Silk Road

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

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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.

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  1. I won’t claim to know the ins and outs of this trial, but if I’m a jury member, the thing that’s sticking in my mind is that either this guy is the Dread Pirate Roberts they’re accusing him of being, or he should have turned state’s evidence and given up whatever information he has that would help the feds nail the real Dread Pirate Roberts.

    If he isn’t the Dread Pirate Roberts they’re accusing him of being, and he doesn’t know the true identity of the real Dread Pirate Roberts, then as a juror, I would want the defense to make it extremely clear to me precisely why he doesn’t know who the real Dread Pirate Roberts is–or why he hasn’t turned state’s evidence and given the feds whatever evidence he has.

    Shouldn’t some form of communication between himself and the real Dread Pirate Roberts exist? It must have existed at one time if they pulled him back in. And if that’s what happened, why didn’t he save that piece of evidence? Even a chicken head bimbo like Monica Lewinsky was smart enough to save the dress! Why didn’t he save the dress?

    1. The defense seems to be somewhat fanciful here. I’m not sure the strategy will really work.

      1. I don’t know what you mean by “work.” There is no way that this guy isn’t going to prison for a very long time. He’s already toast. He should have tried a plea deal or something.

        1. He should have tried a plea deal or something.

          What makes you think one wasn’t offered?

    2. Well let’s hope you’re never on *my* jury.

      1. As DPR, what has he done *wrong* (not illegal, wrong)?

      2. Since when is there a duty to turn state’s evidence – a duty that can be held against you if you don’t fulfill it?

      3. None of that is at issue here – he doesn’t have to prove his innocence, only through sufficient doubt on the prosecution’s case to drop it below the ‘beyond a reasonable doubt’ threshold.

      Hell, giving too much information to ‘prove his innocence’ could accidentally give the prosecution the opening it needs to bring other charges.

      1. “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”

        We’re talking reasonable doubt about what, exactly?

        He admits he launched the site, and he admits that he was in charge at one point. He admits he came back to the site and was apparently in charge of it, to some extent, again.

        That’s pretty compelling evidence that he was Dread Pirate Roberts. He probably wouldn’t have admitted those things if the prosecution didn’t have evidence to show all those things were true.

        I wasn’t saying I would convict him on that basis alone–for every crime he’s been charged with–but I am saying that if I’m a juror who wants to acquit him, I’m hoping to see evidence to suggest that he was in and out of that role.

        1. Saying I was in charge except when all the illegal shit happened is not a strong defense.

          1. No shit. To my layman’s eyes, it looked like a confession. Once he said, “yes, I founded the site,” boom, he’s done in the eyes of the jury.

          2. Saying I was in charge except when all the illegal shit happened is not a strong defense.

            It can be. This is the defense that a retired CEO would put up if he was charged for stuff that happened after he retired, after all.

            1. The first thing that came to mind was Ken Lay et. al. and Enron. It’s certainly something to try, but it’s also something that falls flat.

      2. “As a juror, I would want the defense to make it extremely clear to me precisely why he doesn’t know who the real Dread Pirate Roberts is–or why he hasn’t turned state’s evidence and given the feds whatever evidence he has.”

        What I’m saying is that if the defense wants to seal the deal for acquittal, then they probably need to answer those questions in the jurors’ minds.

        If the evidence points to you being Dread Pirate Roberts, and it’s so persuasive that you’re not even disputing the facts of the case–just saying that you were being framed? Then a jury considering the evidence is going to want to see some evidence that you were being framed.

        …and that evidence should exist somewhere! Even if the Feds were withholding exculpatory evidence, I’d expect that he would at least have something to show that he was in and out of the role of leader. Otherwise, it’s going to be his word against the prosecution’s evidence, and that doesn’t auger well for a defendant that’s already admitted to having been in charge of the site.

        1. Sounds like he is not guilty of any crime.

    3. That’s terrible, you absolutely should not consider why he didn’t turn state’s evidence. That has nothing to do with his guilt or innocence.

