Gawker Ross Ulbricht/Silk Road Archive

 

Meet Silk Road’s Alleged Drug Lord: A 29-year-old California Geek

162.08K

Filed to: DIGITAL UNDERGROUND

The owner of the underground drug market Silk Road was a 29-year-old Libertarian engineer living in San Francisco raking in over $80 million in 2 years, according to the indictment revealed today. Who is the man behind the biggest underground drug market, and how did he get caught? The indictment lays out a detailed account of how Silk Road grew and how FBI agent Christopher Tarbell took it down.

According to the indictment, Silk Road was bigger than anyone had suspected: It boasted over $1.6 billion in sales from 2011-2013, which resulted in $80 million in commissions. (Researchers had previously estimated that Silk Road was doing about $22 million in total sales per year.) According to the indictment, which claims that FBI agents obtained a mirror of the server that housed Silk Road’s business from law enforcement in an unidentified foreign country, Ulbricht “alone has controlled the massive profits generated from the operation of the business.” He used some of the profits to pay a team of administrators as much as $2,000 a week each. And yet, he only paid $1,000 a month in rent for his San Francisco apartment, according to the indictment.

The most bizarre and spectacular allegation in the indictment is that Ulbricht solicited a murder-for-hire against a Silk Road user who was attempting to blackmail him. The user, FriendlyChemist, told Ulbricht—whose alleged online persona was “Dread Pirate Roberts,” or DPR, a reference to the film The Princess Bride—that he had obtained a list of thousands of Silk Road users and was going to release them unless DPR paid off his $500,000 debt to another user, RedandWhite. Instead of paying the debt, DPR contacted RedAndWhite and paid him $150,000 in Bitcoins to off Friendly Chemist.

“In my eyes, FriendlyChemist is a liability and I wouldn’t mind if he was executed,” DPR wrote. DPR even tried to bargain down FriendlyChemist, messaging: “Don’t want to be a pain here, but the price seems high. Not long ago, I had a clean hit done for $80K.” DPR gave redandwhite the address of FriendlyChemist in British Columbia, and the indictment reports that redandwhite sent back photo evidence of the deed. But according to the indictment there is no indication the hit actually happened—”Although I believe the foregoing exchange demonstrates DPR’s intention to solicit a murder-for-hire,” Tarbell wrote, “I have spoken with Canadian law enforcement authorities, who have no record of there being any Canadian resident with the name DPR passed to redandwhite as the target of the solicited murder-for-hire. Nor do they have any record of a homicide occurring in White Rock, British Columbia on or about March 31, 2013.”

Currently the most-discussed aspect of the case on the Darknet is speculation on how Ulbricht got caught. Silk Road was hosted using the privacy-protecting Tor Network, and its brazen customers believed their digital tracks were hidden. But it appears that Ulbricht was tripped up by some security mistakes while promoting Silk Road in the early days. Tarbell found that the two earliest mentions of Silk Road were forum posts by a user called Altoid on the drug forum Shroomery.org and the semi-official Bitcoin Forum. Both were obvious astroturfing efforts to promote the Silk Road:

“Has anyone seen Silk Road yet?” goes one. “It’s kind of like an anonymous Amazon.com. I don’t think they have heroin on there, but they are selling other stuff. Let me know what you guys think.” Altoid was easily connected to Ulbricht by a post on the Bitcoin forum in which Altoid solicits programming help for a “venture backed bit coin startup” using the email address: Rossulbricht@gmail.com. From there, agents surveilled Ulbricht in real life and were able to match up his locations to locations used to log into the DPR account. They noticed that both Ulbricht and DPR were fans of the Libertarian Ludwig Von Mises Institute. And a key used to log into Silk Road’s administrator account was linked to another email address Ulbricht had used.

The feds also managed to gain access to servers belonging to Silk Road. They spied on the traffic in real time, determining that from Feb 2011 to July 2013 there were 2013 1,229,465 transactions on the site, and 957,079 total registered users. This raises the question of exactly how much information they have on Silk Road’s users, and whether more busts are to come. (Agents made over 100 undercover transactions throughout the investigation, according to the indictment.)

Browsing Ulbricht’s social media accounts show a pretty normal, nerdy guy. Ulbricht graduated from the University of Texas in 2006 with a degree in Physics and went to the University of Pennsylvania Pennsylvania State University for grad school, where he studied engineering and wrote a master’s thesis on “Growth of EuO Thin Films by Molecular Beam Epitaxy.” According to property records, he owned a home in State College, PA, which he sold in 2010 for $187,0000. Curiously, the indictment misidentifies his grad school as the University of Pennsylvania.

He’s got a Facebook page full of beer pong pics and, of course, was a vocal supporter of Ron Paul, donating $200 to his campaign in 2007. “He doesn’t compromise his integrity as a politician and he fights quite diligently to restore the principles that our country was founded on,” Ulbricht told the Penn State student newspaper in 2008.

Last year in a YouTube video for the storytelling project StoryCorps with his friend Rene Pinnell. Pinnell, speaking to the Verge, was adamant about his friend’s innocence: “I don’t know how they messed it up and I don’t know how they got Ross wrapped into this, but I’m sure it’s not him,” he said.

Ross Ulbricht Found Guilty on All Counts in Silk Road Trial

25.34K

Filed to: SILK ROAD

Today, a jury found Silk Road founder Ross Ulbricht guilty of seven charges related to his alleged role in running the deep-web bazaar for drugs and other contraband. Ulbricht admitted in court to creating the site, but insisted that he sold it to another operator and left the business before the FBI arrested him in 2013.

