitches), he did something stupid and pissed off a lot of companies and feds, he went to prison camp for a year or so, he came out gung-ho looking for legit work and noone would hire him, even at or below minimum wage — and he’d created basically one of the premier whitehat hacking tools of his time. When he couldn’t get work he wound up “having” to turn back to crime, which is precisely what happens to the bulk of people who have to walk around with a white-collar education and no ability to use their mind or talents and a felony tag hanging around their neck (most POs won’t even permit computer use — that includes use of a cash register at a McDonalds — to anyone who’s committed a computer crime these days).

    So in short, I feel bad for this guy. I feel bad for him because to some extent I think he let himself forget what he was doing was real, most likely, when it comes to the ‘murder for hire’ aspects, which I agree are egregious but which ultimately did not lead to anyone really getting hurt because, ironically, he wasn’t enough of a “real criminal” (like the ones he’ll meet in medium or higher security prison, because he’ll have no chance at minimum; I doubt he’ll get less than 10 years) to recognize he was being stung in the first case and conned in the second case.

    Ultimately he was a kid who wanted to play bad-ass, probably noone was more surprised than him when it worked, and he played the part because, well, he’s a geek — and a smart one — and it probably seemed like one hell of a GAME. Which doesn’t make it excusable but often leaves me questioning why there can’t be some sort of diversionary program for people with far more talent for science than sense for crime (and that doesn’t involve working for the government — which probably doesn’t happen much anymore anyway unless it involves snitching).

    1. Neej

      Did you know him? Seems pretty presumptious of you if you didn’t, just saying.

      In any case you cannot have laws that are deemed right or wrong based on the personality of anyone convicted under them. I’m no fan of current drug laws or victimless crimes in general (though clearly operating Silk Road is not what I would call a victimless crime when you take into account hitmen for hire and services and applications for theft) but it’s the law themselves that is the problem.

      1. Just Curious

        Does one need to know the person in question? In this case in particular, I think his public persona and his education speak somewhat for itself.

        Since everybody seems so gung-ho on Breaking Bad these days, let’s posit it’s a lot like Walter White’s days early on in Season One, minus the death-in-six-months-via-lung-cancer-so-‘must-provide-for-family’ (and honestly, for those who sympathised with him in the beginning, wasn’t that a big part of it — that and the fact that, just a little bit, most Americans could relate to the semi-powerless character who feels screwed over by the world?).

        Kids these days aren’t exactly being given the goods they’ve been told they’d get when they grew up — and by kids these days I’m talking those in their mid-ish 20s and below. Those of us who are a little bit older, but not old enough to have had “the dream” (be it a capitalistic one or a socialistic one — and note, there’s an interesting time-cross there; things were very interesting from the late 80s through the early 2000s, and almost all of the markets and politics (and related economies, criminal and non-criminal, changed accordingly) have seen a bit of both sides, and it’s debatable which is worse — having seen our parents having had that life and believing life is still like that now, only to watch our parents forced to have to go back to work when they should be retiring according to what Western society dictates (according to Western dictates; note that further east, they either never had that option, or else lost whatever value their pensions had and wound up begging or relying on their children, who can’t make ends meet themselves — which has ironically contributed to stronger families than in, say, the US, but at a great price, as well).

        “Kids these days” sounds like such a cliche, especially since the internet makes almost everybody act like or feel like a kid (again, or otherwise). By this I’m talking about the distancing of self from action, of talk online from talk offline — people saying or doing things they’d never do in person (either due to tact or due to common sense or because they’d get punched the hell out or go to prison).

        Do I have to know this guy to know that society is screwed up? Let me think. No, I don’t. My examples are provided amply via news stories that tabloids pick up and the net turns into memes or ‘mourns’ before returning to their own Facebook addictions.

        But this is just blah blah blah. Let me ask you this, because I don’t think you have to know this kid to know the answer to this: Do you believe that he would have done any of this in “real life”?

        In a lot of cases crime now happens because it’s a hell of a lot easier than getting by “in real life” — or just provides more entertainment — but most of the people who pull things off like this would never have gone down this route if the option didn’t exist to begin with.

        And it’s not like it was even his idea to begin with. Rewind to cypherpunks and google on BlackNet. For that matter, rewind to the early/mid-2000s when forums were more forward about “doing terrible things”.

