Silk Road Was Used by More than 100,000 Users to Buy and Sell Hundreds of Kilograms of Illegal Drugs and Other Unlawful Goods and Services
LawFuel.c0m – Preet Bharara, the United States Attorney for the Southern District of New York, announced today the indictment in Manhattan federal court of ROSS WILLIAM ULBRICHT, a/k/a “Dread Pirate Roberts,” a/k/a “DPR,” a/k/a “Silk Road,” in connection with his operation and ownership of Silk Road, a hidden website designed to enable its users to buy and sell illegal
drugs and other unlawful goods and services anonymously and beyond the reach of law enforcement. ULBRICHT was arrested in San Francisco, California, on October 1, 2013, pursuant to a criminal Complaint filed in Manhattan federal court.
According to the allegations in today’s Indictment and other documents previously filed in Manhattan federal court:
ULBRICHT created Silk Road in approximately January 2011, and owned and operated the underground website until it was shut down by law enforcement authorities in October 2013.
Silk Road emerged as the most sophisticated and extensive criminal marketplace on the Internet, serving as a sprawling black-market bazaar where unlawful goods and services, including illegal drugs of virtually all varieties, were bought and sold regularly by the site’s users. While in operation, Silk Road was used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other unlawful goods and services to well
over a hundred thousand buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions.
ULBRICHT deliberately operated Silk Road as an online criminal marketplace intended to enable its users to buy and sell drugs and other illegal goods and services anonymously and outside the reach of law enforcement. ULBRICHT sought to anonymize transactions on Silk Road in two principal ways. First, ULBRICHT operated Silk Road on what is known as “The Onion Router,” or “Tor” network, a special network of computers on the Internet, distributed around the world, designed to conceal the true IP addresses of the computers on the network and
thereby the identities of the networks’ users. Second, ULBRICHT designed Silk Road to include a Bitcoin-based payment system that served to facilitate the illegal commerce conducted on the site, including by concealing the identities and locations of the users transmitting and receiving funds through the site.
The vast majority of items for sale on Silk Road were illegal drugs, which were openly advertised as such on the site. As of September 23, 2013, Silk Road had nearly 13,000 listings for controlled substances, listed under such categories as “Cannabis,” “Dissociatives,” “Ecstasy,” “Intoxicants,” “Opioids,” “Precursors,” “Prescription,” “Psychedelics,” and “Stimulants.” From
November 2011 to September 2013, law enforcement agents made more than 100 individual undercover purchases of controlled substances from Silk Road vendors.
These purchases included heroin, cocaine, ecstasy, and LSD, among other illegal drugs, and were filled by vendors believed to be located in more than ten different countries, including the United States, Germany, the Netherlands, Canada, the United Kingdom, Spain, Ireland, Italy, Austria and France.
In addition to illegal narcotics, other illicit goods and services were openly bought and sold on Silk Road as well. For example, as of September 23, 2013, there were: 159 listings under the category “Services,” most of which offered computer-hacking services, such as a listing by a vendor offering to hack into social networking accounts of the customer’s choosing; 801 listings under the category “Digital goods,” including malicious software, hacked accounts at various online services, and pirated media content; and 169 listings under the category “Forgeries,” including offers to produce fake driver’s licenses, passports, Social Security cards,
utility bills, credit card statements, car insurance records, and other forms of false identification documents.
Using the online moniker “Dread Pirate Roberts,” or “DPR,” ULBRICHT controlled and oversaw every aspect of Silk Road, and managed a small staff of paid, online administrators who assisted with the day-to-day operation of the site. Through his ownership and operation of Silk Road, ULBRICHT reaped commissions worth tens of millions of dollars generated from the illicit sales conducted through the site. ULBRICHT also demonstrated a willingness to use violence
to protect his criminal enterprise and the anonymity of its users. ULBRICHT even solicited six murdersfor- hire in connection with operating the site, although there is no evidence that these murders were actually carried out.
To date, approximately 173,991 Bitcoins (worth over $150 million at present exchange rates) have been seized in the course of the investigation, including approximately 29,655
Bitcoins recovered from servers used to run the Silk Road website, and approximately 144,336 Bitcoins recovered from computer hardware belonging to ULBRICHT seized upon his arrest. On January 15, 2014, the Bitcoins recovered from the Silk Road servers were ordered forfeited in connection with a civil action previously filed in Manhattan federal court on September 30, 2013, seeking the forfeiture of all assets of Silk Road, including its website and all of its
Bitcoins, because those assets allegedly were used to facilitate money laundering and constitute property involved in money laundering. ULBRICHT has filed a claim in the civil action, asserting that he is the owner of the Bitcoins found on his computer hardware, and contesting the forfeiture of those Bitcoins.
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ULBRICHT, 29, of San Francisco, California, is charged with one count of narcotics
conspiracy, which carries a maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years; one count of engaging in a continuing criminal enterprise, which carries a maximum sentence of life imprisonment and a mandatory minimum sentence of 20 years in
prison; one of count of conspiracy to commit computer hacking, which carries a maximum sentence of five years in prison; and one count of money laundering conspiracy, which carries a maximum sentence of 20 years in prison.
In December 2013, an Indictment filed in Manhattan federal court was unsealed charging three individuals, Andrew Michael Jones, a/k/a “Inigo,” Gary Davis, a/k/a “Libertas,” and Peter Phillip Nash, a/k/a “Samesamebutdifferent,” a/k/a “Batman73,” a/k/a “Symmetry,” a/k/a
“Anonymousasshit,” for their alleged roles in assisting Ulbricht in the operation of Silk Road. Mr. Bharara praised the outstanding investigative work of the Federal Bureau of Investigation and its New York Special Operations and Cyber Division, as well as the outstanding investigative work of the DEA’s New York Organized Crime Drug Enforcement Strike Force, which comprises agents and officers of the DEA, the IRS, the New York City Police Department, U.S. Immigration and Customs Enforcement’s (“ICE”) Homeland Security Investigations (“HSI”), the New York State Police, the Bureau of Alcohol, Tobacco, Firearms
and Explosives, the U.S. Secret Service, the U.S. Marshals Service, Office of Foreign Assets Control, and NY Department of Taxation. Mr. Bharara also thanked the ICE-HSI Chicago- O’Hare office for its assistance and support, as well as the Department of Justice’s Computer Crime and Intellectual Property Section and Office of International Affairs. Additionally, Mr. Bharara praised the foreign law enforcement partners whose contributions to the success of the
investigation and prosecution have been invaluable, namely, the Australian Federal Police, the Irish Republic’s Computer Crime Investigation Unit of the An Garda Siochana, the Reykjavik Metropolitan Police of the Republic of Iceland, and the French Republic’s Central Office for the Fight Against Crime Linked to Information Technology and Communication.
Mr. Bharara also noted that the investigation remains ongoing.
The prosecution of this case is being handled by the Office’s Complex Frauds Unit.
Assistant United States Attorney Serrin Turner is in charge of the prosecution, and Assistant United States Attorney Christine Magdo is in charge of the forfeiture aspects of the case.
The charges contained in the Indictments are merely accusations, and the defendants are
presumed innocent unless and until proven guilty.