“Everyone knows too much.” — Dread Pirate Roberts, December 2011
The HBO-style drama begins.
Did Silk Road creator Ross Ulbricht pay $500,000 worth of bitcoins to have five people assassinated to protect his true identity as the Dread Pirate Roberts?
Those details remain speculative at this point, but what we do know — following Wednesday’s (Feb. 4) federal jury conviction — is that Ross Ulbricht is the man they believe to be the Dread Pirate Roberts, the mastermind behind the bitcoin-funded illegal drug trafficking site.
And for that reason, he faces life in prison.
What his trial also unveiled were some pretty salacious details of a private transcript between Ulbricht and some of his “customers” about hiring and paying them in bitcoins. Silk Road supporters claim that the Silk Road site made it possible for customers to procure so-called “victimless crimes.” But as everyone knows about the drug trade, it’s a violent market. And, as the Silk Road trial transcripts illustrate, when that trade turns onto the Deep Web it can get even darker. And then add bitcoins — the supposed untraceable currency — and you have the perfect environment for dialogue that you might only ever find on TV.
Check out what was supposed to be a secret conversation between Dread Pirate Roberts and the alleged hitman connection.
DPR: “Not long ago, I had a clean hit done for $80k. …I’ve only ever commissioned the one other hit, so I’m still learning this market.”
DPR: “The exchange rate is above $90 right now, so at $90/[bitcoin], $150k is about 1670 [bitcoin.] If the market tanks in the next few days, I will send more.”
R&W: “I received the payment. I appreciate the offer if bitcoins lowers in value. We know where he is. He’ll be grabbed tonight. I’ll update you. …Your problem has been taken care of. …They questioned him and he spilled everything he knew. …Rest easy though, because he won’t be blackmailing anyone again. Ever.”
DPR: “Excellent work. Please send any info you can get on this third party along with the picture. …I have no need for any of his possessions, so you can do what you want with that stuff.”
Told ya.
That was part of the chain of events that unfolded in the final day of testimony of the Silk Road trial where federal prosecutor Timothy Howard read a pairing of private messages allegedly sent from Dread Pirate Roberts (Ulbricht) to a person associated with Hell’s Angels (username Redandwhite), which has created suspicion about Ulbricht hiring a hitman to kill someone who was blackmailing him. He allegedly hired them to kill a total of five people, but no formal murder-for-hire charges have been filed in New York, where the Silk Road trial took place. He faces similar charges in Baltimore, though no record of murders linked to the case have been found to date.
But the gruesome details behind these messages that came from the Silk Road’s market server and user forum, according to Wired.com, leave room for the question: Just how far was the Dread Pirate Roberts willing to go to protect his identity?
It sounds like maybe pretty far.
Ulbricht was arrested in October 2013 for seven federal charges related to the Silk Road site used for narcotics-trafficking, illegal goods, computer-hacking tools and money-laundering to an audience in the thousands that turned his “libertarian free-market experiment” into billion dollar drug ring. It also made him filthy rich in bitcoins. The amount of bitcoins seized from Ulbricht was valued somewhere between $18 million and $20 million.
The three-week trial chronicled the case following when the Silk Road site was shut down by the Feds. 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 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.
The drama behind the case doesn’t stop there, as Ulbricht allegedly didn’t back down after the first supposed hit was ordered. One hit led to four others, as the transcript read by the prosecutors suggests. And all for $500,000, according to the narrative provided by Wired.com.
DPR: “I am confident enough that it is him to move forward. Can we round up all four of them, separate them, and get them to out each other and give up their stolen money?”
R&W: “I would send four hitters instead of two to make sure there was no [expletive].”
DPR: “OK, let’s just hit Andrew and leave it at that. Try to recover the funds, but if not, then not.”
R&W: “If you want to hit Andrew only, I can have it done for $150k just like last time. …I was pretty certain you would want them all taken care, so I had an associate send me a couple of his out-of-town hitters to accompany our local hitters. …If you would like just Andrew done send 150k USD to the same address you sent the other funds to. If you would like all four of them done, and product/money recovered from there send $500k.”
DPR: “$500k in [bitcoin] (3,000 @ $166/[bitcoin]) has been sent.”
R&W: “That problem was dealt with. I’ll try to catch you online to give you details. Just wanted to let you know right away so you have one less thing to worry about.”
DPR: “Thanks, see you on chat.”
That testimony was provided Monday in the closing hours of the trial that painted a picture of a man whom prosecutors claimed was living a double life as the operator of the online drug marketplace. He even reveled everything in his suspected private journal on his computer that was seized by the Feds, according to The Wall Street Journal. What prosecutors told the jury, according to WSJ, was that Ulbricht faced many emotions as a result of the rapid success of his tiny libertarian project that grew into a $1.2 billion enterprise. For Ulbricht, it became about power and the anonymity to act outside the law.
“Silk Road is going to become a phenomenon and at least one person will tell me about it, unknowing that I was its creator,” he wrote in one entry. What started under the name “Underground Brokers,” soon turned into the Silk Road.
And what a journey it became.
“I began working on a project that had been in my mind for over a year,” Ulbricht wrote. “The idea was to create a website where people could buy anything anonymously, with no trail whatsoever that could lead back to them.”
His double life continued as he told his friends he was “working on a bitcoin exchange,” according to prosecutors. But eventually he broke down, as his journal entry included: “It felt wrong to lie completely so I tried to tell the truth without revealing the bad part, but now I am in a jam,” according to an entry from December 2011.
“Everyone knows too much,” the post read.
From the posts prosecutors presented, Ulbricht knew the weight of what he had created and the legal issues surrounding the creation of his black market bitcoin project. But he didn’t believe he could be caught, as most criminals on the Deep Web never are.
One chat revealed by prosecutors pinpointed this mindset.
“What evidence could [prosecutors] pin on you?” the post read. “The only way for them to prove anything would be for them to watch you log in and do your work.”
And that’s exactly what the federal agents did when the lured him into a San Francisco public library where he logged on in October 2013 as the Dread Pirate Roberts onto the Silk Road marketplace. That was enough to nab him after two years of following the Deep Web mastermind. That fatal mistake could cost this cybercriminal life in prison.
And what does this case mean for bitcoins?
Two things.
It certainly affirms that bitcoin’s biggest use case was paying for things that you wouldn’t want your mama to know about. And, as a result, they haven’t yet broken on to the list of the federal government’s favorite things.
Convicted!
That was the big news of the week – as Dread Pirate Roberts, aka the mastermind of Silk Road, finds himself moving into prison, possibly for the rest of his life.
Banking of the anonymity of the digital currency, which turned out not to be true, Ulbricht didn’t help bitcoin’s namesake in the world of currency options, particularly in the eye of the Feds. But that’s not the only headline bitcoin made its way into this week.
In other news, Juniper Research reports that the value of bitcoin transactions will reach $30B this year, down from $70B last year. Even $70B represented a pindot of a pindot of a pindot of transactions, and these new estimates reduce that tiny pindot by more than half. It’s certainly not at all surprising that bitcoin, this week, is trading again, at $215.44 according to the PYMNTS.com Bitcoin Price index.
As always, if you have any news you’d like to share, please send it our way at contactus@pymnts.com.
Despite the hype, Bitcoin really isn’t anonymous as previously thought. Ross Ulbricht and his team of attorneys found that out the hard way when he was found guilty of running the Silk Road website and for long after the defense team claimed he stopped running his little “experiment.”
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