        What people seem to want to forget is, a lot of this is about fantasy. It’s about a need for power that is innate to all primates, but which most primates learn as a matter of course but which Western Society has been removing from the act of ‘growing up’. I’m not talking about ‘know your place’; surely everybody should have the chance/opportunity to rise to the level of their competence and abilities. But when everybody thinks they’re getting shafted because everybody thinks they’re special… Then that’s a problem, because people who believe they’re being shafted tend to, most of the time, want to act out upon it, and there are very few socially acceptable ways to do that nowadays.

        So do I need to know this kid? Don’t all of us know a ton of these kids? Or adults for that matter? Fantasy is a whole lot easier than reality. And it’s easy to forget it’s for real when all you see is digital renderings and words — no real blood, no hands-on anything. Basically a lot of online crime — I’d even say the gross majority of online crime — is, while not recognized as such by most of the players, typically approached like one great big MMORPG — and by both sides, not just the ‘criminals’.

        The harder question is, what could the possible appropriate repercussions be for very real crimes that have lost the veneer of reality? Should they be the same or different as, say, a gang leader out on the street slinging drugs, bullying kids who rely on one another for physical protection in rough neighbourhoods, carrying weapons and killing people themselves? My question isn’t, should it be punished — my question is, is the current set of punishments appropriate and would they even matter?

        Usually when you pull away the curtain, most of these kids are freaked the hell out. They don’t get right back online and do stuff again once the real world repercussions are dealt out to them if they have the appropriate level of support in their community as well as the opportunity to work. There are exceptions to this, of course, but those aren’t the people I’m talking about.

        Was this guy really a super-criminal villain drug lord? Or was he just playing one online? For that matter, were most of the vendors major dealers? Generally, not really. And the funny part is, the feds will play this to try to help these people reach their potential to be the bigshots they see in the media, fantasize about when most would never have the means or motivation to deal in a big sense.

        The big secret to crime is, you don’t become a supervillain alone, and without the proper, very real, very hard to find connections, most people don’t. The feds pretend to be those connections, but in almost none of the cases I’ve read about or researched have any of them had the potential to hit upon those sorts of connections on their own unless they were blessed by an exceptionally uncommon stroke of pure, blind luck. And the ones that do have those connections probably aren’t going to stick their necks out in ridiculous ways like selling sixteenths to anonymous people online.


        1. Just Curious

          Let me correct myself: without those connections most people don’t *successfully*, and certainly not for any extended period of time.

      2. Just Curious

        I concur with you vis a vis the laws themselves being the problem, but I disagree with you saying sentences cannot vary depending on the personality of the person who commits them (or, presumably, their reasons for committing them, by extension). They do, all the time, and when they don’t we get things like outrageous mandatory minimums for small-time drug charges… but even then, they do, because there simply aren’t enough resources to charge and take to trial/settle every case that comes along. So they cherrypick cases, and they profile, and they very much decide what to pursue based precisely on things like personality (whether their interpretations of the presumed perpetrator’s personality is correct or incorrect is largely unsubstantiated and generally doesn’t even matter, which only makes this all the more egregious).

        1. CooloutAC

          I’m no hacker, but apparently you always need alot of fresh brain power to keep up. The truth is in this profession your over hill once your over 30 years old. Just like in most pro sports….

          1. CooloutAC

            I remember Bill Maher had this famous security expert on his show one day and they were joking about how hes over the hill at 34. I forget his name now some famous hacker. He protects alot of British and American companies, and he was saying how the main problem is only criminal organizations are the ones who recruit these 16 years olds. Gov’ts don’t but should.

            He got recruited at 16 by the Gov’t but he said it was lucky circumstances. 16 year olds are the ones the gov’t needs to be actively recruiting he said.

    1. SeymourB

      Except for all the users of SR who end up in prison.

      They’ll be moving on to a cellmate named Bubba.

    2. Just Curious

      Of course, the feds ultimately gain a ‘deterrence’ factor; by making both the smarter people and the fearful people go away, as well as encouraging fraud (ironically) by vendors only out to scam buyers. Basically they inject more doubt into the marketplace.