Ulbricht’s trial has been a spectacle befitting an internet drug lord: in recent weeks, attorneys have presented transcripts with apparent Hell’s Angels about murderers-for hire, given wild theories about a fallen Bitcoin entrepreneur, and argued about the lexical power of emoji. Ulbricht’s defense hinged on the claim that he had been framed as Dread Pirate Roberts—the online pseudonym adopted by The Silk Road’s leader—because he made a “perfect fall guy” as the avowed founder of the site. (The defense attorney claimed that Ulbricht created The Silk Road as an innocuous “economic experiment” before the real kingpins took over.)

In the end, Ulbricht was found guilty on all charges leveled against him, including money laundering and drug trafficking. He will be sentenced on May 15. According to reporter Patrick O’Neill, Ulbricht faces 20 years to life in prison.

hashtag everything sucks@sarahjeong

Sentencing on May 15.

hashtag everything sucks@sarahjeong

As we left, an activist shouted, “Ross is a hero!”

hashtag everything sucks@sarahjeong

As we left, an activist shouted, “Ross is a hero!”

hashtag everything sucks@sarahjeong

Family is devastated. Mother said something about not being able to bring witnesses– doesn’t think this trial was fair.

[Image via AP]

Why You Should Care About the Silk Road Trial

45.77K

Filed to: SILK ROAD

Right now, a 30-year-old engineer is on trial for founding and operating an enormous online black market—the Amazon of drugs. The outcome of his trial could change the way we use the internet.

In 2011, it was possible to buy pretty much any illegal drug you desired on a single website—The Silk Road. Today (right now!), the United States is trying to put away Ross Ulbricht, the man they say ran the operation. This is more than just the trial of an alleged drug dealer: The outcome of this case will shape how the public looks at emerging technologies like bitcoin, online privacy, and the role of the federal government in policing the web. Motherboard put it well:

The case will address many issues that have never before been argued in a US court, and many believe it will set precedents for privacy and the extent to which the government holds people responsible for content on their sites and servers.

As the internet uneasily settles into its new role as as a global commerce hub and powerful driver of immense economies, governments have become increasingly aggressive in ensuring their interests are represented—even, and maybe especially, when it means betraying ideals of anonymity and freedom held dearly by the web’s early adopters.

If Ulbricht—a name to a face—goes down for the Silk Road—a drug market for the faceless—it’ll discourage a lot of would-be imitators who want a narcotics free-for-all, and represent the most high-profile way the internet’s promise of true anonymity has been undermined by the state. But if “Dread Pirate Roberts” eludes the FBI once again, it’ll make the darker corners of the internet a whole lot more confident to do what they please in the shadows.

Silk Road

Before Gawker’s Adrian Chen revealed it to the world, hardly anyone had ever heard of the Silk Road, and it flourished. You could browse the site pretty much like you’d browse any other e-commerce destination—so long as you were accessing it via an anonymous connection—buying as much or as little of your preferred narcotic from a wide variety of pseudonymous vendors. It wasn’t the prettiest website (screenshot below), but it was functional and straightforward.

What allowed the Silk Road to work was anonymity. It could be accessed only through Tor, a piece of software that allows encrypted, anonymous access to hidden websites around the world—perfect for both a foreign dissident and a drug dealer.

Silk Road was also quite possibly what popularized bitcoin, so perfectly suited for illicit transactions.

“Dread Pirate Roberts”: Silk Road’s Mastermind

Because of the collective anonymity of the site’s participants, it was impossible to tell who was in charge. The site’s administrator went by “Dread Pirate Roberts.” Feds say the man behind “Dread Pirate Roberts” is Ross Ulbricht.

Details gleaned after his arrest show a surprisingly ordinary man; certainly not someone who screams INTERNATIONAL DRUG MASTERMIND:

Browsing Ulbricht’s social media accounts show a pretty normal, nerdy guy. Ulbricht graduated from the University of Texas in 2006 with a degree in Physics and went to the Pennsylvania State University for grad school, where he studied engineering and wrote a master’s thesis on “Growth of EuO Thin Films by Molecular Beam Epitaxy.” According to property records, he owned a home in State College, PA, which he sold in 2010 for $187,0000. Curiously, the indictment misidentifies his grad school as the University of Pennsylvania.

He’s got a Facebook page full of beer pong pics and, of course, was a vocal supporter of Ron Paul, donating $200 to his campaign in 2007. “He doesn’t compromise his integrity as a politician and he fights quite diligently to restore the principles that our country was founded on,” Ulbricht told the Penn State student newspaper in 2008.

Nonetheless, police accuse him of making an enormous amount of money on the Silk Road:

According to the indictment, Silk Road was bigger than anyone had suspected: It boasted over $1.6 billion in sales from 2011-2013, which resulted in $80 million in commissions. (Researchers had previously estimated that Silk Road was doing about $22 million in total sales per year.) According to the indictment, which claims that FBI agents obtained a mirror of the server that housed Silk Road’s business from law enforcement in an unidentified foreign country, Ulbricht “alone has controlled the massive profits generated from the operation of the business.” He used some of the profits to pay a team of administrators as much as $2,000 a week each. And yet, he only paid $1,000 a month in rent for his San Francisco apartment, according to the indictment.

The Investigation

According to a detailed Wired account of the investigation, a DHS informant in Baltimore told the feds about Silk Road. Cops managed to identify site moderators and administrators, and started making arrests to get closer to Dread Pirate Roberts.

How did they pull that off? As Wired puts it, the “FBI’s Story of Finding Silk Road’s Server Sounds a Lot Like Hacking”:

As bureau agent Christopher Tarbell describes it, he and another agent discovered the Silk Road’s IP address in June of 2013. According to Tarbell’s somewhat cryptic account, the two agents entered “miscellaneous” data into its login page and found that its CAPTCHA—the garbled collection of letters and numbers used to filter out spam bots—was loading from an address not connected to any Tor “node,” the computers that bounce data through the anonymity software’s network to hide its source. Instead, they say that a software misconfiguration meant the CAPTCHA data was coming directly from a data center in Iceland, the true location of the server hosting the Silk Road.

