A federal jury has convicted the man they believe is the Dread Pirate Roberts — aka the mastermind and ringleader behind the Silk Road online illegal drug trade website that used bitcoins as its currency.
The Wall Street Journal reported that a federal jury spent 3 1/2 hours deliberating before finding the defendant, 30-year-old Ross Ulbricht, guilty of seven criminal charges stemming from the site that the federal government says ran the massive online illegal drug trade that brought in billions of dollars for selling heroin, cocaine and crystal meth. What started as a small site selling homegrown illegal mushrooms soon turned into a giant bazaar for narcotics-trafficking, illegal goods, computer-hacking tools and money-laundering to an audience in the thousands. Now, Ulbricht faces life in prison for the charges.
Former Bitcoin Foundation board member and CEO of the now out of business BitInstant Charlie Shrem was sentenced to two years in prison in December for his collaborator role and connection to activities aimed at helping Silk Road users swap their digital currency for cash.
The three week trial chronicled the case that began in October 2013 when the Silk Road site was shut down and Ulbricht was set up in a San Francisco public library by a federal agent to catch him logging onto the site. The agents had been quietly watching him for two years and was arrested once he logged on to The Silk Road. During the trial, Ulbricht’s lawyer claimed that Mark Karpeles, the bitcoin tycoon, was the true Dread Pirate Roberts. Karpeles is the former CEO of Mr. Gox, the busted Bitcoin exchange based in Tokyo. Karpeles is also now the current CEO of Tibanne Co, a company that specializes in Web hosting, application development, network administration and business development. Karpeles shrugged off the accusations and told multiple media outlets that he was not the man the Feds were looking for.
Ulbricht’s lawyer admitted that his client founded the Silk Road as a free-market site to sell almost anything that could be untraceable. The defense claimed it was an economic experiment that grew too large and Ulbricht passed off the site to others. They then claimed he was lured back by the operators of the site, baited into the library and put into the hands of the federal government as a scapegoat. But the jury didn’t buy the story.
Manhattan U.S. Attorney Preet Bharara said the conviction “should send a clear message to anyone else attempting to operate an online criminal enterprise,” according to WSJ’s report.
The dark website ran on the Tor network, a hidden section of the Internet, and the site only accepted bitcoin as payment. Like the supposed anonymity of the digital currency, the prosecution argued that Ulbricht created the Dread Pirate Roberts username to further hide his involvement. At one point in the case, Ulbricht was accused of paying others to solicit murder of people who said they’d reveal the true leader, but no charges were ever filed.
Once the agents were able to tie Ulbricht to the Silk Road site, prosecutors used the federal agent’s testimony to show how he was connected. The Feds said they connected Ulbricht’s email to a post made on other drug-related forums that linked back to his personal email address. From that, as WSJ reported, there was enough evidence to connect him to the site. Also, the amount of bitcoins seized from Ulbricht was valued somewhere between $18 million and $20 million at the time of the seizure. On top of that, journal entries found on the laptop taken during the investigation also gave a clue into what prosecutors called the “double life” that Ulbricht led.
“Silk Road is going to become a phenomenon and at least one person will tell me about it, unknowing that I was its creator,” the entry read, according to WSJ’s report.
And that was a fatal flaw in Ulbricht’s slip up, a federal attorney on the case said.
“Criminals make mistakes all the time,” Assistant U.S. Attorney Timothy Howard said Tuesday (Feb. 3) during the end of the trial. “And there are plenty of opportunities to make mistakes when you’re running a massive online criminal enterprise…which is processing hundreds of millions of dollars in illegal transactions.”