Silk Road used to be a darknet platform for trading illegal goods, named after the trade route between Europe and East Asia that was paved in the 2nd century BC. "Modern" Silk Road was founded by Ross Ulbricht in 2011 and existed for two years and eight months. In October 2013, Ulbricht was arrested by the FBI in the San Francisco Public Library in Glen Park. Today, Ulbricht is serving a life sentence. A Twitter account Free_Ross boasts of more than 22,000 followers and is collecting signatures for his release.
The Silk Road website was located in the “deep web”, a part of the Internet that exists “around” the accessible part (surface web) and is not visible to most users. Its content is not indexed by search engines like Google, and, according to some experts, it is hundreds of times larger than the size of the visible network. The site was accessed via the anonymous Tor network, which hid user IP addresses and provided untraceable connections. Therefore, although the FBI learned of the existence of the site a couple of months after its launch, the operation to close it took two years.
Who and Why
The founder of the marketplace, Ross Ulbricht, was known online under the pseudonym Dread Pirate Roberts after the character of William Goldman’s novel "Princess Bride" (and a movie of the same name).
Ross Ulbricht, born in Austin, Texas, received a degree in physics from the University of Texas and a master’s degree in engineering from the Pennsylvania State University. For five years, he worked as a research scientist. After that, he tried to launch several startups, including the Good Wagon Books online bookstore, which sold used books and donated part of the funds to charity while also sending unsold books to prison libraries.
“I love learning and using theoretical constructs to better understand the world around me. Naturally therefore, I studied physics in college and worked as a research scientist for five years. [. . .] My goal during this period of my life was simply to expand the frontier of human knowledge. 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,” as follows from Ross Ulbricht’s profile on LinkedIn, presumably written during the creation of the Silk Road.
The same libertarian ideals, but reworked by time and a 'first-hand experience', were reflected in Ulbricht’s letter to Judge Katherine Forrest, who sentenced him to life in prison: “I believed at the time that people should have the right to buy and sell whatever they wanted so long as they weren't hurting anyone else. [...] Silk Road was supposed to be about giving people the freedom to make their own choices, to pursue their own happiness, however they individually saw fit.”
Since the Silk Road was on the darknet (on the Tor network), the communication of its participants was anonymous. Bitcoin payments provided a certain (at the time the highest) level of anonymity as well. Thus, the transactions were trustless, which was especially important when trading sensitive goods. Orders were delivered to customers right to the door, just like a regular package, so they attracted no attention. The rating system also served security, as the participants in the transaction could rate each other according to different criteria.
Goods sold at Silk Road were mostly illegal as 340 types of drugs accounted for 70% of the turnover. However, legal goods like books, jewelry, and pornography were also presented on the website.
As planned by Ulbricht, all the goods offered for sale at Silk Road should have been classified as victimless crimes. Therefore, specific categories of products were prohibited for sale by the rules of the site. Among them were stolen credit cards, assassinations, weapons of any type, and child pornography.
Over time, however, the policy became more and more flexible, when Ulbricht could no longer or did not want to preserve the initially set boundaries. Thus, the sale of weapons on Silk Road was permitted under the pretext that the government imposes ever more stringent restrictions, making it increasingly difficult for people to purchase them, which goes contrary to the libertarian policy of the site. Later on, more contraband products appeared on the platform.
Meanwhile the FBI…
It took about two years to establish Ulbricht’s identity. The authorities needed to gain access to the network and make contact with vendors and administrators, none of whom knew Ulbricht’s real name.
During the operation, the FBI identified some of his close associates and used this information to get a complete picture. The last puzzle was a simple Google search result that linked Ulbricht’s alias Dread Pirate Roberts with another nickname — altoid. This account advertised Silk Road at an early stage. It helped to track the Bitcoin forum on which Ulbricht left his personal e-mail address.
Ulbricht was caught red-handed. At the time of his arrest in the San Francisco library, he was logged into Silk Road as an administrator and communicated under the alias Dread Pirate Roberts with an FBI undercover agent.
The agents found out that the Ulbricht's laptop stored tens of millions of dollars in Bitcoins, and millions more on flash drives found in his apartment. The computer also kept Ulbricht’s personal journal, which contained evidence of his guilt. Within a few hours after Ulbricht’s arrest, the Silk Road domain was seized, and the marketplace was shut down.