Is Ross Ulbricht “Dread Pirate Roberts”?

Ulbricht doesn’t deny creating the Silk Road—just using it to sell drugs. On the first day of Ulbricht’s trial, Motherboard reports his attorney did not deny that his client founded the site:

However, while Ulbricht’s attorney Joshua Dratel admitted for the first time in court Tuesday that Ulbricht did create Silk Road as an “economic experiment,” he claims thedefendant passed the site to other administrators when running it became “too stressful” after just a few months in 2011.

But feds have a lot of evidence linking Ulbricht to the Dread Pirate Roberts drug baron identity.

Over at the Daily Dot, you can view a rough outline of what the FBI is trotting out against Ulbricht in court. Vast chat transcripts, screenshots from Ulbricht’s laptop, and internal Silk Road communiques are at the ready. Photos like this one, which law enforcement says was on Ulbricht’s laptop screen (the “mastermind” controls for Silk Road) when he was arrested in San Francisco:

Or this one (his strangely ample collection of fake IDs)—

—could go a long way in convincing a jury that he was indeed responsible for a criminal conspiracy to traffic narcotics around the globe and throughout the United States.

But it’s important to note that Ulbricht’s criminal defense doesn’t hinge on distancing himself completely from the Silk Road—simply showing that some other person (or persons) could have been operating the Dread Pirate Roberts persona, acting as the drug market’s chief administrator and leader. Proving that a single person is the sole operator of a pseudonymous internet account based on pseudonymous software channels will not be easy for the feds.

The Trial

Bitcoin is still so new, complex, and untested that it’s tough to explain what it isto a layman, let alone prove that it was instrumental in Dread Pirate Roberts’ global drug ring. To how many people could you stop on the sidewalk and easily explain the functionality of Tor? Even if the prosecution can provide a convincing argument that Dread Pirate Roberts and Ross Ulbricht are one in the same, can they prove beyond a reasonable doubt that this in itself was a crime, and not just an internet screen name?

But the verdict could change the way we use the internet—and the way the government regards it, too. The Silk Road trial is a simple drug trafficking case in some ways, but it’s also going to make us confront the difficult reality that just because certain online activities have managed to skirt or challenge established law so far doesn’t mean that the internet will forever remain a Wild West. As Woodrow Hartzog, an associate professor of law at Samford University and scholar at the Stanford’s Center for Internet and Society, put it:

Online black markets are likely to continue to be created and shut down. Yet this trial has also reminded us of the limits of technology. When the Internet was in its infancy, many thought online activity was also beyond the reach of the law. We’ve seen time and time again this is just not true. Bitcoin is a very powerful and interesting technology, but it is important not to overestimate innovation. It’s equally important not to underestimate how our offline actions can make us vulnerable online. Perhaps the most significant impact of this trial is to serve as a reminder not to be overly confident in online anonymity, particularly in the face of substantial resources.

Australian security consultant and fervent Silk Road analyst Nik Cubrilovic told me he thinks the trial has already altered the net, verdict aside:

Consequences of the Ulbricht trial are already being felt. They are good or bad depending on your viewpoint. First thing is that many vendors, users and market administrators who are less confident in their ability to shield themselves from federal law enforcement have given up. The administrators of Agora [another darknet market] are considered the most technically and security adept and they spent the 2 weeks [after November ’14 darknet raids by police]…in a complete state of panic.

Even having hidden markets like Silk Road raided—let alone prosecuted—has been enough to push copycats deeper underground, says Cubrilovic:

Gone are the days where starting a market was as simple as Googling ‘how to setup a tor hidden service’ and then installing some off-the-shelf market software. Those guys have all been arrested, and anybody with that lower level of skill has been scared away.

The End of Anonymous Browsing?

Most importantly, the FBI will be free to use the same, possibly illegal methods it employed to take down the Silk Road on future targets:

The FBI has also done a good job of keeping their methods and techniques close to their chest. There has been a level of cooperation here from the justice system and the presiding judge—what usually happens is that to convict someone or to grant them a fair trial the methods used in the arrest would have to be scrutinized. The pre-trial in Ross’ case concluded that the FBI didn’t have to reveal their server uncovery method – and even if it was hacking it would still be ok. This means law enforcement are free to apply the same methods again, they didn’t have to ‘burn’ their techniques.

This would be a huge win for any government apparatus that wants to decrypt the channels we’ve been assuming are safe—it wasn’t so long ago that Edward Snowden relied on Tor to protect his whistleblowing activity.

Security expert and CloudFlare researcher Marc Rogers sees two courses depending on the jury’s decision. If the FBI manages to convict Ulbricht, Rogers “suspect that the primary long term effect of this is that we will see further prosecutions of hidden Tor services.”

This means further attempts to de-cloak services which violate US law and that may lead to collateral damage as not all hidden services are illegal drug markets. Undermining one category of hidden services potentially undermines them all.

A not guilty verdict, however, “carries the most risk.”

Prosecutors and law enforcement are under immense pressure to “do something” about the underground drug markets. Failure to successful prosecute the single largest and longest running of these will almost certainly add fuel to the call for more and stronger laws to arm the justice department.

It was only a matter of weeks before Congress capitalized on the Sony hack to give the odious CISPA legislation another go. If the FBI can’t pry the darknet’s drug baron out of hiding, there’s every reason to expect it’ll just ask for scarier tools.

END–

HERE’S THE SECRET SILK ROAD JOURNAL FROM THE LAPTOP OF ROSS ULBRICHT

[](HTTP://FREEROSS.ORG/PHOTO-ALBUM/#PRETTYPHOTO </P> )

AS THE SAGA of the Silk Road has unfolded over the last four years, everyone has had an opinion about the unprecedented, billion-dollar online narcotics bazaar, from press to politicians to prosecutors. Even the pseudonymous mastermind of the site, the Dread Pirate Roberts, gave an interview and posted many thousands of words to the Silk Road’s users forum. The one voice that’s been missing, however, is that of Ross Ulbricht, the 30-year-old Texan accused of actually running the site from behind the Dread Pirate Roberts mask.

