Silk Road Bust: The Rothbardian Connection, the Bitcoin Bounce, and The Nuts and Bolts of the Case Against Alleged Mastermind Ulbricht


Some followup news and commentary on yesterday's shuttering of Silk Road and arrest of its alleged operator.

Many have argued that movement libertarians need to stop wasting their time with mere ideological education and get down to the actual practice of building alternate institutions that show-not-tell the world that government isn't necessary to meet human needs.

Those types should be cheering the news that accused "Dread Pirate Roberts" Silk Road founder and operator Ross Ulbricht is a classic Rothbardian libertarian of the Mises Institute variety. See this interesting profile from Business Insider, which reports Ulbricht:

lost his interest in physics and chemicals sometime after he graduated from Penn State in 2008, in favor of a new passion — libertarianism. He wrote on his LinkedIn profile:

Now, my goals have shifted. I want to use economic theory as a means to abolish the use of coercion and aggression 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.

He became a fan of the Austrian School of Economics, a conservative take on the free market. The indictment against him says he became a devotee of the Mises Institute, and that the writing of Ludwig von Mises and Murray Rothbard "provid[ed] the philosophical underpinnings for Silk Road."

Worth noting for future reference that a fair amount of chatter around people seemingly close to Silk Road are claiming that if the feds think they have "Dread Lord Pirate Roberts" in the singular person of Ulbricht, that they are mistaken. Two months ago Forbes had the first press interview with, supposedly, the Dread Lord.

The full government complaint out of New York (there's a separate indictment from Maryland) against Ulbricht can be found here.

Lots of other interesting rubble fluttering around the supposedly shuttered doors of Silk Road including, as anyone who understands that the human spirit cannot be fettered and that "black markets" are real markets, the rise to prominence of substitutes, as Digital Trends reports, most prominently Sheep Marketplace and BlackMarket Reloaded.

A more well-known Silk Road competitor called Atlantis, interestingly, shut itself down just two weeks ago.

This federally caused glitch in what was probably still the first thing most people think about when they think about Bitcoin also predictably caused some flutterings in Bitcoin valuation, Wired reports:

As news of the Silk Road shutdown spread, bitcoin values took a tumble, initially dropping by about 20 percent, or close to $500 million by mid-morning, Pacific time. But values soon crawled back. On the Bitstamp exchange, for example, bitcoins dropped from about $125 to $90, before climbing back to $115 at midday. On the slightly inflated Mt. Gox exchange, values went from $140 to 109, before jumping back to $128.

Analysis at The Genesis Block concludes that "a significant portion of bitcoin's early traction and price gains can be traced directly to Silk Road, with that impact waning over time, most dramatically in the past six months."

Also in Silk Road fallout:

•Meghan Ralston of Drug Policy Alliance at Huffington Post notes how the Silk Road bust limns the foolish fecklessness of war on drugs.

The Verge reports, no surprise, that the hitman who Ulbricht allegedly hired was in fact an undercover cop.

The Verge also has some words from someone claiming to be Ulbricht's San Francisco roommate. As Jonathan Grubb wrote on Facebook, "Lesson from Silk Road: even the owner of an international drug cartel can't live in San Francisco without having housemates."

Popehat has a fascinatingly detailed account for fans of federal law enforcement about the hows and whys and likely nexts of the federal case against Ulbricht. It includes this useful summation of all the charges, from two separate investigations (in New York and Maryland) against Ulbricht:

The New York complaint charges Ulbricht with three crimes:

1. A conspiracy to traffic in narcotics in violation of Title 21, United States Code, section 846. That charge requires proof that (1) that two or more persons agreed to distribute drugs in violation of federal law, and (2) the defendant knew of the agreement, and (3) the defendant intentionally joined the agreement.

2. A "computer hacking conspiracy" in violation of Title 18, United States Code, section 1030(a)(2).2 That charge requires proof that (1) there was an agreement intentionally to access a "protected computer"3 without authorization or in excess of authorization and get information from the "protected computer," (2) the defendant knew about the agreement, (3) the defendant intentionally joined the agreement, (4) somebody committed an "overt act" — some affirmative step — in support of the agreement.4

3. A conspiracy to launder money in violation of Title 18, United States Code, sections 1956(a)(1)(A)(i) and (a)(1)(B)(i). That charge requires proof that (1) the defendant conducted a transaction with money, (2) the money was the proceeds of an unlawful activity specified in the statute (including, for instance, drug trafficking), (3) the defendant knew that the money was the proceeds of that specified unlawful activity, and (4) the defendant intended that the transaction promote the activity or conceal the nature, the location, the source, the ownership, or the control of the money.

The Maryland indictment charges Ulrich with three crimes:

1. A narcotics trafficking conspiracy, under the same statute discussed above.

2. Attempted murder of a federal witness in violation of Title 18, United States Code, section 1512. That charge requires proof that the defendant (1) attempted to kill a person (2) intending to prevent the person (3) from communicating to federal law enforcement or a federal judge (4) about the commission of a federal crime. The indictment charges Ulbricht as someone who aided and abetted this crime under Title 18, United States Code, section 2; under that theory, if another person commits a federal crime, the defendant is equally guilty if the defendant intentionally "aids, abets, counsels, commands, induces or procures" the commission of the crime.

3. Use of interstate commerce facilities to procure murder-for-hire, in violation of Title 18, United States Code, section 1958. That charge requires proof that the defendant(1) used or caused another to use any facility of interstate or foreign commerce (like the internet); (2) with the intent that a murder be committed; (3) in exchange for something of value.

Note to sticklers, the soliciting murder stuff does not require an actual murder to have occurred, which indeed in this case it seems there was not.