Among other users identified in the course of the investigation was Curtis Green, a moderator, who started at Silk Road with selling prescription medication. Upon learning that Green was caught, Ulbricht was afraid that he would become an informant. His suspicions were confirmed after he discovered that 20,000 Bitcoins ($350,000 at the time) had disappeared from various accounts and ended up on Green’s account. Then he asked a close associate under the nickname Nob to remove Green. But Nob was actually the DEA agent named Carl Force. To get closer to Ulbricht as part of his assignment, Nob staged the murder of Curtis Green, taking $40,000 for it. After the “murder,” Ulbricht regretted what had happened, but believed that it was necessary.
Force became one of two federal agents convicted of abusing their positions during the investigation of the Silk Road case. He used the information he had on Dread Pirate Roberts to create alternate identities on the Silk Road forum and extorted money from Ulbricht in exchange for insider information about the progress of the FBI investigation. Subsequently, Force signed a contract for $240,000 with 20th Century Fox Film Studios to create a film about the investigation, without the Drug Enforcement Agency's approval. In October 2015, Force was sentenced to 6.5 years in prison and was required to pay restitution of $340,000 for extortion, money laundering, and obstruction of justice.
As for Green, he really became an informant in January 2013, and $350,000 was indeed stolen, but not by him. This crime was committed by Secret Service agent Shaun Bridges, to whom Green handed access to his account as part of a deal. Later, he stole another $450,000 from other accounts. Bridges was arrested in 2015 and sentenced to 71 months in prison on money laundering charges. In November 2017, Bridges was sentenced to an additional imprisonment for a term of two years.
Later it turned out that the hit on Green was not the only time Ulbricht attempted to hire killers. Another assassination was assigned to a member of the world famous motor club Hell’s Angels. He had to kill a user who threatened to hack the site with a DDoS attack. In total, Ulbricht was charged with five murder attempts, but none of them was included in the final indictment.
Ulbricht was sentenced to two life sentences without parole. On May 29, 2015, Manhattan’s US district court for the southern district of New York found him guilty of money laundering, conspiracy, hacking, and drug trafficking. “I have spent well over 100 hours on this sentence contemplating it, walking and being silent and thinking about it, and running over and over and over it in my mind from every angle I could think of. I have tried very hard to come up with what is a just sentence and in doing that I have tried to come up with what does that even mean. [. . .] You are educated. You have got two degrees [. . .] You have an in tact family. You have 98 people plus yourself who are willing to write letters on your behalf, maybe a hundred when the other ones had come in. So, you are a complicated person and you are not the typical criminal profile but this is real life and life is a lot more collected than what we see in the movies or the kind of people we might imagine as the typical criminals. We have you and you're a criminal. And that word I know probably even today may sound harsh to you [. . .] It was carefully planned life's work. It was your opus. You wanted it to be your legacy and it is,” as follows from the judge’s accusatory speech.
After the arrest of Ulbricht in October 2013, the site was relaunched by the Silk Road administrators as Silk Road 2.0. The FBI closed it on November 6, 2014, and its alleged operator, Blake Bentall (under the pseudonym Defcon), was arrested.
Price in Dollars
According to estimates, the site's total revenue resulted in 10.1 million Bitcoins, and Ulbricht’s personal Bitcoin fortune at the time of the arrest constituted $28 million.
Attempts at Appeal
For several years, the Ulbricht family has been campaigning to appeal against the “barbaric, double life sentence for all non-violent charges” and raise funds to pay lawyers on the official Free Ross website.
In May 2017, Ulbricht’s new appeal for the abolition of a life sentence was rejected. It referred to the fact that during the trial, his defense was not aware of the cases of the Force and Bridges agents. A panel of three judges confirmed the decision on life imprisonment, noting that when the verdict was passed, suspicions of attempted murder had been taken into account. “Reasonable people may and do disagree about the social utility of harsh sentences for the distribution of controlled substances [. . .] It is very possible that, at some future point, we will come to regard these policies as tragic mistakes and adopt less punitive and more effective methods of reducing the incidence and costs of drug use,” the appellate court states.