As Ulbricht faces trial on conspiracy charges that include running a narcotics ring, laundering money, and selling counterfeit IDs, a jury may now be hearing Ulbricht tell his story for the first time. The FBI has said it found a journal on Ulbricht’s laptop, seized at the time of his arrest. Those journal entries have been entered into evidence against Ulbricht. And they seem to detail everything from Ulbricht’s time growing psychedelic mushrooms in a remote Texas cabin to serve as the Silk Road’s first product, to his early days trying to code a stable website, to recruiting Silk Road staff and attracting a coterie of drug dealers.

Ulbricht’s defense team will no doubt challenge the authenticity of the journal entries. His lead defense attorney Joshua Dratel argued in his opening statement that Ulbricht had created the Silk Road, but gave it up after a few months and was only “lured” back to the site in 2013 to be framed by the real Dread Pirate Roberts. The defense hasn’t yet explained how the journals ended up on Ulbricht’s laptop, and declined WIRED’s request for further comment.

In addition to the journal, Ulbricht’s laptop also contained what seemed to be a log of daily activities, which is embedded at the bottom of this post below the long-form journal entries. The dates marked are those originally included in the text, and neither the journal nor the log is necessarily complete. Both are only the portions of text that have been admitted as evidence in Ulbricht’s case, and we’ll update the journal or log if more entries are added by the defense or the prosecution.

In the meantime, here’s Ulbricht’s story in—according to the Department of Justice, at least—his own words.

2010

I started the year in the middle of my stint with Good Wagon Books. Donny and I had worked on it the last quarter of 2009 and were trying to ramp up by hiring people to go door-to-door. It was a real struggle and by the end of our trial partnership, it was clear that we hadn’t grown the business to the point that it made sense for me to stay on. I also had an offer for a job from Peter and David that sounded great and I was ready to move on and work for them on their private equity venture. Unfortunately, they were all smoke and mirrors and after several weeks of them not returning my calls, I realized there was not an opportunity for me there. This was extremely discouraging. There I was, with nothing. My investment company came to nothing, my game company came to nothing, Good Wagon came to nothing, and then this.

I had to find a job quickly, so I turned to Craig’s List and found American Journal Experts. For the next six months, I edited scientific papers written by foreigners. It sucked. The hours were flexible, but it drained me. I hated working for someone else and trading my time for money with no investment in myself.

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Up to this point, I had been working on selling my rental house in Pennsylvania. It had helped me stay afloat with around $600/mo in cashflow, but finally the sale came to a close. I made about $30k off the whole thing, and could finally start trading again. I had been practice trading for a while and saw an opportunity to take my $30k and make it as a day trader. $30k isn’t alot to start with, and I didn’t get off to a very good start with my trading.

Around that time, another opportunity came into my life. Donny had gotten a job offer from his brother in Dallas to be the VP of sales at their milling company. He didn’t know what to do about Good Wagon, which he had grown somewhat to the point that he was making around $6k per month in sales. He made me an offer. 50% of the company and a $3k per month salary to take over and run the business going forward. I took the deal and we went to work on it. By the end of the year, we had our best month on record with around $10k in sales in December.

While all of this was happening, I began working on a project that had been in my mind for over a year. I was calling it Underground Brokers, but eventually settled on Silk Road. The idea was to create a website where people could buy anything anonymously, with no trail whatsoever that could lead back to them. I had been studying the technology for a while, but needed a business model and strategy. I finally decided that I would produce mushrooms so that I could list them on the site for cheap to get people interested. I worked my ass off setting up a lab in a cabin out near Bastrop off the grid. In hindsight, this was a terrible idea and I would never repeat it, but I did it and produced several kilos of high quality shrooms. On the website side, I was struggling to figure out on my own how to set it up. Driving out to Bastrop, working on Good Wagon, and trying to keep up my relationship with Julia was taking all of my time. By the end of the year, I still didn’t have a site up, let alone a server. I went through a lot over the year in my personal relationships as well. I had mostly shut myself off from people because I felt ashamed of where my life was. I had left my promising career as a scientist to be an investment adviser and entrepreneur and came up empty handed.

More and more my emotions and thoughts were ruling my life and my word was losing power. At some point I finally broke down and realized my love for people again, and started reaching out. Throughout the year I slowly re-cultivated my relationship with my word and started honoring it again.

My relationship with Julia was pretty rocky throughout the year. We even broke up for about a month and half toward the end. I couldn’t even tell you now why it was a struggle, or why we broke up. On my side, I wasn’t communicating well at all. I would let little things build up until I got mad. We eventually got back together and even moved in together, and it has been amazingly good since.

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 will tell me about it, unknowing that I was its creator. Good Wagon Books will find its place and get to the point that it basically runs itself. Julia and I will be happy and living together. I have many friends I can count on who are powerful and connected.