      Even if the charges go away, or nobody else gets charged via SR’s takedown, people will have a somewhat more wary view of marketplaces of this nature. There’s a reason there are very few serious English “carding” boards for this same reason (and a lot of middling to horrible ones, from a ‘criminal perspective’ — that is, a lot which are ripe with people who will be easy for the feds to infiltrate and bust, and/or take over, and yet few which probably merit the resources that will be spent on it — but will bump numbers up to look considerably impressive).

  11. Adrian

    No matter how technically advanced you are, it always seems to be ‘laziness’ that gives us away.
    The Silk Road site may be of a dubious nature, but when you consider that Govts wage war for oil, and much worse, this case is only about one bunch of crooks taking out their competition.
    The Govt are guilty of far far worse crimes than Silk road’s crime of (mostly) allowing people to get high on drugs.

    Really though, this is about money, who controls the money supply, and the money powers have scored a propaganda coup. We must hold our nerve, tighten up our security and Bitcoin’s robustness.
    The Best weapon the money power elites have is Propaganda and the best weapon the Bitcoin community have against that is soldier on and make Bitcoin more secure and more robust, tread very carefully, ensure changes are well tested, and no more Hitmen, though of course that’s going to happen.
    It happens with Cash, it’s going to happen with Bitcoin, but if we want the public to buy into Bitcoin we must realise the propaganda value of our actions.
    We are in a War, the people we are fighting have murdered hundreds of millions if not Billions for their money power supremacy.
    Expect more propaganda and negative press, lies and deceipt against bitcoin, attacks and exploits.
    Our Best defence is to remain calm and develop Bitcoin further, deliver to the public what the Money Powers want to take away, Liberty and personal Prosperity.

    Although none of us like paying fees, just as no one lkes paying Taxes but the fees are a mere penny or two, I’d like to suggest an increased transaction fee for the development of Bitcoin, just an extra Penny, or a fractional percentage on the exchanges, so that funds could be acrued for Bitcoin’s further development.
    IF a way could be found for this to be voluntary, optional, so much the better.
    If all clients had a setting to charge an extra penny, or even enforce a Penny transaction fee because many transactiosn go through free, that money could go to the development community for things such as Radio, TV and Billboard advertising.
    I know this sounds a bit like paying taxes, but it could be voluntary and in fact, if the exchanges agreed, it might not even need to be an increase at all, since the exchangs etc could simply agree to a fractional percenatge or a penny per transaction go towards Bitcoin development and advertising to counter the Propaganda waged by the Moneychangers.

    Another use of such fees might be Free Hosting for Bitcoin Businesses, or random Bitcoin rewards for startups.
    A bitcoin Lottery might be good, but how would you ensure that someone doesn’t just submit a million BTC addresses to ensure that they stand a larger chance of winning.
    Well, how about allowing senior members of the Bitcoin community to hand out Paper Bitcoins to members of the Public at lectures, like Money, and let them Redeem them, either as Bitcoin, or sell them for Cash.
    How about using those voluntary Taxes to fund those lectures. The Possibilities are endless.

    1. Just Curious

      I think you’ve effectively missed the entire point of Bitcoin, and I’d recommend you read up on the history of macroeconomics, with all due respect. 🙂 There was an abundance of reasons the creator of BTC wanted to remain anonymous; one of them had to do with decentralization.

  12. klzo

    I don’t want to play devil’s advocate but…

    “The government notes in its complaint that most of the drug pushers on the Silk Road sold packets of drugs for individual use”

    Yes indeed, and it’s totally the fed undercover agent who urged them to buy bigger amount of drugs.
    It seems it wasn’t easy to find 1 kilo of cocaïn even on Silk Road. One can wonder if the busted buyer could have purchase such an amount if it wasn’t for the FBI.

    I’m just saying.

  13. onewhoknows

    For those of you who don’t know, the Hells Angels are heavily filled with informants, which is why they get away with what they do. They are involved in international markets, including those of a “national security interest”. It doesn’t surprise me at all that someone tried to hire an Angel for a hit, no evidence of an actual killing, and voila, Ulbricht gets nailed by the feds. The feds tend to give them a pass on their domestic activities as long as they feed them info on, say, the drugs-for-weapons channels in Afghanistan. Think “The Departed” and Bulger for a pop culture version of this paradigm.

