Looks like the government shutdown didn't stop federal agents from shutting down the most popular "deep web" illegal drug market. In San Francisco, federal prosecutors have indicted Ross William Ulbricht, who is said to be the founder of Silk Road. The internet marketplace allowed users around the world to buy and sell drugs like heroin, cocaine, and meth.
The government announced that it seized about 26,000 Bitcoins worth roughly USD$3.6 million, making this the largest Bitcoin bust in history. There were nearly 13,000 listings for controlled substances on the Silk Road site as of Sept. 23, 2013, according to the FBI, and the marketplace did roughly USD$1.2 billion in sales, yielding some $80 million in commissions.
According to the complaint, the service was also used to negotiate murder-for-hire: "not long ago, I had a clean hit done for $80k," the site's founder is alleged to have messaged an associate.
Ulbricht, 29, is also known as "Dread Pirate Roberts."
Here is a copy of the criminal complaint [PDF]. Via Adrian Chen at Gawker, here's a text version.
To access Silk Road, users had to use the online anonymity tool Tor, and transactions were performed in the online P2P currency Bitcoin. Sellers' identities were hidden from buyers.
According to a study [PDF] by Carnegie Mellon University assistant professor Nicolas Christin, roughly $1.2 million in sales were conducted each month in early 2012.
The government's complaint says Ulbricht earned a bachelor's degree in physics from the University of Texas in 2006, and later attended the Pennsylvania School of Materials Science and Engineering. Feds ID'd Ulbricht after a routine border search intercepted a package containing 9 fake IDs, which had been shipped from Canada to a San Francisco address. Agents went to that address and found Ulbricht there.
Government agents identified the main Silk Road server and imaged its hard drive in July, which gave the federal government a previously unobtainable cache of information about the marketplace's operations.
The fact that Silk Road was a place where lots of people bought lots of drugs for lots of money is no secret. But some of what's alleged in the complaint is news, including the claims that Ulbricht was brokering the murders of his enemies. Here, he is referred to as "DPR," short for Dread Pirate Roberts.
j. Several hours later on March 29, 2013, DPR sent a message to "redandwhite," stating that is
"causing me problems," and adding: would like to put a bounty on his head if it*s not too much trouble for you. What would be an adequate amount to motivate you to find him? Necessities like this do happen from time to time for a person in my position."
k. After redandwhite asked DPR what sort of problem was causing him, DPR responded, in a message
dated March 30, 2013: 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
doesn't have to be clean."
1. 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 "nonwclean."
m. On March 31, 2013, DPR responded: "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."
n. Through further messages exchanged on March 31, 2013, DPR and redandwhite agreed upon a price of 1,670 Bitcoins — approximately $150,000 — for the job. In DPR's message confirming the deal, DPR included a transaction record reflecting the transfer of 1,670 Bitcoins to a certain Bitcoin address.
o. Several hours later on March 31, 2013, redandwhite wrote back: received the payment. . . . We know
where he is. He'll be grabbed tonight. I'll update you."
p. Approximately 24 hours later, redandwhite updated
DPR, stating: "Your problem has been taken care of. . . . Rest easy though, because he won't be blackmailing anyone again. Ever."
q. Subsequent messages reflect that, at DPR's request, redandwhite sent DPR a picture of the victim after the
job was done, with random numbers written on a piece of paper next to the victim that DPR had supplied. On April 5, 2013, DPR wrote redandwhite: "I've received the picture and deleted it. Thank you again for your swift action."
The federal criminal complaint states that the exchange captured above "demonstrates
DPR's intention to solicit a murder-for-hire," but also states that Canadian law enforcement authorities have no evidence that any such homicide occurred in White Rock, British Columbia on or about March 31, 2013.
It's of course also possible that the message exchange and the charges of paid assassinations made by the U.S. will prove to be not valid, when the case goes to trial.
More: Washington Post, Reuters, NYT.
Good background reading on Silk Road by Adrian Chen at Wired and Gawker.
(via Brian Krebs)
Previously on Boing Boing:
• "Using Silk Road: game theory, economics, dope and anonymity"
• "Cyber-crooks mail heroin to Brian Krebs"
this complaint against DPR suggests he routinely failed to follow his own best practices on privacy, anonymity and security.
— briankrebs (@briankrebs) October 2, 2013
the extent to which Silk Road underpinned the Bitcoin market is pretty amazing 1) https://t.co/UCVbWhp6Ad 2) https://t.co/nED5kpUq1X
— Adrian Chen (@AdrianChen) October 2, 2013