2011

still working on good wagon books and Silk Road at the same time. Programming now. Patchwork php mysql. Don’t know how to host my own site. Didn’t know how to run bitcoind. Got the basics of my site written. Launched it on freedomhosting. Announced it on the bitcointalk forums. Only a few days after launch, I got my first signups, and then my first message. I was so excited I didn’t know what to do with myself. Little by little, people signed up, and vendors signed up, and then it happened. My first order. I’ll never forget it. The next couple of months, I sold about 10 lbs of shrooms through my site. Some orders were as small as a gram, and others were in the qp range. Before long, I completely sold out. Looking back on it, I maybe should have raised my prices more and stretched it out, but at least now I was all digital, no physical risk anymore. Before long, traffic started to build. People were taking notice, smart, interested people. Hackers. For the first several months, I handled all of the transactions by hand. When they came into my local bitcoin client, I matched them up with the amount and time of the purchase and did all of the necessary account adjustments. Between answering messages, processing transactions, and updating the codebase to fix the constant security holes, I had very little time left in the day, and I had a girlfriend at this time! At some point, a hacker found some major flaws in my code. I sent it to him for review and he came back with basically “this is amateur shit”. I knew it too. I tried to work with him but I think he lost interest and since I wasn’t charging commission, I only had my shroom money to pay him with. Thankfully that quadrupled from bitcoin increasing in price, little did I know I could’ve cashed out at 8x higher for a total of 32x! That would have gotten me off to a hell of a start. As it was, I cashed out all the way up and all the way down. I called the peak, my timing was just off. In any case, I decided to rewrite the site in an mvc framework as suggested by my benevolent hacker adviser. So, while still manually processing transactions and responding to a bigger and bigger message load, I learned to use codeigniter and began rewriting the site. At some point around this time, I also learned how to host my own site and was on my own servers. I think I made this plunge because I wasn’t sure how much traffic freedomhost could handle, and I wanted control of my .onion domain. So, when I switched I posted a redirect from the old .onion to the new, ianxz6zefk72ulzz.onion. And yea, that was yet another learning curve, configuring and running a LAMP server, oh joy! But I was loving it. My ideas were actually working. Sure it was a little crude, but it worked! Rewriting the site was the most stressful couple of months I’ve ever experienced. I worked all day everyday, still processing transactions by hand, dealing with scammers, answering messages, meeting new strange people through my site and getting to know them. When I finally got the site ready, there were several new features including a tumbler and automated payment processing. The weekend of the switch was the peak of stress for me. Updating a live site to a whole new version is no easy task. You don’t realize how many little pieces lay on top of one another so it works just right (at least when you code poorly like my amateur ass was doing). So for about 48 hours it was stop and start on the switch, but I finally got there and it was working. It looked like I didn’t have to process the transactions manually anymore, but then the rot started. Some where, the site accounting wasn’t balancing, and I was losing hundreds of dollars every few hours. I started to panic. I tried everything I could think of, but couldn’t stop the bleeding. It was getting to be thousands of dollars and I was losing sleep and getting slow. I didn’t give up though. I rewrote the entire transaction processor from scratch and some how it worked. To this day I don’t know what the problem was. AND in addition to these stressors, Silk Road got its first press, the infamous Gawker article. When you look at the historical #s, you can see right when it happened. A huge spike in signups, and the beginning of an upward trend in commerce that would continue until the time of this writing, and hopefully for much longer. There was really a smattering of press at this time including the local news in FL! Most interestingly, two US senators came out against the site and against bitcoin. They made a big deal out of it and called for a shutdown of the site. I started to get into a bad state of mind. I was mentally taxed, and now I felt extremely vulnerable and scared. The US govt, my main enemy was aware of me and some of it’s members were calling for my destruction. This is the biggest force wielding organization on the planet. Eventually we got through it though and entered a more calm and harmonious phase, there were still the hackers and scammers, and occasional fuck ups by me when trying to add a feature of what not, but in general, working within the CI framework and getting a feel for linux allowed me to take it a little easier and get into a normal work rhythm. Some major advances were price pegging, vendor ranking, a more sophisticated feedback system, buyer stats, transaction logging, and building up the admin toolset. Most importantly, the market began it’s path to maturity. Vendors and buyers forged great relationships, more vendors came in to fill holes in the market, others competed and variety, customer service, and professionalism emerged. After making about $100k and up to a good $20-25k monthly, I decided it was time to bring in some hired guns to help me take the site to the next level. This would prove to be the biggest challenge I had ever faced. I actually got to see a fairly wide range of employee types. SYG, the schmoozer who winds up being a waste, DA, the model employee. Super enthusiastic, hard working, and trainable. Then there is utah, professional who does it for the money. Get’s the job done, but his heart isn’t always in it. First I put up an ad for a system administrator. I needed someone to help me take the back end to the next level in security. I had many candidates duke it out in the forum on many topics from os to isolation to software to security. In the end, I made what I thought was a wise decision. Looking back, I picked the most vocal one who also was on board ideologically. At first he was very good, giving me lots of advise and helping me upgrade the server’s security. We spent many hours on torchat configuring the server. We ran it on FreeBSD for the first time and it actually ran pretty well. Getting it set up was a total disaster, though. My host had suddenly stopped paying his upstream provider and dropped it on me that in a few days they would shut off the server. Luckily I had a backup and a spare server ready to go, so we decided to setup freebsd and run it. It was a trial by fire, but we eventually passed. The site was down for almost a week. You can see it die on the historical charts. For the next 3 months, SYG had my full attention. I was basically at his mercy because he knew FreeBSD and I didn’t. We kept trying to implement different solutions, but he just kept dragging on and on. He was trying to get his bitcoin exchange thing going through the site at the same time and he just wasn’t giving the site everything he had. In the end, he milked me for the last few weeks and eventually I had to let him go. It was a really painful lesson, but one I hopefully won’t need to learn again. I eventually moved the site back to ubuntu where I am comfortable. At around the time SYG was falling out of favor, I started looking for someone new and utah was there. I gave him more and more responsibility and he gave me good time estimates and followed through on them. I was still working with SYG, so utah was set to work on rewriting the site. Around this time, Variety Jones showed up. This was the biggest and strongest willed character I had met through the site thus far. He quickly proved to me that he had value by pointing out a major security hole in the site I was unaware of. It was an attack on bitcoind. We quickly began discussing every aspect of the site as well as future ideas. He convinced me of a server configuration paradigm that gave me the confidence to be the sole server administrator and not work with someone else at all. He has advised me on many technical aspect of what we are doing, helped me speed up the site and squeeze more out of my current servers. He also has helped me better interact with the community around Silk Road, delivering proclamations, handling troublesome characters, running a sale, changing my name, devising rules, and on and on. He also helped me get my head straight regarding legal protection, cover stories, devising a will, finding a successor, and so on. He’s been a real mentor. Shortly after I met VJ, I started looking for a right hand man, an administrative assistant of sorts. Someone to answer messages, manage the forum and wiki, and eventually even dispute resolution. I found that man in Digital Alchemy, who was one of the original members of the site, and had been modding the forums for pretty much the whole time. There were lots of applicants, but for some reason DA stuck out as promising, and he has turned out to be invaluable. He quickly learned how to respond to messages and keep things running smoothly. Before long he was managing the forums, the wiki, the messages, the resolution center, scam prevention, and odd jobs for me like mini research projects and tedious tasks. He works his ass off and will eventually get burnt out, so I need to find him some help at some point.