  2. Isn’t it supposed to be up to the Feds to prove his guilt, not the converse?

    I see what you are saying, but it really shouldn’t be on him to help the gummint find DPR.

    1. Sorry – reply to Shultz (SCHULTZ!) above.

    2. Yeah, the strategy is simply pointing out that if the agent investigating was initially so sure that Karpeles was “the” DPR they were looking for and turned out to be wrong, how do they know if Ulbritch’s the right guy?

      It certainly makes sense, but I’m not sure if the jury will buy it. Usually folks are pretty trusting of authorities and I wonder if they believe that there are multiple DPRs (although this has been repeatedely mentioned in Andy Greenberg’s interviews and publicly acknowledged by the DPRs on their forums from what I understand)

    3. Yeah, I appreciate that they’re just going for reasonable doubt here.

      But this guy isn’t saying, “It wasn’t me!”, really. He’s saying, “Yeah, I was Dread Pirate Roberts–but not when the crimes under consideration were committed.”

      There’s no reasonable doubt that this guy was Dread Pirate Roberts at some point, right? The reasonable doubt they want is that he wasn’t Dread Pirate Roberts–at the time–and after admitting that he was the guy at one time, he’s gonna have to show something to the jury suggesting that he was in and out of the role if he wants to be acquitted.

      He’s basically admitting to having been caught holding a smoking gun. He’s admitting that the gun was smoking–but he’s saying he wasn’t the one that fired it.

      That’s a hard sell to a jury, right? Ultimately, it’s going to be about who the jury believes, and the guy that’s already admitted to having been the guy in charge at one point–needs to show some evidence to shore up his credibility, there. I guess that’s what I’m trying to say.

      Show the jury some kind of evidence suggesting that you were in and out of that role, or I’m not sure the jury is going to buy what he’s selling.

      1. That’s basically why, although called, I’ve never had to serve jury duty. It’s my opinion that, whether on purpose or deliberately, jurors often don’t get the full picture. Therefore, in good conscience I’m not able to participation in anyone’s guilty verdict. Better a bunch of guilty dirt-bags go free than even one innocent citizen suffer wrongful conviction for crime they did not commit.

        1. *participate

        2. Juries are weird. On my first one, the defendant had been caught in the stolen car, fingered by the person who had been carjacked (eyewitness with minutes of time to watch him during the crime), and had no reasonable alibi other than he knew the guy who really did it (and who nobody could locate).

          Pretty cut and dry, solid case. The jury still waffled on the first 2 votes.

  3. “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.”

    Man I really wish people would stop turning into ass-kissing pussies when the government spotlight is on them. And that statement is contradictory too, for it was the law that killed Mt.Gox (fed’s freezing of accounts and massive fines; 50 x $1mil+ state bonds for MSB compliance, etc.) and is the law that hamper’s people’s lives.

  4. Good, somewhat unnerving stuff about how Bitcoin anonymity can be breached in practice.

    Get unnerved. Stuff like Bitcoin and Tor and other ‘anonymizing’ technologies are not silver-bullet solutions to keeping your identity obscured.

  5. “Ulbricht’s sharing of radical libertarian beliefs with the anonymous Pirate was always part of the case against him.”

    It’s going to get to where I *AM* Spartacus.

    1. Except it’s more like “I’m not Spartacus”

      Libertarians can’t even bother to vote, much less make any sort of meaningful stand. Look at the post here criticizing Ben Carson for saying that some beliefs are worth dying for.

      Libertarians aren’t even slacktivists, the most you can get from them is being snarky on a website…

      (OKay, I guess Snowden is one of the rare exceptions)

      1. Whoa dude. Slow down. It takes a lot of effort to sit here on my ass at work and mock Reason staffers for not being pure in their libertariansim.

        /sarc

      2. Go fuck yourself.

        I have voted in many elections and with one exception–exactly one in the hundreds of races in several elections I’ve voted in–you could take the inverse of my ballot and predict the outcome of the election.

