"Silk Road" Shuttered, Alleged Operator Arrested: Shutdown Government Still Managing To Destroy Honest Commerce [UPDATED with Soliciting Murder Accusations and How He Was Caught]

Terrible news for lovers of black market (that is, free market) commerce free of the watching eyes and clutching hands of government. Even shut down, the government manages to ruin things for everyone, having this morning, says The Guardian, shut down the "Silk Road" site for anonymous online commerce and arrested its alleged operator.

The bad news:

Police in New York say that a man has been arrested over the ownership and operation of Silk Road, a site which was used to sell drugs over the internet and which used Bitcoins for funding.

Ross William Ulbricht, who the police claim operated the site under the name "Dread Pirate Roberts" or "DPR", was arrested in San Francisco. Documents seen by the Guardian say that Ulbricht was in possession of 26,000 Bitcoins, worth approximately $3.6m.

Silk Road was normally reached via the Tor anonymisation network. 

The police complaint says that Silk Road was "a vast online marketplace responsible for the distribution of hundreds of kilograms of illegal drugs and other illicit goods and services."

Other online sources confirmed that the site now displays a message saying that it has been taken seized. One suggests that it is the domain for the site which has been seized, rather than the server itself.

Reason on Silk Road.

UPDATE: BBC is reporting some real crimes that Ulbricht is alleged to have committed: soliciting murder.

A second document alleges that private communications recovered from the Silk Road's computer server suggested the suspect had been willing to pursue violent means to defend his interests.

It said that messages sent in March and April indicated he had "solicited a murder-for-hire" of a Canadian Silk Road user nicknamed FriendlyChemist who had tried to extort money by threatening to release the identities of thousands of the site's users.

Subsequent messages indicated he had been sent a photograph of the victim after paying $150,000 to have the blackmailer killed.

"I've received the picture and deleted it. Thank you again for your swift action," Mr Ulbricht is alleged to have written to an assassin.

However, the court documents note that Canadian law enforcers have said there was no record of a homicide taking place in White Rock, British Columbia at the time.

UPDATE II: Of special libertarian interest, see this Reddit thread that connects the website of the Mises Institute with how Ulbricht was caught:

  • An agent involved in the investigation ("Agent-1"), found the first few references to SR on the internet from somebody only identified as "altoid", attempting to promote the site in its beginning days, in January of 2011.
  • In October of the same year, a user also going by the name of "altoid" made a posting on Bitcoin Talk titled "a venture backed Bitcoin startup company", which directed interested users to "rossulbricht at gmail dot com".
  • That email address is what led to DPR's downfall.
  • ---
  • After identifying "altoid", they started connecting the "DPR" identity to Ulbricht pretty quickly.
  • Ulbricht's Google+ page and YouTube profile both make multiple references to the a website dubbed the "Mises Institute". DPR's signature on the SR forums contained a link to the Mises Institute.
  • DPR cited the "Austrian Economic theory" along with the works of Ludwig von Mises and Murray Rothbard, all of which are closesly associated with the Mises Institute.
  • Server logs show that someone logged onto the SR administration panel from San Fransisco around the same time that Ulbricht was staying in San Fransisco.

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  • tarran||

    Fuck!!!!!!!!!!

  • ||

    I am in agreement.

  • Mr Whipple||

    There are alternatives. Many of the SR vendors are moving to other sites like

    "Black Market Reloaded":

    http://5onwnspjvuk7cwvk.onion

    and

    "Sheep Marketplace":

    http://sheep5u64fi457aw.onion

    It may take you a few tries to access the sites. They are getting a lot of traffic.

  • Hyperion||

    Well, we have to have our priorities, it's for the children.

  • Matrix||

    Another reason to start up a libertopian country that allows individuals and companies to host their sites without fear of government being able to seize data, domains, or anything else.

  • Hyperion||

    Then how will you know what is good for you, or how to think, if your betters are not telling you? Who's going to protect you from yourself in this libertopia?

  • db||

    Grenada, Panama, Libya, Iraq, Somalia, etc., might have some advice for an ambitious new country daring to do anything counter to America's wishes. They may point to, for example, North Korea and Iran.

