The History of Silk Road: A Tale of Drugs, Extortion & Bitcoin

Silk Road was a marketplace like no other.  Described as the internet’s Wild West and the eBay of vice, it was a haven for drug dealers, gun runners and document forgers. Founded in February 2011 by a young libertarian called Ross Ulbricht (alias Dread Pirate Roberts, a character in the movie “The Princess Bride” whose identity was said to be shared by several people), the original Silk Road website was active for less than three years, but in that time it made quite a stir.

For starters, it made Ulbricht a multi-millionaire, and later a convict. Then, the fallout from the collapse of Silk Road has also resulted in the conviction of two US federal agents for corruption.  And finally, it has left a legacy behind, but what is it. Was it ultimately a force for good? Or was it ultimately a corrupting influence on its idealistic founder?

Sounds like the makings of a Hollywood movie right? It does, and it is. Hollywood star Keanu Reeves narrated a 2015 documentary on the Silk Road saga called Deep Web which chronicles the rise and fall of the website and its founder. It therefore seems appropriate that this post will start with introducing the deep web.

The Deep Web & the Dark Web

The deep web is the part of the internet that most users never see. It’s defined as encompassing all of the World Wide Web content that, for one reason or another, is not indexed by search engines such as Google (the indexed portion of the internet is referred to as the surface web). Although there is no way of accurately measuring the size and scope of the deep web, some experts suggest that it is hundreds of times bigger than the surface web. Accessing the deep web requires specialized skills and tools, such as Tor, a software program developed by the US navy that enables anonymous communication online.

As a result of the success and notoriety of websites such as Silk Road, a small but notorious section of the deep web has become widely referred to as the dark web. The dark web is the part of the deep web that exists on darknets (ie, overlay networks that can only be accessed with specific software or configurations, examples of which include Tor or file sharing / peer-to-peer networks).

Ross Ulbricht

Born in Austin, Texas, Ross Ulbricht held a degree in physics from the University of Texas and a Masters in Engineering from Pennsylvania State University. He held libertarian views about the world; reading Ayn Rand and being a self-identified supporter of US presidential candidate Ron Paul.  He was skeptical about governmental authority and questioned the legitimacy and effectiveness of the US War on Drugs.

After graduation, Ulbricht was a research assistant in his alma mater. Later, having decided that he did not want to become a full-time scientist, Ulbricht tried his hand at a number of start-ups, including an online bookstore. However, he became disillusioned with his attempts to become a successful entrepreneur and, like many other computer programmers of his age and ability, he headed towards Silicon Valley to create a start-up like no other.

Silk Road

Named after the historical trade route network that connected Europe to East Asia, Ulbricht founded Silk Road on the basis of a modest principle: making the world a better place. According to his LinkedIn profile, Ulbricht wanted “to use economic theory as a means to abolish the use of coercion and aggression among mankind.”

Silk Road was designed by Ulbricht be a free market, a market whose very existence would be outside the scope of government control, thereby undermining the very fabric of the state. Ulbricht’s ideology was that the users of Silk Road were being enabled with the means to decide for themselves what substances they wanted to put into their bodies, without having to resort to dealing with dangerous drug gangs or falling foul of governmental authorities. Similar to eBay, it would match buyers and sellers, allow users to rate each other, and provide for listed products to be delivered direct to customers’ doors by the unsuspecting postal service.

As it operated as a Tor hidden service, communications on Silk Road were considered by users to be almost entirely anonymous. In addition, transactions on Silk Road could only be made using bitcoin, which, although not entirely anonymous, offered a level of anonymity far greater than any other form of currency or credit card transactions would have enabled.

According to Ulbricht’s outlook when setting up the site, listings on Silk Road were to be restricted to products that resulted in ‘victimless crimes’. On that basis, listings related to the likes of child pornography, stolen credit cards, assassinations and weapons of mass destruction were banned. Indeed, a survey of the site in early 2013 suggests that up to 70% of the products listed on the website were drugs. However, despite creating terms of service that were more prohibitive than other dark web markets, Ulbricht became unwilling or unable to maintain the standards that he had initially set, and indeed had relaxed the policy on banning the sale of weapons based on a view that increased firearm regulations were making it harder for people to purchase guns, in contrast with his libertarian values. Furthermore, as the site evolved, more and more ‘contraband’ products began to be listed.

For users of Silk Road, the primary advantage it had over its competitors was that it was trustworthy. Buyers and vendors were able to rate each other based on quality, reliability and price, among other things. Another reason for Silk Road’s success was that Ulbricht was, for the most part, consistent and genuine when it came to his views on how he wanted Silk Road to operate, and his interactions on Silk Road’s forum appears to indicate that he genuinely felt like he and the other users of Silk Road were a community. Orders were almost always fulfilled (unless on the rare occasion that a delivery was interrupted by authorities, in which case the anonymous users would feign innocence) and users could trust that any bitcoin held in Escrow was secure. It is estimated that in its relatively short lifespan, over $1 billion changed hands through Silk Road, netting Ulbricht a personal fortune of an estimated $28 million dollars at the time of his arrest.

Although the authorities were aware of the existence of Silk Road within a few months of its launch, it took over two years from that time for Ulbricht’s identity to be revealed. Two US senators had publicly and denounced the site asked the DEA to seize Silk Road’s domain name, but it was slow progress, with authorities having to attempt to infiltrate the network, track down suppliers and administrators (none of whom had ever got close enough to Ulbricht to learn his real name) and painstakingly piece together the tiny pieces of the puzzle that they were able to work with. However, after many years of diligent work the FBI finally caught up with Ulbricht.