12/29/2011

Chatted with VJ again today. Him coming onto the scene has reinspired me and given me direction on the SR project. He has helped me see a larger vision. A brand that people can come to trust and rally behind. Silk Road chat, Silk Road exchange, Silk Road credit union, Silk Road market, Silk Road everything! And it’s been amazing just talking to a guy who is so intelligent and in the same boat as me, to a certain degree at least. So, today we talked mostly about the exchange, what to charge, boundary conditions, etc. Then I went for a surf with Billy Becket. Caught a couple of good waves, chatted with him took some wipe outs and went in. Soon after, I ran around the city with Ashley and Kelly. We drank some beer, walked around the city and botanical gardens. I then went out with Jessica. Our conversation was somewhat deep. I felt compelled to reveal myself to her. It was terrible. I told her I have secrets. She already knows I work with bitcoin which is also terrible. I’m so stupid. Everyone knows I am working on a bitcoin exchange. I always thought honesty was the best policy and now I didn’t know what to do. I should have just told everyone I am a freelance programmer or something, but I had to tell half truths. It felt wrong to lie completely so I tried to tell the truth without revealing the bad part, but now I am in a jam. Everyone knows too much. Dammit.

January 1, 2012

Well, I’m choosing to write a journal for 2012. I imagine that some day I may have a story written about my life, and it would be good to have a detailed account of it. I did some work in the morning, can’t remember now exactly what it was, but it wasn’t long before I was responding to text messages and making plans to hang out on the beach. It was a holiday for everyone, so the beach was as packed as I’ve ever seen it. A teeming mass of humanity, helicopters flying overhead, waves crashing, a real spectacle. I was offered a ticket to a warehouse party by Nicole, but just couldn’t bring myself to accept. I just was not in the partying mood. George also invited me to join him camping for 2-3 nights. I wanted to go, but the swell is low and it’s just too much time away from Silk Road, and there is so much to do before the rents get here, and before I leave for Thailand. I need to get DigitalAlch set up handling the resolutions, and it just seems like Variety Jones gives my broad sweeping tasks on a daily basis. Emma, Jessica, Cally, Kim, Tim and a couple others, Mike, were all on the beach with me. Playing paddle ball and soaking up the sun. I’ve been thinking a bunch about what is next for me. I like my little life here in Bondi, but what if I love Thailand, or want to go on even further? I don’t want to go backwards, and while I could see a lot more in Australia, I’m not even taking the opportunities that are coming up as it is. I need to find a place I can work from. Cheap and off the beaten path.

Ulbricht Log by Andy Greenberg

Feds Seize Silk Road, Everybody’s Favorite Illegal Drug Website

Once upon a time, you could sign on to Silk Road and buy everything from LSD to Moon Rock molly with Bitcoin. That time is now over because the FBI along with a few other federal agencies have seized the domain and shutdown the drug-dealing site. The only question is, what took them so long?

Silk Road found its way into popular culture a couple of years ago when Gawker’s Adrian Chen a big exposée on “the site where you can buy any drug imaginable.” Chen made the point that it wasn’t just illegal drugs that were being sold on the anonymous black market site. But when you look at the criminal complaint, it’s pretty obvious that it’s the drugs the Feds are interested in.

The Criminal Complaint

Indeed, the very first count in the complaint is for “Narcotics Trafficking Conspiracy.” The complaint is filed against a Mr. Ross William Ulbricht, a.k.a. “Dread Pirate Roberts,” a.k.a. “DPR,” a.k.a. “Silk Road.” The second and third counts include “Computer Hacking Conspiracy” and “Money Laundering Conspiracy,” and based on the numbers in the complaint, the scale of the operation was nothing less than severe. The complaint says that Silk Road did some $1.2 billion in sales, amounting to $80 million in commissions:

This was not run like your standard member of the Better Business Bureau, either. At one point, Ulbricht actually tried to hire a hit man to kill a Silk Road user and paid in Bitcoin:

And if you had any hopes that Silk Road was actually a safe place to buy massive quantities of illegal drugs, think again. The cops were on to this place a long time ago, and they had undercovers carry out over 100 purchases. They even tested the drugs, and the drugs were good:

Oh and just in case you were wondering, the FBI knows how nicknames work online:

By the way, this is all very inconvenient for the drug dealers that had money wrapped up in Silk Road. Once their money went into Silk Road’s coffers, its impossible to get out now that the Feds have control over the domain.

The Alleged Criminal

Ross Ulbricht, the 29-year-old man who was arrested under suspicion of being Silk Road’s ring leader, has a revealing online presence. Ulbricht’s LinkedIn profile describes him as an “investment advisor and entrepreneur” in Austin, Texas. Past employers include Pennsylvania State University and Good Wagon Books, a service that picked used books up from people’s houses. If you dig into his personal summary, though, it’s clear that Ulbricht had bigger plans. He wrote:

I want to use economic theory as a means to abolish the use of coercion and agression amongst mankind. Just as slavery has been abolished most everywhere, I believe violence, coercion and all forms of force by one person over another can come to an end. The most widespread and systemic use of force is amongst institutions and governments, so this is my current point of effort. … To that end, I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force.