  • Cytotoxic||

    Er. Those all had crazy people in charge or were just crazy (Somalia).

  • Calidissident||

    You don't think the Top.Men in our government would view a libertopian country as crazy?

  • Redmanfms||

    Grenada? Really?

    You're listing a violent Communist coup supported by a Cuban invasion that were using American college students as hostages as an example of "ambitious new country daring to do anything counter to America's wishes."

    If anything it stands as the only example of justified American intervention.

  • db||

    Regardless of the provocation, the reaction and effect are likely to be similar.

  • Gray Ghost||

    And that it came literally a day and a half after the Marines got their barracks blown up in Beirut, I'm sure was entirely coincidental. The coup happened four years prior; the fighting and second coup that occurred ~two weeks or so before the invasion was a power struggle between two sects within the overall Marxist New Jewel Movement. No matter who won, they were going to be tight with Cuba. Wiki says we ended up handing off power to the Governor-General, Paul Scoon, who definitely wasn't a Marxist.

    Reagan, Weinberger, et al, needed something to distract the public from the utter clusterfuck Lebanon was turning into, and we certainly weren't going to invade Lebanon and Syria to avenge the Marines. So, the U.S. picked Grenada. Bill Clinton learned from the best.

  • CE||

    Your anonymous currency = bad, enabling drug dealers and money laundering.

    US government anonymous currency = good. Only the people who use it for dealing drugs or laundering money are bad.

  • Matrix||

    why are drug dealing and money laundering bad?

  • kinnath||

    I guess it's good that I'm a boring, middle-aged guy with no bad habits.

  • waffles||

    I think this site is a plenty bad habit. Probably enough to get you some time in the camps.

  • SweatingGin||

    Other online sources confirmed that the site now displays a message saying that it has been taken seized. One suggests that it is the domain for the site which has been seized, rather than the server itself.

    With TOR, there isn't really a domain as such. It's a hash (IIRC) of the cert that is used for HTTPS, so it's not like a regular domain that can just be seized.

    Unless they managed to brute force the cert (TOR certs don't use huge keys, it's possible). I'd expect they got the physical server(s).

    Damnit. Throws a wrench into a few of the bitcoin/TOR services I want to put up.

  • Brett L||

    And it turns out the FBI funded TOR and had all the data on "anonymous" users all along.

  • tarran||

    I had lunch with one of the early heavy hitters involved in the development of TOR.

    She said that the U.S. Govt actually was an early provider of funds and assistance. The line she was fed was that the govt wanted a secure way to communicate with agents in countries with Internet monitoring.

    The protocol was publicized so that the U.S. intelligence traffic would be hidden in a larger set of traffic of porn and drugs etc usign the exact same protocol.

  • np||

    Yeah I've read that too and I think that is actually the official story of its origin. But people should probably shift to I2P or others. Many government endorsements or support of a technology should be viewed with suspicion now.

  • SweatingGin||

    Many government endorsements or support of a technology should be viewed with suspicion now.

    ^ Good point.

  • SweatingGin||

    It was the Navy, I believe, that funded TOR (it's public, right on torproject.org).

    I'm not sure I believe they can de-anonymize it. One non-compromised node (or compromised by a different attacker who doesn't cooperate with the other attacker) is enough to be safe from simple attacks. Maybe they can get a bit more of timing attacks in there, too, though.

  • SKR||

    there was still a website on a physical server somewhere.

  • np||

    Ulbricht's LinkedIn profile:
    http://www.businessinsider.com.....ge-2013-10

    I studied physics in college and worked as a research scientist for five years. I published my findings in peer reviewed journals five times over that period
    [ . . . ]

    Now, my goals have shifted. 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. The best way to change a government is to change the minds of the governed, however. 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.
  • db||

    I wonder how that meshes with his alleged hiring of an assassin?

  • Brett L||

    Well, I wouldn't say that's systemic. More like finding someone who wants a $150k life insurance policy claim on a given person more than the live person. Economic theory at work!

    Also, this guy is why libertarians can't have nice things or a seat at the big people table.

  • np||

    Well, first something is up with that story since despite having him confirmed it, no killing actually took place.

    But even if everything is true, the extortioner was not an innocent person. He was threatening the use of violence by the state--initiating the act of aggression--on other peaceful participants.