        And the only exception (Michael Hogan, Republican for governor of Maryland) had a large enough margin that my vote wasn’t anywhere near essential to his win.

        Primaries are an even bigger joke. The LP doesn’t have enough people to hold them, so registering LP is like disenfranchising yourself, the Democrats have never run anybody close to libertarian, and the Republicans always elect the candidate closest to being a Democrat himself.

        The two options that remain are: move (which doesn’t make my vote any more significant), or run for office (which I have no chance in hell of winning). Even if I did win office, I would have to quit a decent-paying job to sit in a state house and be outvoted on every issue.

        Politics is for the welfare and leisure classes.

  6. Who says nothing even mildly interesting happens these days?

    1. Right? This is pretty fascinating to me.
      It’s like all of Dan Brown’s, Crichton’s, and Grisham’s novels had an orgy and this case is the love child.

      Does the MSM seem to be paying much attention to this? I have a feeling this will be a trial that happens completely under the radar but has a huge ripple effect.

  7. Dude is pretty smart. Wouldnt surprise me at all man.

    http://www.Anon-Best.tk

  8. Are the views expressed by DPR libertarian of the minarchist variety or of the ancap variety? Lot of room separating the two.

    1. If I recall correctly, the silk road forums had a lot of discussion on DPR’s reading list. Lots of Mises there. Quite far towards the ancap end.

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    ????? http://www.netpay20.com

  10. Why is providing a site where people freely buy and sell things a crime?

    1. Why is running a whorehouse a crime? Because FYTW.

    2. Because fuck you, that’s why.

  11. my buddy’s half-sister makes $66 an hour on the computer . She has been without a job for five months but last month her payment was $19090 just working on the computer for a few hours. browse around this site……….
    ????? http://www.cashbuzz80.com

  12. I like the strategy. Even if he doesn’t finger the real DPR, it can and should work. What will be interesting is whether the feds can close the gap between when he says he quit and when he says he came back for limited purposes. What proof do the feds have that he was in charge the whole time?

    The real issue isn’t who was in charge years ago. The real issue is whether he was in charge when the crimes he has been charged with occurred.

    As a matter of persuasion, it would help enormously if he could fill that gap by fingering the real DPR, but it shouldn’t be strictly required. The testimony that the feds were sure it was somebody else for a long time is very helpful.

    Racehorse Haynes was a famous Texas defense lawyer who won a lot of cases with the same strategy: show how the evidence presented by the prosecution is consistent with more than one account of the crime, with the alternate-reality versions being impossible for his client to have committed.

    I suspect the real battle will be over whether the defense can provide any basis for their claim that the info on his computer was put there to frame him, either by the feds or by the “real” DPR.

    1. Seems like the defense is trying to avoid being stuck in a situation where the Dread Pirate Roberts is on trial instead of Ulbrecht.

      They basically have to split that hair that Ulbrecht went by a certain name, but did not commit the crimes he’s accused of. Otherwise, the prosecution can prove that someone under the name DPR did something, and that Ulbrecht went by the name DPR, therefore Ulbrecht did those things.

      I would make sure that I called objection every time the prosecution tried to prove that something was done by DPR instead of proving it was done by Ulbrecht.

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    This is wha- I do…… ?????? http://www.jobsfish.com

  14. up to I looked at the check 4 $9975 , I did not believe that my brother woz like they say trully taking home money in there spare time from their computer. . there best friend has done this less than 10 months and a short time ago paid for the depts on there home and purchased themselves a Ariel Atom . have a peek at this website………..
    ????? http://www.Workvalt.Com

  15. Ella . even though Paula `s artlclee is terrific… I just purchased Mazda MX-5 after having made $6168 thiss month and-also, ten-grand this past month . this is certainly the best-job Ive ever had . I started this four months/ago and practically straight away began to bring in over $86… per-hour . read ………
    ????? http://www.cashbuzz80.com

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