Sounds a little bit like Silk Road, doesn’t it? It’s unclear when Ulbricht last updated his LinkedIn profile, but the most recent date listed—May 2011—suggests that it must’ve been not long after Silk Road was getting up off the ground.

For context, Chen’s Gawker piece was published in June 2011. The criminal complaint says that a Silk Road WordPress was registered on January 23, 2011, and a user by the name of “altoid” started promoting “an anonymous amazon.com” in various forums two days later. “Altoid” was later linked to Ulbricht’s Gmail address.

Ulbricht was also active and politically outspoken on YouTube. Six years ago, he wrote in the comments section of a video he’d uploaded:

We should leave the UN simply because being in it is not in our best interest. The UN is a governing body that, in some cases is supreme to the US government. It is not required to abide by the constitution, and many of its objectives are contrary to the constitution. It is a perfect vehicle for those who want to dominate the world and so far, that is what it has been used for. That is not to mention the well documented corruption and dishonesty.

So certainly something’s stirring in that active young mind of his. Just check out his latest activity on YouTube:

Like many Americans these days, Ulbricht also has a Facebook profilea Google+ page—tagline: “spunky, funky, not so chunky”—and a Twitter account he never uses. But this is hardly the last we’ll hear of Ross Ulbricht. Homeboy has a long and revealing trial ahead of him, one that we’ll watch with fascination.

 

 

The Underground Website Where You Can Buy Any Drug Imaginable

3.06M

Filed to: EXCLUSIVE

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 Silk Road.

About three weeks ago, the U.S. Postal Service delivered an ordinary envelope to Mark’s door. Inside was a tiny plastic bag containing 10 tabs of LSD. “If you had opened it, unless you were looking for it, you wouldn’t have even noticed,” Mark told us in a phone interview.

Mark, a software developer, had ordered the 100 micrograms of acid through a listing on the online marketplace Silk Road. He found a seller with lots of good feedback who seemed to know what they were talking about, added the acid to his digital shopping cart and hit “check out.” He entered his address and paid the seller 50 Bitcoins—untraceable digital currency—worth around $150. Four days later the drugs, sent from Canada, arrived at his house.

“It kind of felt like I was in the future,” Mark said.

Silk Road, a digital black market that sits just below most internet users’ purview, does resemble something from a cyberpunk novel. Through a combination of anonymity technology and a sophisticated user-feedback system, Silk Road makes buying and selling illegal drugs as easy as buying used electronics—and seemingly as safe. It’s Amazon—if Amazon sold mind-altering chemicals.

Here is just a small selection of the 340 items available for purchase on Silk Road by anyone, right now: a gram of Afghani hash; 1/8th ounce of “sour 13” weed; 14 grams of ecstasy; .1 grams tar heroin. A listing for “Avatar” LSD includes a picture of blotter paper with big blue faces from the James Cameron movie on it. The sellers are located all over the world, a large portion from the U.S. and Canada.

But even Silk Road has limits: You won’t find any weapons-grade plutonium, for example. Its terms of service ban the sale of “anything who’s purpose is to harm or defraud, such as stolen credit cards, assassinations, and weapons of mass destruction.”

Getting to Silk Road is tricky. The URL seems made to be forgotten. But don’t point your browser there yet. It’s only accessible through the anonymizing network TOR, which requires a bit of technical skill to configure.

Once you’re there, it’s hard to believe that Silk Road isn’t simply a scam. Such brazenness is usually displayed only by those fake “online pharmacies” that dupe the dumb and flaccid. There’s no sly, Craigslist-style code names here. But while scammers do use the site, most of the listings are legit. Mark’s acid worked as advertised. “It was quite enjoyable, to be honest,” he said. We spoke to one Connecticut engineer who enjoyed sampling some “silver haze” pot purchased off Silk Road. “It was legit,” he said. “It was better than anything I’ve seen.”

Silk Road cuts down on scams with a reputation-based trading system familiar to anyone who’s used Amazon or eBay. The user Bloomingcolor appears to be an especially trusted vendor, specializing in psychedelics. One happy customer wrote on his profile: “Excellent quality. Packing, and communication. Arrived exactly as described.” They gave the transaction five points out of five.

“Our community is amazing,” Silk Road’s anonymous administrator, known on forums as “Silk Road,” told us in an email. “They are generally bright, honest and fair people, very understanding, and willing to cooperate with each other.”

Sellers feel comfortable openly trading hardcore drugs because the real identities of those involved in Silk Road transactions are utterly obscured. If the authorities wanted to ID Silk Road’s users with computer forensics, they’d have nowhere to look. TOR masks a user’s tracks on the site. The site urges sellers to “creatively disguise” their shipments and vacuum seal any drugs that could be detected through smell. As for transactions, Silk Road doesn’t accept credit cards, PayPal , or any other form of payment that can be traced or blocked. The only money good here is Bitcoins.

Bitcoins have been called a “crypto-currency,” the online equivalent of a brown paper bag of cash. Bitcoins are a peer-to-peer currency, not issued by banks or governments, but created and regulated by a network of other bitcoin holders’ computers. (The name “Bitcoin” is derived from the pioneering file-sharing technology Bittorrent.) They are purportedly untraceable and have been championed by cyberpunks, libertarians and anarchists who dream of a distributed digital economy outside the law, one where money flows across borders as free as bits.