The End of the Road

On an October afternoon in a public library in San Francisco, Ross Ulbricht’s dream of an online libertarian paradise came to a sudden end. The FBI had finally caught up with Ulbricht having infiltrated Silk Road by ‘flipping’ many of Ulbricht’s closest associates and using their identities to gradually unravel the Silk Road network.  The final connection was made between Silk Road and Ulbricht when a simple Google search connected the Dread Pirate Roberts with another alias called ‘altoid’ that was an early promoter of Silk Road on another drug forum. That alias was traced through the internet to a bitcoin forum where Ulbricht had posted his personal email address.

Ulbricht was caught red-handed. At the time of his arrest, he was logged into Silk Road as an administrator and using his Dread Pirate Roberts alias to unknowingly communicate with an undercover FBI agent. Agents found that Ulbricht’s laptop had tens of millions of dollars of bitcoin on it, with millions more stored on USB drives found in his apartment. The computer also contained Ulbricht’s private journal, which contained damning evidence against him. Within hours of his arrest, Silk Road’s domain had been seized, the market was shut down and Ross Ulbricht’s grand plans to make the world a better place were in disarray.

Attempted Murder

When Ross Ulbricht eventually found himself in court, one of the more surprising charges on the rap sheet were six counts of procuring murder. Silk Road was created by an idealist and a free marketer and was intended to reduce the violence associated with the drug trade. But yet its idealistic and principled founder was now in court facing attempted murder charges.

As part of their investigation into Silk Road the FBI had caught up with a number of other Silk Road users and administrators while hunting for Dread Pirate Roberts. One of these was a middle-aged father of two called Curtis Green. Green was a moderator on Silk Road who started out selling prescription medication on the website. After reading about Green’s arrest, Ulbricht, who had required all moderators to reveal their real-life identity to him, feared that Green would become an informant, especially after he learned that $350,000 in bitcoin had disappeared from various Silk Road accounts and were traced back to Green’s account. To protect himself and his enterprise, Ulbricht called on another of his close associates, who posted on Silk Road as ‘Nob’, to do him a favor and execute Green. Unfortunately for Ulbricht, ‘Nob’ was a DEA agent named Carl Force who had infiltrated Silk Road to get close to Ulbricht.

Using this opportunity to integrate himself further with Ulbricht, Force staged the killing of Curtis Green for the princely sum of $40,000. In the aftermath of the ‘assassination’ Ulbricht expressed remorse for what had happened, but agreed that it was necessary. But as it later transpired, evidence suggested that this wasn’t the only time that Ulbricht had attempted to hire assassins. Bizarrely, these attempts included the hiring of a member of Hell’s Angels to kill a Silk Road user that was blackmailing Ulbricht by threatening to hack the website using a denial of service attack.

Although the attempted murder charges were removed from the indictment, Ulbricht was convicted of money laundering, computer hacking and drug trafficking and was sentenced to life imprisonment without the possibility of parole.

And the $350,000 that had gone missing? It had been stolen, but not by the person that Ulbricht suspected.

Extortion

As previously stated, ‘Nob’, the DEA agent who had staged a hit in order to entrap Ulbricht, was named Carl Force. Force used the information that he had gained about the Dread Pirate Roberts to create alternate identities on the Silk Road forum that he used to extort money from Ulbricht in exchange for insider information on the FBI investigation into the website. As the information that Force sent to Ulbricht was in encrypted form, there was no way of knowing whether the information provided was legitimate or not. Furthermore, Force had sold his story in exchange for a luxurious Hollywood contract.

What’s more, the $350,000 in bitcoin that Ulbricht had traced to Curtis Green’s account had been stolen, but not by Green. Former Secret Service agent Shaun Bridges had used Green’s identity to steal the money from Silk Road’s account. In addition, he had used Green’s account to steal a further $450,000 from other Silk Road accounts, which he had transferred to his own account.

Aftermath

Ross Ulbricht appealed against his conviction and the life imprisonment sentence handed down, citing the two corruption convictions against Force and Bridges, neither of which his defense team were made aware of during his trial. His defense team also claimed that the FBI searches of the Silk Road network during their investigation were unconstitutional. The judges rejected the appeal, noting the fact that, when sentencing, the trial judge had took into consideration the allegations of attempted murder brought against Ulbricht.

Carl Force pleaded guilty to extortion, money laundering and obstruction of justice and was sentenced to six and a half years in prison, as well as being ordered to pay more than $300,000 in restitution. Shaun Bridges also pleaded guilty to money laundering and was sentenced to 71 months in prison. He is currently on trial for further counts of money laundering through BTC-e, a bitcoin exchange that was recently shut down by the FBI during the investigation into the Mt Gox hacking.

Following Ross Ulbricht’s arrest in October 2013, Silk Road 2.0 was temporarily re-opened by administrators of the original site. Silk Road 2.0 survived for about a year until it too was shut down and the alleged operator arrested. Further iterations of Silk Road have appeared, as well as other sites offering similar services. However, with the knowledge that the FBI are on their trail and the harsh punishments that website operators potentially face if caught, no successors to Silk Road have reached its levels of success or notoriety. In addition, many scam sites have arisen, with a number of high profile scams making users more wary about trusting any such sites.

Ross Ulbricht remains in prison, sentenced to life without chance at parole, he recently lost an appeal against this seemingly harsh punishment with a three-judge appellate panel affirming the original decision of the court, they did however include muted criticism of america’s drug laws:

“Reasonable people may and do disagree about the social utility of harsh sentences for the distribution of controlled substances, or even of criminal prohibition of their sale and use at all,” the appellate court’s opinion reads. “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.”

“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”

Ross’ family continue to campaign to “free Ross Ulbricht from a barbaric, double life sentence for all non-violent charges”, with a website in place to accept donations towards lawyer fees.

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