  14. swerner

    First of all, I enjoyed this article today more than any other articles posted by the news organizations of nationally prominence.

    Regarding the arrest of the college grad and owner of the “Online Criminal Empire” who may have thought he was so smart that he could get away with it, first thing came up to my mind was if he ever took a Ethics Course while in college (knowing that many engineering and science colleges require students to take it as mandatory). Well, it might not have helped an evil of this magnitude even if he took it.

    After graduation and some years of research work, Ross Ulbricht “chose” to be the KING of CORRUPTION by promoting, instructing, and encouraging people to do a variety of criminal activities without a shame all the while he was sucking up tons of sweet honey juice.

    As long as Ross Ulbricht was making tons of money, he didn’t care whether people were into all kinds of criminal activities. A king pimp!

    Irony is that Ross Ulbricht who regarded institutions and governments as the sources of authoritarian “power” house and wanted to create a place free of such power did exercise very the “power” he hated and wanted to stay away from:
    he hired a hit man to get rid of his unwanted. And he sounded like he had done it before.

    What all these tell us?

    Ross Ulbricht is a pimp, a man of hypocrisy and selfishness who tried to destroy the world into a evil’s rubble for his survival in wealth.

    They say that man’s character cannot be built over the night.

    “Who” raised this kind of dirty monster?

    1. CooloutAC

      He seems typical of most hackers. Scary to me because they seem to be getting more and more prevalent.

      After highschool, criminal organizations and foreign enemies and spies are more likely to recruit or influence your gifted and technical 16 year old son, then lets say instead of some security company.

      And they just feel they are superior beings and lose all empathy. And lets face it hard drugs like cocaine make you evil. Most people I should say, not everyone, become very conceded, paranoid, and see nothing wrong with taking advantage of others.

      Even the non malicious hackers, though, are pretty dam arrogant and rude, its no wonder the computer and software industry is suffering now a days. I don’t blame cell phones one bit, nor do i consider them a pc or software replacement. I actually prefer Indian Tech support agents. Theres a reason linux will never be popular, or why alot of these technical gurus put the word EVIL in their name…

      This guy Ubricht, imo, is just typical nerd in this culture that has formed in the past 20 years that resents society and is trying to bring it into chaos. Hillary has always said the internet is the greatest soft power in the world. He who controls the internet controls the world now. Think of the internet as a cyber barbarian age. Or wild wild west, where there were more devices and manuals on how to cheat, then honest gamblers, when people shooting each other was common, when towns became ghost towns…etc…..

      1. Jess

        Your a bit mistaken. hes a normal everyday person. anyone can use tor. anyone can setup a hidden service. anyone can run a server either locally or elsewhere. anyone can setup a website.. and someone a bit tech savy can setup the bitcoin interface for payments. he just happened to be the first/most successful to setup a drug trade website using that. i think youd be hard pressed to find anyone who, presented with the same situation and opportunity and with the necessary skill set who wouldnt setup that site. after all.. it cant be tracked. remember, its been live for 3 years. if there was a way to track it they would have done so long ago. something not on the tech side must have given him away, maybe carelessness and overconfidence.

      2. Frank Richards

        Largely because the criminals are more decent people than the security companies, let alone the government.

        It may be just me, but I strongly prefer an honest crook to a hypocritical slimeball. General Alexander should be in jail for perjury.

  15. indio007

    Shouldn’t you put a disclaimer up that you that this is an editorial? Someone tried to frame you using Silkroad so the conflict of interest appearance of bias is fairly obvious.

    You kind of showed your hand by your character assassination contained in the last paragraphs, and by your taking the gov’t unsworn complaint as proven fact

    In my experience, 90% of the accusations in a criminal complaint turn out to be lies in the end.

    1. BrianKrebs Post author

      Character assassination? How do you support this allegation? Give me a reason not to zero out your baseless comments.

      If you want to say the government can’t prove half of what it’s alleging, that’s fine. But my reporting what is in the complaint (and being very careful all over the story to note that these are allegations, not facts) hardly amounts to character attacks.

      And what makes you think I have anything against SilkRoad? My beef was with the individual asshat who sent me the drugs, not with SR itself.

      Get your facts straight before making such strong accusations.

