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Silk Road Shut Down, Founder Arrested, $3.6 Million Worth of Bitcoin Seized
New submitter u38cg writes Ross William Ulbricht, known as 'Dread Pirate Roberts,' was arrested in San Francisco yesterday and has been charged with one count each of narcotics trafficking conspiracy, computer hacking conspiracy, and money laundering conspiracy, according to a court filing. Silk Road has been shut down and some $3.6m in Bitcoin (26,000 Btc) seized. The question is — how?"
onyxruby submitted a link to the criminal complaint (PDF; coral cache might work better). The court filing indicates that they seized the actual servers and recovered their contents, making numerous references to the private messaging system. Also according to the court filing, the Silk Road was used to sell ~$1.2 billion in illicit goods since being founded in 2011.
I think it can be argued that Silk Road practiced the use of Tor as well as anyone could have. They still got pinched. Although it may come out that an insider turned informant, it seems that the Tor system is compromised by the snoops.
"Here Lies Philip J. Fry, named for his uncle, to carry on his spirit"
So this begs the question - Are we winning the war on drugs yet?
I just finished reading Gwern's guide to the Silk Road the other evening. If you weren't familiar with the goods for sale, or how it worked, this is a great article: http://www.gwern.net/Silk%20Road
This guy had to convert some of the bitcoin into real $ at some point, he had to eat and live somewhere right? Money laundering investigations might have been the vector through which he was compromised instead of a computer based trace.
Or more specifically, monitoring known(or complicit) tor entry nodes, looking for quantity of activity corresponding to activity by roberts, back tracking to the origin IP address, getting a warrant for a full-on-monitoring of that address, verifying their target, then going for a bust.
Encryption and anonymyzing technology only works in as much as no one with any resources actively wants to figure out who you are. You might be able to hide your message, but you'll never hide your existence.
Yup. NSA -> FBI -> Parallel Construction Filter -> Arrest.
Tor was not designed to protect against an adversary that has a global view of all traffic.
According to the complaint, they tracked him by intercepting fake id's he sent to his actual home address. Whether they breached TOR and just set him up, or just hit the stupid mistake of a lifetime by him using his actual address I doubt we will ever know. In any case, they traced things back to him in the end it seems.
The only surprise here is why this arrest and seizure took so long. I hope all these evildoers and drug pushers realize now that they can't hide behind anonymity and the authorities can prosecute and punish these dastardly bastards.
Congrats to the FBI, DEA, and government for taking this hooligan down.
Sounds like you need a mushroom session.
They didn't. They used their backdoor.
So how long will it be before the Silk Road is back up and running under the management of the Dread Pirate Roberts? I presume he had a cabin boy prior to being arrested... or was that how he got nabbed?
It's an open secret that Silk Road was THE primary driver of demand for bitcoin in the beginning. Adoption by the Silk Road transformed bitcoin from a technical curiosity to a real currency backed by a valuable physical commodity (drugs).
Bitcoin has a life of its own now. Even Wall Street is involved. But without Silk Road, 99% of slashdot would have never heard of bitcoin. And the end of Silk Road is certain to impact bitcoin in a big way, even today.
Or more specifically, monitoring known(or complicit) tor entry nodes, looking for quantity of activity corresponding to activity by roberts, back tracking to the origin IP address, getting a warrant for a full-on-monitoring of that address, verifying their target, then going for a bust.
Encryption and anonymyzing technology only works in as much as no one with any resources actively wants to figure out who you are. You might be able to hide your message, but you'll never hide your existence.
You had me sold on this theory, right up until you said "warrant".
Then I knew it was bullshit.
Like our government feels the need to recognize the legal process anymore.
Everyone knows the real Dread Pirate Roberts has been retired +15 years in Patagonia ... But, of course, no one would care about arresting the Dread Pirate Ulbricht.
It must have been something you assimilated. . . .
The object of this Essay is to assert one very simple principle, as entitled to govern absolutely the dealings of society with the individual in the way of compulsion and control, whether the means used be physical force in the form of legal penalties, or the moral coercion of public opinion. That principle is, that the sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in the opinion of others, to do so would be wise, or even right... The only part of the conduct of anyone, for which he is amenable to society, is that which concerns others. In the part which merely concerns himself, his independence is, of right, absolute. Over himself, over his own body and mind, the individual is sovereign.
— John Stuart Mill,
Prove anything by multiplying Huge Number times Tiny Number
https://medium.com/p/d48995e8eb5a
I didn't write it.
Link to indictment contained within too.
http://lkml.org/lkml/2005/8/20/95
Will the government try to redeem these bitcoins? Wouldn't that be like saying that they accept that bitcoin is valid? (Of course they could be hypocrites and say that bitcoin is completely invalid and redeem them anyways.)
It would be neat if all the seized bitcoins could be identified and recorded as being worthless now.
You had me sold on this theory, right up until you said "warrant".
Then I knew it was bullshit.
Like our government feels the need to recognize the legal process anymore.
You know that he's going to have a trial, right? And that the FBI won't want him to get off because there was no warrant for the evidence the prosecution presents in that trial, right? There might very well be unconstitutional monitoring in this process, but to bring it to court and get a conviction, a warrant is necessary paperwork.