“At this point in our history, however, the democratically-elected representatives of the people have opted for a policy of prohibition, backed by severe punishment,” as commented by the panel of judges.
One of the latest appeals was rejected on February 5. Ulbricht’s new lawyer, Paul Grant, tried to get the case reopened through the Rule 33 motion, which may be applied if new circumstances of the case were discovered within three years after the verdict had been passed. Judge Catherine Forrest denied the motion, saying that “A Rule 33 motion is not an opportunity to relitigate that which has been litigated, or to engage in a fishing expedition for new evidence” and noting that all the evidence presented by lawyer Grant “was explicitly known at the trial.”
One of the possible violations during the investigation, which Ulbricht’s lawyers have already tried to use to mitigate or cancel the punishment, surfaced in March when Edward Snowden published classified documents. They revealed that the National Security Agency (NSA) tracked Bitcoin users, and, what's more, the same records showed that the NSA worked on identifying Bitcoin users six months before the arrest of Ulbricht. In court, Ulbricht’s defense also claimed that the story of how the FBI found him did not add up and that the government could have infiltrated the Silk Road servers with the help of the NSA, possibly illegally. The court rejected these arguments. Patrick Toomey, an attorney with the ACLU’s National Security Project, said that the NSA documents that emerged raise an important question for U.S. law enforcement agencies: “If the government’s criminal investigations secretly relied on NSA spying, that would be a serious concern. Individuals facing criminal prosecution have a right to know how the government came by its evidence, so that they can challenge whether the government’s methods were lawful. That is a basic principle of due process.”
A petition, Free_Ross, started by Twitter account activists collected 100,000 signatures for Ulbricht's release. “Pinch me, I must be dreaming! 100,000 signers want to see me released from prison! This is incredible to see such a huge wave of support in these first few months since the petition launched. Our 500k goal feels totally doable now. I haven't felt this hopeful the whole time I've been locked up. Thank you! Ross.” A photo of such a handwritten note was posted on Ross Ulbricht’s Twitter account.
Silk Road in Culture
The history of Silk Road has been reflected in the documentary Deep Web (2015) and Nick Bilton’s book American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road. “Let the market decide, not the government,” such a message from Ross is given in the book.
It is known that Ross dictates his tweets from prison, and they are published in his personal Twitter account created in June of this year like the aforementioned gratitude for the collected signatures.
Given his relationship with Bitcoin, Ross couldn't help but comment on an important milestone in its history, namely its 10th jubilee. DeCenter has already published “congratulations” from other members of the community, and now cites the congratulations letter from Ross Ulbricht:
Happy Birthday, Bitcoin!
Bitcoin is turning ten, and like many of us, I feel like a proud parent, having watched it grow into its potential over the years. I guess I’m the estranged father in prison though, who can’t be there to help raise his kid.
Bitcoin: Mommy, when’s Daddy coming home?
Mommy: He’ll come home as soon as he can, sweetie.
Bitcoin: Why did he leave us, Mommy?
Mommy: I’ll explain when you’re older. Now run along and play blockchain with the other cryptos.
Bitcoin as a 10-year-old kid is not a bad analogy. The technology is still very young, still growing. It’s been shooting up like a weed and been through some growing pains, but it’s barely a pre-teen and has the rocky road of adolescence still ahead. It’s something we all have to go through to mature into adults, to discover who we are, and Bitcoin is no different.
We will see in the years ahead what Bitcoin is capable of, how it will be used, and the impact it will have on our world. I have high hopes that our gifted child will exceed everyone’s expectations and go on to greatness, but it is still a child that must be nurtured and protected.
Bitcoin needs us to continue guiding it with the values it was founded on, that gave it its potential. We must keep our focus on decentralization, privacy, and empowering individuals. We are Bitcoin’s advocates and representatives. How far it goes and what it becomes in the crucial years ahead will depend on us. It is a technology with the power to make abstractions like peace and equality into reality. But it’s up to us to embody such ideals and be role models for the ever-growing Bitcoin community and for Bitcoin itself.
I’m so excited for what’s to come in the next ten years, for Bitcoin and all of its crypto cousins. I just hope I can come home and make up for these lost years and show everyone where my heart truly is.