FBI Shuts Down the Second Silk Road [UPDATE: Accused Operator Might Be Former SpaceX Employee]

The FBI's ultimately fruitless war against online drug sales had another minor victory for them, as Wired reports:

On Thursday international law enforcement agencies including the FBI, the Department of Homeland Security and Europol took down the Silk Road 2 and arrested its alleged operator 26-year-old Blake Benthall in San Francisco. Benthall, who is accused of running the new Silk Road under the handle "Defcon," has been charged with narcotics trafficking, as well as conspiracy charges related to money laundering, computer hacking, and trafficking in fraudulent identification documents. The criminal complaint against him alleges that the Silk Road 2 sold hundreds of kilograms of drugs of every description to hundreds of thousands of buyers around the world, with bitcoin-based sales of more than $8 million per month at the time of its seizure….

The criminal complaint against Benthall outlines how the Silk Road 2?s staff was infiltrated by at least one undercover law enforcement agent even before the site went online in November of last year. In May of this year, the FBI somehow pinpointed the foreign server that ran the Silk Road 2 despite its use of the anonymity software Tor to protect its location, and obtained records from the server's hosting provider identifying Benthall.

The complaint also traces Benthall's proceeds from his alleged management of the Silk Road 2?s bustling sales. Law enforcement officials found that he used a bitcoin exchange to cash out $273,626 between Silk Road 2?s creation in November of last year and October of this year. About $70,000 of that money went towards a down payment on a $127,000 Tesla Model S. Benthall is also accused of holding the pursestrings for the Silk Road 2?s employees:An undercover Homeland Security agent was also paid $32,189 worth of bitcoin for work the agent did for the site.

The Wired link contains a copy of the criminal complaint against Benthall.

This second Silk Road has already lost market leadership in recent months to Agora, so it is not like this destroys the online drug marketplace, but it sure cost taxpayers a lot of money and is going to mess up the lives of people just trying to help people buy and sell things they want.

My Reason feature on the first Silk Road and its shutdown is in the new December issue of Reason, in subscribers hands right about now.

UPDATE: A Facebook page of a Blake Benthall  that hasn't been updated since October 27 lists him as a SpaceX employee; SpaceX confirms that someone of that name worked for them from December 2013 to February 2014.

Comments

[Episiarch]

In May of this year, the FBI somehow pinpointed the foreign server that ran the Silk Road 2 despite its use of the anonymity software Tor to protect its location

The NSA, lending a helping hand to their fellow jackboots. It's good that they stay within mission parameters, amirite?

[waffles]

I'm pretty sure drug users are terrorists or at least terrorist supporters so you are spot on.

[Carl ?s the level]

From the FBI's press release:

During the Government's investigation, which was conducted jointly by the FBI and HSI, an HSI agent acting in an undercover capacity (the "HSI-UC") successfully infiltrated the support staff involved in the administration of the Silk Road 2.0 website, and was given access to private, restricted areas of the site reserved for BENTHALL and his administrative staff. By doing so, the HSI-UC was able to interact directly with BENTHALL throughout his operation of the website.

It could be parallel construction but Occam's Razor suggests that it is not.

[Carl ?s the level]

Someone on HN is saying that locating the server was separate from the undercover work, but I'm not sure how he/she is concluding that based on my quick skim of my complaint. I will read it in more detail when I have more time.

[Paul.]

This sounds entirely plausible. Even likely.

[Counterfly]

This second Silk Road has already lost market leadership in recent months to Agora, so it is not like this destroys the online drug marketplace, but it sure cost taxpayers a lot of money and is going to mess up the lives of people just trying to help people buy and sell things they want.

So it's working perfectly?

[angelinaclarkevli]

my best friend's half-sister makes $71 every hour on the internet . She has been out of a job for 9 months but last month her payment was $12894 just working on the internet for a few hours. see here ...

????? http://www.netjob70.com

[Doghouse Riley Jr.]

Selling DRUGS! Isn't she, "Angelina"?

[Cytotoxic]

This sucks, but the Silk Road not only has competitors it has infinite back-ups. SR 3.0 is either already running or will be shortly. They and the other dark markets will need to figure out a way to keep out infiltrators. They need to pay up for inside informants within the government. We also need MaidSafe to enable server-less internet.

[Paul.]

This is all true. I wonder if there'll be infinite backups of people willing to do 20 to life to run them?

And Reason just had a hiccup. Gillespie's on a watchlist.

[Cytotoxic]

I wonder if there'll be infinite backups of people willing to do 20 to life to run them?

Considering the money involved, it is quite possible.

[Warren]

Well shit. There goes another 0.65 BtC.

[Carl ?s the level]

He gave whomever he leased his server from the email address [e-mail]. An address hosted by Google Apps. Jesus Christ.

[Cytotoxic]

Wow. Um. Damn. Bad News: the SR folks are WAY stupider than we thought. Good News: the FBI took its time busting even really stupid people.

[Paul.]

This is the thing. Such simple mistakes, but yet so easy to make.

[Cytotoxic]

A Heisenberg or Gus Fring would not fuck up like this. If one of they're kind gets into this business, or already has and is running one of the dark markets still running, then the FBI will have a much tougher time cracking that nut.

[Paul.]

I think this is the problem. We've got these geeks with inhalers who decide they want to run one of these dark sites, but they don't think like kingpins. A real kingpin would NEVER be personally involved. Someone like Ross Ulbricht or this Benthal chap would actually be middle management.

They'd be running the day-to-day of the business, but kicking 20% (or more ) back to the kingpin, who lived in a conservative house in the outskirts of Hoboken.

They'd never discuss business on the phone, and the kingpin would only meet face-to-face.