    Canadian Silk Road user nicknamed FriendlyChemist who had tried to extort money by threatening to release the identities of thousands of the site's users
  • db||

    "no record of a homicide taking place in White Rock, British Columbia at the time" doesn't quite add up to "no killing took place."

    One might imagine that the "proof" photo referenced was staged by investigators after they either stopped a murder they expected to take place or, more likely, after they set the whole extortion thing up in an attempt to get him to react violently, giving them an opening to take the whole operation down.

  • Andrew S.||

    If the murder solicitation actually happened, that seems the most likely reason for it.

  • db||

    That's what I meant. However, the murder solicitation may have come as a result of a fake extortion attempt by authorities designed to provoke a reaction. Even if the extortion attempt was real, if the authorities were into the network so deep they could read the operator's e-mail, they may have been decided to fake the assassination in order to put an end to the whole thing.

  • Free Society||

    The whole monopoly of courts has a chilling effect on the ability to have peaceful dispute resolutions. He couldn't exactly take the blackmailer to court could he?

    And since it seems his identity was revealed from association with an email account in his real name, I doubt this "Blackmailer" was anyone but a fed looking to add 'attempted murder' to the charges.

  • Gorilla tactics||

    Anyone know if he was some kind of Jim Bell type?

  • SKR||

    I'm guessing he justified it by thinking that he was not initiating aggression. He was being blackmailed supposedly.

  • waffles||

    This story has all the intrigue. I'm sorry I never once took a look at silk road even if I have no intention of trading. I guess when something like that gets casual mention in all manner of magazines it becomes too high profile for the government to not "do something". This is the general story for all manner of "operation webtryp" type operations. It simply becomes too public for the wrong sorts of people to ignore.

  • Juice||

    It was VERY risky and the prices were outrageous.

  • Gorilla tactics||

    silk road was napster, the tech will outrun the state. More competition, more websites and even more bitcoin type currencies will make it happen, im not that worried.

  • Cytotoxic||

    Well that sucks, but if he only got caught because he hired an assassin then doesn't that mean the central technology and MO of Silk Road can still work, even if it has to be rebuilt from scratch? I'd like to think Roberts has a backup plan and players who are now executing it to get Silk Road back up and running.

  • Hugh Akston||

    You notice how lately all of these whistleblowers, unauthorized merchants , and other world class criminals also get charged with secondary charges like child pr0n or rape or soliciting a murder that apparently never happened?

  • waffles||

    No? Are there other examples?

  • Hugh Akston||

    Well there was Julian Assange, and this guy.

  • Paul.||

    Yes. At least in the realm of these internet guys... if your site hosted child pornography, you're a pornographer. What people need to understand is that the internet has merely ushered in a new way for you to get charged with a crime. The feds aren't going away, and they're not going to loosen the screws until the whole thing is taxed and tightly regulated, or until the feds are toppled in a bloody, violent revolution.

    Those are the two paths that I see. Guess which one is the more likely?

  • Cytotoxic||

    What people need to understand is that the internet has merely ushered in a new way for you to get charged with a crime.

    Yes, that's all the internet has done. You get the stupid comment prize of the day.

  • Paul.||

    If you don't understand the nuance or point I was making, there truly is no help for you.

  • Cytotoxic||

    You have shitty communication skills.

  • Paul.||

    Coming from you, I do have to admit that's an epic insult. Well played, sir. Well played. It's like being called retarded by Corky Thatcher.

  • ||

    Allegedly.

    I, for one, don't automatically buy it.

  • Tonio||

    ^This. I haven't RTFA, but this is too convenient.

    So, either tarran's information was wrong (not a slam on you, bro), or they've found another channel for talking to their operatives.

  • waffles||

    I think this is the most righteous attempt to hire a hitman I have ever heard of. I mean it's still wrong in a moral sense. But he was trying to protect the identities of nonviolent offenders. I have difficulty defending murder-for-hire, even in this twisted drama. If this were fictionalized and made into a film people would probably have difficulty suspending disbelief.

  • Andrew S.||

    I wonder if this will have an effect at all on the value of bitcoins.