      1. Jess

        Would be nice if you updated your story to point out price is back to where it was within 2 days. (at least as far as normal ranges go/seem to be going)

      2. Just Curious


        “And what makes you think I have anything against SilkRoad? My beef was with the individual asshat who sent me the drugs, not with SR itself.”

        Are you saying you didn’t (I’ll have to use the past tense, vis a vis SR)? This, to me, would be a good story.

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  17. indio007

    Just to drive the point home about gov’t lying in a complaint. They claim Silkroad collected 9.5 million in BTC.
    That is 90% of all BTC in circulation.
    Sorry that’s a stinking pile of BS.

    1. CooloutAC

      If i believed anyone other then hackers, suspect businesses, and arrogant computer nerds were using bitcoins, I might agree with you.

      Isn’t it true that at one point, only botnets had a chance of getting anything. Now apparenlty even a large botnet really has no chance of getting anything, but still better then most unless your a billionaire techy with a super computer.

      But these losers are still going to use their botnets for mining even if they don’t get much, because why not? which is still going to hurt networks and bandwith and peoples computers.

      I still don’t even completely understand how bitcoin works, its still over my head, I have to take peoples words for it like Steve Gibson when he tries to explain it. But I still can’t muster any sympathy for any delusional selfish nutjob who thinks its a money replacement, when most of society doesn’t even know what it is.

      1. Jess

        To both of you, 9.5 million would refer to USD value of the bitcoins at the time.

        @Cool, You yourself say you know nothing about bitcoins, yet here you are giving an opinion on them. have you ever known about a subject only to hear someone who knows nothing about it talk about it?

        para2: Completely inaccurate. Anyone with a cheap laptop could have earned bitcoins in the beginning. the rate at which bitcoins are found remains constant. so as more people start trying to get them, it becomes harder. what that means is that you needed a faster CPU. Over time, people discovered that GPU(graphics cards) could do the calculations far more efficiently, and so CPU mining was given up for GPU mining. Over time people discovered that they could have FPGA cards do the work even more efficiently. All the while the cost remained relative and vary affordable to anyone. Then there was one tech leap left. ASIC’s fully customized boards and chips designed for the single purpose of solving these problems. again its affordable but like anything sold over the net where people claim to design them, there is risk of fraud and failure. To be first in line for the next leap people had to take risks. For some it paid off.

        In regards to super computers. They are not designed for bitcoin mining. it would be like trying to play a video game that needs a high end graphics card on a old 1 core cpu from 10 years ago.

        People with big botnets discovered that they could use them to make bitcoins, but they did so when CPU’s were on their way out. ie. they missed the boat. they needed gpu mining(im sure a few did this, but this is already past its time as well, gpu mining is out) Of the few that did it and tried to use ‘pools’ they were all kicked out because they were costing the pool owners more in bandwidth then they made in % from them.

        If you ever gave anything a chance, You should look into bitcoin. There is a reason why so many tech people are interested in it. they understand it to some extent and see its potential. looking at it from the sidelines and saying ‘it wont work’ while at the same time saying ‘i dont understand it’ is silly. It has the ability to wipe out fees and money processors, to put you back in control of your money.

        Anyone with sufficient knowledge, an open mind and a willingness to look towards the future can see the potential of bitcoin and how its better then everything thats come before it.

        One final parting piece of info.. When i was learning about bitcoin, id learn something, id ‘find a problem’ with bitcoin.. id say to myself ‘omg this cant work!’ then a week later id find a solution and say ‘omg there was such a simple solution for this.. and its built in’. That happened to me several times… i learned to look for solutions and to think outside the box. The system works, and it will work far better in the future with more people. Play devils advocate with yourself, if you think ‘this cant possibly work’, then look for a way that it can work, youll be surprised.

    2. Just Curious

      While I agree with a lot of what you’ve said, and while I agree that they’ve no doubt conflated figures (and definitely hate how people assume ‘guilt’ based on ‘accusation’), a small nitpick: Bitcoins likely got reused quite a lot, especially on SR; Churn to come up with a (no doubt still inflated) number of imaginary dollars exchanged versus number of BTC are independent of one another. It could have been the same several tens of thousands of BTC; to the feds, it’s still x dollars (and yeah, I have an issue with that, myself, considering they seem to like to decide when money is or isn’t real based on when it is convenient or not convenient for them. Nothing new.