To purchase something on Silk Road, you need first to buy some Bitcoins using a service like Mt. Gox Bitcoin Exchange. Then, create an account on Silk Road, deposit some bitcoins, and start buying drugs. One bitcoin is worth about $8.67, though the exchange rate fluctuates wildly every day. Right now you can buy an 1/8th of pot on Silk Road for 7.63 Bitcoins. That’s probably more than you would pay on the street, but most Silk Road users seem happy to pay a premium for convenience.

Since it launched this February, Silk Road has represented the most complete implementation of the Bitcoin vision. Many of its users come from Bitcoin’s utopian geek community and see Silk Road as more than just a place to buy drugs. Silk Road’s administrator cites the anarcho-libertarian philosophy of Agorism. “The state is the primary source of violence, oppression, theft and all forms of coercion,” Silk Road wrote to us. “Stop funding the state with your tax dollars and direct your productive energies into the black market.”

Mark, the LSD buyer, had similar views. “I’m a libertarian anarchist and I believe that anything that’s not violent should not be criminalized,” he said.

But not all Bitcoin enthusiasts embrace Silk Road. Some think the association with drugs will tarnish the young technology, or might draw the attention of federal authorities. “The real story with Silk Road is the quantity of people anxious to escape a centralized currency and trade,” a longtime bitcoin user named Maiya told us in a chat. “Some of us view Bitcoin as a real currency, not drug barter tokens.”

Silk Road and Bitcoins could herald a black market eCommerce revolution. But anonymity cuts both ways. How long until a DEA agent sets up a fake Silk Road account and starts sending SWAT teams instead of LSD to the addresses she gets? As Silk Road inevitably spills out of the bitcoin bubble, its drug-swapping utopians will meet a harsh reality no anonymizing network can blur.

Update: Jeff Garzik, a member of the Bitcoin core development team, says in an email that bitcoin is not as anonymous as the denizens of Silk Road would like to believe. He explains that because all Bitcoin transactions are recorded in a public log, though the identities of all the parties are anonymous, law enforcement could use sophisticated network analysis techniques to parse the transaction flow and track down individual Bitcoin users.

“Attempting major illicit transactions with bitcoin, given existing statistical analysis techniques deployed in the field by law enforcement, is pretty damned dumb,” he says.

Ross William Ulbricht lived at Bondi while allegedly developing billion-dollar drugs website Silk Road
CAROLINE MARCUS, The Sunday Telegraph
October 5, 2013 7:00am

THE man accused of masterminding billion-dollar drugs website Silk Road was living in Bondi Beach while developing the site, The Sunday Telegraph can exclusively reveal.

Ross William Ulbricht, 29, was arrested while using his laptop in the science fiction section of a San Francisco library by FBI agents and charged with narcotics trafficking, computer hacking and money laundering.
Silk road ‘pirate’ wanted to change the world and get around government ‘coercion’
According to documents filed in the Southern District Court of New York, Ulbricht established the site – described by FBI prosecutors as “the most sophisticated and extensive criminal marketplace on the Internet today” – in January 2011 and was running it up to late September 2013, when he was nabbed by police.

Accused mastermind of drugs website Silk Road Ross William Ulbricht with his sister Cally. Picture: Facebook
The timing places him in Sydney during the site’s early stages, with a local friend saying he spent about six months in the city in 2011, during which he lived in a share house in Bondi Beach.
Ulbricht yesterday appeared calm at a bail hearing in a US federal court, wearing red prison clothes and shackles. His lawyer yesterday denied the charges against him.
US man denies charges in Silk Road case
A Sydney friend said he was “absolutely gobsmacked” to learn of Ulbricht’s double life.
“He’s the nicest guy,” the friend said. “He said he was a programmer consulting in projects and you could do it from anywhere on the road on laptops. I’m totally spun out.”
The accused’s sister, Cally Ulbricht, still lives in Bondi. She’s not linked to her brother’s activities. Authorities claim Ulbricht ran the Silk Road Hidden Website under the alias “Dread Pirate Roberts” from the movie The Princess Bride.

A still of the Silk Road website shows thumbnails for products allegedly available through the site. Picture: AP

Ads by Kiosked

The site functioned as a black market bazaar for drugs, brokering more than $1 billion in transactions for illegal drugs and services such as computer hacking and the sale of fake IDs and passports.
Ulbricht is also alleged to have hired a hit man for $160,000 to kill a blackmailer who threatened to expose users of the site.
Closure of black market Silk Road website will devastate some elderly Australians
In a separate indictment in Maryland, police claim he told an undercover police operative posing as a drug dealer he would pay him to torture and kill a former employee he believed stole money from the site.
Almost one million people used the site from around the world, including Australia.
Police swooped on Ulbricht while he was chatting on his laptop with a cooperating witness about Silk Road and taken into custody.

This artist rendering shows Ross William Ulbricht, second from left, appearing in Federal Court with his public defender Brandon LeBlanc in San Francisco on October 4, 2013. Picture: AP
He was allegedly brought down when an amateur user on the tech site Stack Overflow asked a technical question and Ulbricht answered that the user could go to his website Silk Road, inadvertently using his real name.
One minute later, he changed his name to “Frosty” on the site, but not before the slip-up caught the attention of the FBI.
Authorities then allegedly matched codes in Ulbricht’s answer to trace the website back to him.

If convicted, Ulbricht faces a lengthy jail sentence.
Ironically, he penned a lengthy post on his Facebook page on the subject of freedom back in July 2010, before he is alleged to have started the website.

The price of Bitcoins has continued to fall after it dropped to 8.6 per cent following a raid on Silk Road, the online marketplace that allegedly allows illegal drugs and illicit services to be bought using the virtual currency. Picture: Getty Images
“Is it possible for someone locked in a cage to be freer than someone who isn’t?” Ulbricht wrote. “What if they are free from limiting beliefs and can imagine experiences without limits, while the other limits themselves to a prison of dull routines?”
Ms Ulbricht did not return calls.

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