  • SweatingGin||

    Oh yea, at least for a little while:

    $107 now, was $125 - $130 for the past several days.

    Click the bar at the top on mtgox to see their price trending.

  • buddhastalin||

    BTC/USD has taken big, ugly hit, but I think that this is panic selling. I've owned stocks that have nosedived at the first whiff of some adverse government action, only to recover, sometimes completely, in the following days. Bitcoin has many legitimate, legal uses and is a concept bigger than Silk Road, so I expect it to survive. Thus to me, this dip is a buying opportunity.

  • Paul.||

    Yes, a panic hit from the... panic that the feds are simply going to shut the whole thing down. I'd say it's a reasonable panic.

  • Cytotoxic||

    No it isn't. It is impossible to shut down without a global EMP.

  • Paul.||

    Coming from you, I do have to admit that's an epic insult. Well played, sir. Well played. It's like being called retarded by Corky Thatcher.

  • Scruffy Nerfherder||

    Sad to say I called this one. When the FBI penetrated the Tor network and nailed the Freedom kiddie porno dude, Silk Road was the logical next target and a whale to boot. Too much temptation to pass on.

  • Steve G||

    Wonder what this bodes for the SR's two competitors

  • np||

    John McAfee’s plan to build a million tiny darknets, foil the NSA, & give everyone free music
    .. seems like a wireless mesh network with some security features though.

  • Broseph of Invention||

    Someone who isn't me was just looking at Strattera prices on Silk Road last night - $2/pill, versus $8/pill out of pocket at the pharmacy. That someone who isn't me may have to pay significantly more now, but at least the children are safe.

  • A Secret Band of Robbers||

    Fuck Strattera. Why would you touch that stuff?

  • Broseph of Invention||

    The doc is paranoid of prescribing stimulants. I just wasted two months on Wellbutrin. I've already made my mind up that Strattera won't work, but it'll cost me another $450 ($250 for the meds, $200 for the follow-up visit) of penance to the medical industry before I can help myself.

    But that Dread Pirate Roberts, helping people have individual autonomy to make their own choices, was such a bad dude.

  • A Secret Band of Robbers||

    Your best case is that it's mostly ineffective.

    My doctor decided it was time for me to try a non-stimulant medication. (It's not, of course. It's effectively a long-acting stimulant, but it has no abuse potential.) I was good for 2 1/2 months, then had brain damage that took a year and a half to heal. I will never again be as smart as I was before that adventure. It was literally the biggest mistake of my life.

    Stay. The. Fuck. Away.

  • CE||

    NYT calls Silk Road "an online drug market" in its headline.

    http://www.nytimes.com/2013/10.....-says.html

    In recent months, federal authorities charged seven people believed to be linked to Liberty Reserve, another virtual currency, which prosecutors described as a $6 billion money-laundering operation that facilitated a black market for everything from stolen identities to child pornography.

    Anyone who doesn't think BitCoin will end up the same way hasn't been paying attention.

  • Cytotoxic||

    Anyone who thinks BitCoin can end up the same way doesn't understand BitCoin.

  • Paul.||

    espoused Libertarian ideals and claimed that the use of Bitcoin in combination with Tor had stymied law enforcement and “won the State’s War on Drugs.”

    Oh you poor, poor, sweet, innocent and young bright-eyed kid. Welcome to the inside of a prison cell... for the rest of your life.

  • Cytotoxic||

    Well it did win against the state's war on drugs. Silk Road is down, but there are other sites doing similar things. They can't stop this.

  • Paul.||

    And it won't matter one whit to the judge who throws him in a hole. And the thousands of others who are being thrown into holes.

  • Cytotoxic||

    True but that wasn't my point.

  • db||

    Didn't there used to be a poster here who went by the name "altoid?"

  • Paul.||

    Not anymore, if you get my meaning.

  • Tony||

    I hope this rallies people in support of ending the brutal and pointless war on hitmen.

  • Cytotoxic||

    Tragically, Tony wasn't the target.

  • Drizzle||

    No need. Smug self-delusion and righteousness are terminal.

  • Dread Pirate Roberts||

    It's OK. The feds didn't pick up the real Dread Pirate Roberts.

  • trig||

    +1 That would be great if someone took over :)

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