On Wednesday, October 2nd, the online drug marketplace Silk Road was raided and shut down by the FBI, who arrested its alleged mastermind, Ross William Ulbricht, known online by his pseudonym “Dread Pirate Roberts,” named after the feared protagonist of the 1987 movie “The Princess Bride”
Feds swooped in on Ulbricht in a San Francisco public library where he had been anonymously running the billion dollar website. The authorities immediately seized and shut down the website, charging the 29 year old physics and engineering student with three counts of conspiracy: narcotics trafficking, computer hacking, and money laundering.
Silk Road had been in operation since January 2011, and has become known as “the most sophisticated and extensive criminal marketplace on the Internet today”, and as the “Amazon.com for drugs.” It was a website that allowed buyers to purchase everything from cocaine and heroin, to fake IDs and weapons, to hired murderers.
Users purchased drugs and other illicit items on the site with a digital currency called Bitcoin, a cryptographic currency and payment system which exists entirely online, which allows users to exchange money anonymously. Instead of using cash or credit card numbers, which would be easily traceable even on the Tor network, Silk Road users bought Bitcoin from separate exchange websites like Mt. Gox, and then used the Bitcoin to buy things on Silk Road. Bitcoins’ value fluctuates with the market just like normal currency; one Bitcoin is currently worth $115.
Over its three year lifespan, the site generated over 9.5 million Bitcoins in sales revenue and 600,000 Bitcoins in commissions for its owner. This is equal to about $1.2 billion in sales, and $80 million in commissions.
In total, over 1 million purchases were made, and 70% of these were of illicit drugs. The site acquired nearly a million registered users worldwide.
The FBI had been following the hidden website for months, but could not trace or track its operator because it was hosted on something called the Deep Web, a collection of websites that aren’t indexed by search engines and are thus hidden from public view. The Deep Web can only be accessed by downloading cryptographic software called Tor, which makes all web traffic anonymous.
Ulbricht’s LinkedIn profile describes him as a stout economic libertarian, also stating that since completing his advanced chemical engineering degree in 2010, he has focused on “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 of the kind imposed by institutions and governments.” This simulation is Silk Road.
Ulbricht’s relatives described him as a brilliant, idealistic young man, but they may not have known him as well as they thought. His darker side was revealed as the site grew- using Bitcoin, he paid for the separate assassinations of two users who he felt threatened the site. One user, named FriendlyChemist, blackmailed Dread Pirate Roberts by telling him that if he was not paid $500,000, he would release the identities of thousands of users of the site.
“In my eyes, FriendlyChemist is a liability and I wouldn’t mind if he was executed,” wrote DPR (Dread Pirate Roberts). When redandwhite, a user claiming to be a hit man, said he’d do it for $300k, DPR replied “Don’t want to be a pain here, but the price seems high. Not long ago, I had a clean hit done for $80k.” Although redandwhite later sent pictures to DPR of a slain FriendlyChemist, the FBI thinks the murder never occurred.
The FBI was able to catch “Dread Pirate Roberts” because of a couple of rookie mistakes he made early on in Silk Road’s lifespan.
First, On January 27th, 2011 the month that Silk Road became active, he advertised his website on a magic mushroom forum under the username “altoid”, and then used “altoid” on a Bitcoin forum to ask for “an IT pro in the Bitcoin community” to contact him at his personal email.
Second, he used his real name in a posting on Stack Overflow to create a programming code for a hidden Tor site. He doubled back and changed his username to “frosty” a minute after, but by then, it was too late- the internet is eternal.
Third, he came under further suspicion in July when Homeland Security agents intercepted a package from Canada containing nine fake IDs with different names, all with a photo of Ulbricht.
The combination of these errors led the FBI to find and arrest him. But what does that say about virtual drug dealing as a whole? The integrity of Tor and of Bitcoin stood strong throughout the entire process; it was simply his carelessness that allowed the Feds to catch him. So what’s to say a more careful mastermind couldn’t get away with it in the future?
Just as fast as the Silk Road was shut down, mirror sites have popped up, and there is no doubt that the drug dealers and buyers who used Silk Road will simply switch to alternate sites to do their business.
In The Princess Bride, Dread Pirate Roberts was feared as a name, regardless of who carried it; thus, there was always a Dread Pirate Roberts. Such is the case with the name’s new use: there will continue to be virtual drug marketplace kingpins, popping up all over the web, even though Ulbricht has been caught.
