Friday, May 29, 2015

Silk Road Mastermind Reportedly Sentenced Life In Prison

Ross Ulbricht

Facebook / Via Facebook: Free-Ross

Ross Ulbricht, 31, the mastermind behind the darknet marketplace Silk Road, was sentenced to life in prison in federal court Friday.

Silk Road

What is the Silk Road?

In 2011, Ulbricht created the website as an online marketplace where people could buy whatever they wanted anonymously. He managed the website under a number of anonymous handles, the most well known being “Dread Pirate Roberts” after the popular character from the movie The Princess Bride.

The site operated on the anonymous internet or “darknet,” only accessible by using the encryption software TOR — an acronym for the program standing for “The Onion Router” to reflect the layers of security. All transactions on the Silk Road were completed using Bitcoin, the well known crypto-currency.

In a journal entry introduced in court, Ulbricht wrote, “In 2011, I am creating a year of prosperity and power beyond what I have ever experienced before. Silk Road is going to become a phenomenon and at least one person is going to tell me about it, unknowing that I was its creator.”

How Silk Road Blew Up

The online bazaar became like an Amazon for dealing drugs and other illicit goods. Several thousand vendors sold LSD, heroin, cocaine, marijuana and other drugs anonymously.

In a June 2011 profile of the site, Gawker’s Adrian Chen wrote, “Making small talk with your pot dealer sucks. Buying cocaine can get you shot. What if you could buy and sell drugs online like books or light bulbs? Now you can: Welcome to the Silk Road.”

Federal investigators said there were more than 1.5 million transactions on the site; evidence presented by the government at trial showed that Silk Road generated more than $213 million in revenue between January 2011 and October 2013.

Vocativ reports that marijuana sales accounted for more than $46 million on Silk Road, while heroin sales were worth about $8.9 million.

Ulbricht himself took commission on every deal, amassing a fortune of more than $18 million in Bitcoins before the feds started to close in.

Ross Ulbricht

Facebook / Via Facebook: Free-Ross

The Bust of Dread Pirate Roberts

In October 2013, Ulbricht was arrested by the F.B.I. He was apprehended in a San Francisco library and his laptop was seized while logged in to the Silk Road as Dread Pirate Roberts.

He was charged with seven federal counts including narcotics trafficking, computer hacking and money laundering.

He was also accused of soliciting the murders of six people he believed were threats to the site’s business. At trial, the prosecution said there is no evidence that the murders actually took place or anyone was harmed.

Lyn and Kirk Ulbricht (back R), parents of Ross Ulbricht, speak to journalists after his conviction in Lower Manhattan, New York February 4, 2015.

Reuters Staff / Reuters

The Trial of Ross Ulbricht

At trial, Ulbricht pleaded not guilty to all the charges.

His lawyer argued that Ulbricht created the Silk Road as an “economic experiment” but then turned the site over to others when it became too popular for him to manage.

“He created it as a completely freewheeling, free-market site that could sell anything except a couple items were harmful,” Dratel told the jury.

Dratel said that after giving up the site Ulbricht was eventually lured back as a “fall guy” when the investigation heated up.

The prosecution said that the Silk Road was Ulbricht’s “baby” and promised to show the jury “a mountain of evidence” that proved that he was the owner and operator of the site.

“His idea was to make illegal drug deals as quick and easy as ordinary online shopping,” the government told the jury.

After Ulbricht was busted, the office of Preet Bharara, U.S. attorney for the Southern District of New York, said that private messages from Dread Pirate Roberts matched evidence recovered from Ulbricht’s laptop. “This evidence, therefore, connects Ulbricht in the real world with Dread Pirate Roberts in Cyberspace.”

In court, the prosecution cited the journal entries that Ulbricht kept while building and running the site and a college friend of Ulbricht, Richard Bates, testified that he told Bates about the project after seeking his help with programming.

“He shared with me that he created and ran the Silk Road website,” Bates said.

The prosecution illustrated the alleged murder-for-hire plots during the trial. They argued Ulbricht solicited the murders, “to retaliate against a former staff member who he believed had stolen Bitcoins from the site and who he feared would provide information about the site to law enforcement, and to eliminate the threats posed by others who were threatening to publicly leak the names and addresses of Silk Road users and vendors.”

In one example, prosecutors said that in 2013, Ulbricht paid Silk Road user Redandwhite to kill user FriendlyChemist, who had threatened to publicize real names and addresses of site vendors and customers unless Ulbricht gave him $500,000.

In his closing argument, prosecutor Serrin Turner told the jury that Ulbricht use his “dark corner of the internet” and “made it easier for drug dealers to get users hooked, users from all over the world.”

In February 2015, Ulbricht was found guilty on all seven counts. The jury deliberated for three-and-a-half hours. The charges against him demanded a sentence of at least 20 years.

Ulbricht didn’t testify at the trial. Prior to sentencing, he broke his silence in a letter to the judge.

“I’ve had my youth, and I know you must take away my middle years, but please leave me my old age,” Ulbricht wrote, pleading for leniency.

“Please leave a small light at the end of the tunnel, an excuse to stay healthy, and excuse to dream of better days ahead, and a chance to redeem myself in the free world before I meet my maker.”

Max Dickstein stands with other supporters of Ross Ulbricht, the alleged creator and operator of the Silk Road underground market, in front of a Manhattan federal court house on the first day of jury selection for his trial on January 13, 2015 in New York City.

Spencer Platt / Getty Images

What Happens Now

After Ulbricht was found guilty, Bharara said the verdict, “should send a clear message to anyone attempting to operate an online criminal enterprise.”

“The supposed anonymity of the dark web is not a protective shield from arrest and prosecution.”

In a bizarre twist in the story, two governments agents involved in the investigation of Silk Road were indicted on federal charges from the bust of Ulbricht.

DEA agent Carl Mark Force and Shaun Bridges, who worked for the Secret Service, stand accused of money laundering and wire fraud in connection with actions during the investigation.

Both men were part of a Baltimore-based task force that investigated Ulbricht separately from the Manhattan group. Following their indictments, Bharara said that their operation was separate from his office. The defense attempted but was unable to introduce details of the Force investigation at Ulbricht’s trial.

During the Baltimore group’s investigation, Force allegedly made contact with Dread Pirate Roberts under several fictitious user names not sanctioned by the government, communicated with him using encrypted messaging, and attempted to extort $250,000 from Ulbricht in exchange for withholding secret information from the government.

According to the complaint, during the investigation Force deposited $776,000 in misappropriated Bitcoins into his personal accounts and Bridges diverted $800,000 in his.



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