  18. DefendOurFree

    From TheHackerNews.com:

    “Seized $3.5 Million worth Bitcoins from Silk Road will be deposited in the U.S. Treasury”

    1. Just Curious

      Ugh, I just realized — it doesn’t matter if they see them as real or not; they will be used just like any other seized goods: In stings to bring down other people. Not news but it does make me wonder how much they’ve done this sort of thing before (eg MMORPG item sales/fraud), and how they quantify it?

  19. Some One

    Ok, just reading about this… Correct me if I am wrong but don’t bitcoins have a mechanism for tracking every transaction ever done with them built into them? That is the true source of long term income for miners – residuals on every transaction using a bit coin they have put into circulation.

    1. Jess

      If im understanding what your saying, your a bit mistake at the end there.

      Bitcoin has the ‘blockchain’ its essentially a list of all past and current ‘accounts’ that have had or have bitcoins in them. it allows the system to verify where the bitcoins came from and that they cant simply appear because someone wants them too. in the future when miners are no longer given bitcoins for solving blocks they will rely solely on transaction fees. The only fees they get from transactions are the fees included in the current block they solved. the fees they get have nothing to do with old blocks or old transactions. Anyone can get Asic mining hardware and start mining for a piece of the pie.( Though id recommend against it, have you seen the network hashrate? its exploding upward thanks to ASIC’s)

  20. scortbarcelona

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  21. pragmatist

    oh goody. Returning power of those drug routes to the cartels and government now. Gotta keep the prisons full. Pieces of shit, preaching out against drugs then run home to pop a vicodin and a xanax to mellow out. While they drop the gavel on others.

    1. Jess

      much like napster and file sharing , stopping it one way through one site wont change anything, but the Us govt is happy to wage the unwinable war on drugs.

      If the gov’t had half a brain between them they would make drugs legal, produce it themselves and tax the hell out of them. all the while doing studies on the negative effects and running ads that actually talk about the truth, treat people like adults and convince them why they shouldnt use drugs instead of insulting people with lies in ads. but the govt needs the peoples support and they cant just outright do a 180 on drugs, or they wont get into office. Its one of those things thats going to take a long time to happen.

  22. QHoster

    Silk Road 2.0 , and may be will take them 2-3 years to stop it again 🙂 May be they are preparing version 3.0 as well …

  23. zeppe mina

    this is just another time we let the system take over our rights, as human beings, not letting us decide what we want to do if there’s no wrong done to a brother. this is just another example. another brick in the wall of ignorance.

    peace dpr

  24. Lasher

    Its a shame that Dread got caught. The Silk Road offered recreational drug users the decision to purchase drugs from reputable wholesalers without any fear of being ripped off, and a control which kept the ones who treated customers poorly out on the street where they belonged. With that being said, I cant say I stand for the right to be a thief or murderer (unless your Easy E) where the whole idea is to keep people safe and Tor’d.
    Dont worry Dread, you will survive! Fed prison is one million times better than state pen. Email me and I’ll give you survival tips. Here, this first one is free: Become a Muslim

  25. Charles Kluge

    I have long been a fan of this site, and have reccomended it to many folks. But I was saddened to see both the appearance of the article regarding the prosecution of an individual related to an online shopping center,as well as the headline that claimed that the shopping center was a “fraud Bazaar”.

    Both the word bazaar and the word fraud seem to be some sort of negative editorial comment regarding the online store. Using the word bazaar functions in the same way that calling certain militia leader “generals” and other militia leaders “warlords” .

    But the word fraud seems to be particularly inappropriate.
    And the use of it is the reason why this article is editorial.
    Worse, the contents are in part a regurgitation of the most shocking and muck-racking garbage published everywhere else
    And most embarassingly, like some weekly expected gimmick joke in a bad sit com – there’s the part where Mr Krebs himself recounts how his personal life was almost negatively affected by the denizens of his columns.

    And no mention whatsoever of what is happening on the SR forums , or the new site’s ramp up.
    Just a dash of FUD against the sellers and dealers as a favor for a LEA buddy/source.

    It makes me sad, I was hoping for a more enlightened reaction or article if one had to be written at all.


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