Silk Road Trial Roundup, Week One: Mt Gox Bitcoin Exchange Operator Mark Karpeles Was Thought by Federal Agent to Be Dread Pirate Roberts

Testimony Says Ross Ulbricht Wasn't Always the Feds' First Target

The first day's big news was the defense in Ross Ulbricht's trial for the first time acknowledged that defendent Ross Ulbricht actually did launch Silk Road. However, they seem to believe this was not tantamount to a guilty plea by denying he was the latter-day "Dread Pirate Roberts" whose crimes are mostly at issue in the case. Ulbricht, the defense says, gave up running the darknet, Bitcoin-using site to buy and sell usually illegal goods early, only to get sucked back in later in a smaller role to be used as a patsy when the real operators smelled the Feds closing in. I blogged further about that first day here.

The second big news out of the trial yesterday (it was not in session today, and will resume Tuesday) was the defense getting a Homeland Security agent involved in the Silk Road investigation, Jared Der-Yeghiayan, to say on the stand that for a long time he was convinced the true Dread Pirate Roberts actively running Silk Road was Mark Karpeles, more publicly known as operator of what was for a time one of the largest bitcoin exchanges, Mt. Gox.

The public voice of Dread Pirate Roberts, Ulbricht attorney Joshua Dratel said, according to Daily Dot, was "his associate Ashley Barr, a Canadian computer scientist"—a voice Dot describes as "famously libertarian." Indeed Ulbricht's sharing of radical libertarian beliefs with the anonymous Pirate was always part of the case against him. 

Techdirt notes that Dratel's strategy isn't to nail Karpeles for the crimes of DPR per se, but "to show reasonable doubt to get Ulbricht off the hook." If even federal investigators were sure DPR was someone else, maybe the jury shouldn't be so certain when they now say he was Ulbricht.

Karpeles denied being Dread Pirate Roberts in strenuous terms. "I have nothing to do with Silk Road and do not condone what has been happening there," he told Daily Dot. "I believe Bitcoin (and its underlying technology) is not meant to help people evade the law, but to improve everyone's way of life by offering never thought before possibilities."

On-the-scene accounts of yesterday's trial testimoy from Wired; Wall Street Journal; and Ars Technica.

At Forbes, Nicholas Weaver supplied some very interesting techy talk about how he's confident he was able to connect Ulbricht's known Bitcoin wallet with Silk Road, both here and here. Good, somewhat unnerving stuff about how Bitcoin anonymity can be breached in practice.

For all the background on Silk Road and the road to Ulbricht's trial and the issues at stake in it, see my long December Reason feature on the topic.