No. http://www1.icsi.berkeley.edu/~nweaver/UlbrichtCriminalComplaint.pdf has more info. DPR got extremely sloppy with keeping his identities separate. The Tor part worked fine.
It didn't stop them from abusing the crap out of the law when they got Kim Dotcom. That said, Kim might walk because there was so much prosecutorial misconduct.
I read the internet for the articles.
Using the word "evildoers" in a context other then a Saturday morning cartoon means that he is brainwashed.
it is more likely than not that a very clear paper trail will be shown that it all happened by good old fashioned police investigation as you described.
It doesn't mean it was not obtained with an illicit program to begin with, only that they were able to cross the "t"s an dot the "i"s later.
i'm attacking the notion that because the "war" goes on forever it is invalid. you also need to take the trash out every thursday. is that an argument to end "the war on trash"? no, some functions of society are just maintenance functions that never end
i'm not defending us drug policy, it's poor tactics. and some substances need to be legal. but i'm attacking the notion that just because there's demand and supply for something, therefore it needs to be accepted
example: something like meth has a lot of supply and demand. meth also creates horrible costs to individuals and society. such that attacking the meth supply and demand chain has direct costs, and secondary costs. but if meth use is minimized to some extent because of the "war", that pays dividends in the form of less overall costs for individuals and society in regards to the harm that meth does. such that fighting meth is worth it
it's a case-by-case basis. just because marijuana is legalized (and should be legalized) doesn't mean all drugs should be. each substance has to be evaluated individually
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
The US Government cares, but only so far as they need to make sure they get reciprocal privileges in that country. Obviously, US power makes it easier to get things done without having to horse trade for it, but ultimately, it only works if there is not too much abuse.
It sure doesn't read like TOR was compromised. It was the Gmail account DPR left when first advertising SR on a shrooms site. The FBI (if they aren't just covering for the NSA) do seem to have caught DPR through old fashioned sleuth work. Yes, they managed to copy a server but they still couldn't get the names out of it, only link the messages and transaction dates to other events they tracked down to DPR after tentatively identifying him using Gmail, Google+ and LinkedIn. Ouch.
I find myself ambivalent to Silk Road actions when I think of the losses to over 30 million American home owners of their homes to outside factors that they had no control over. That those involved in attacking the U.S.Economy got less regulation, and squandered, then profited from it. I believe the "Robo Singers" should be in prison, with restituion for damages caused. And yet, they walk more free than everyone else.
Every incoming (or, I guess, in the case of Canada, outgoing) mail parcel goes through an x-ray (I'm not saying they actually pay a lot of attention to each one; it's kind of luck-of-the-draw.) If the inspector sees a package containing a bunch of plastic cards and something that looks like a passport, they are naturally going to wonder what that's doing being sent via international mail. It's not as if you can accidentally leave your passport at home when leaving the country.
Because customs facilities are on international borders, they don't need anything but the barest suspicion to take a peek in your package, certainly not a warrant.
But yeah, hosting SR in SanFran was not very bright. Of course, given that what he was doing would get him arrested in pretty much every country in the land, there's not really any good location for the servers. Even in Russia, you would have needed some pretty good underworld connections to keep those servers out of govt. hands.
Wow, if people read the criminal indictment there's one, possibly even two murder-for-hires in the wings linked to (allegedly posted by / conversation with) this guy.
-Matt
Wait, so after all the NSA bullshit, he was caught by Canada? Oh, the irony.
Welllll, maybe...
Do you remember the recent stories about the DEA and "parallel construction," where the DEA was getting phone records from the NSA and then using them to identify suspects from which they could reverse engineer a false "lead" to let the police just happen to find other incriminating evidence to build a case on?
I'm not saying that's clearly what happened here, but as others have pointed out, it's a distinct possibility given that drugs are involved.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
I'm not going to cry about criminals going to jail. it's people like this that help the govt justify the NSA, etc. they need all these tools because people who use encryption / tor / bitcoin / etc are criminals! thanks silk road for ruining it for the rest of us.
it's like the shoe bomber guy who gave the gov't authority to tell me to take off my shoes, and the underwear bomber guy who convinced the govt to fondle my nuts every time I went through security (although secretly they always wanted to do that). Now because of the boston bombers NSA will be collating my online profile to look for "suspicious activities" that may make me a potential terrorist.
I think in 1984 the Goldman terrorist guy actually didn't exist, and was just a gov't front to justify their behaviors and scare people. maybe that's what's going on here?
Article: 11:36am: US Government seizes $3.6 million worth of bitcoins
Update, 11:45am: US Government seizes $1.75 million worth of bitcoins
Update, 12:03pm: US Government seizes $8.3 million worth of bitcoins
Update, 12:54pm: US Government seizes $766 thousand worth of bitcoins
Update, 3:27pm: US Government seizes Eight Dollars worth of bitcoins
Update, 5:55pm: US Government seizes $15 million worth of bitcoins
UTF-8: There and Back Again
Look up "Parallel Construction". Regardless of how much they originally had on him through NSA channels or whatever, I assure they have a clean paper trail with enough to take him to trial for stuff he did after they already had warranted phone taps and e-mail, etc.
Peter predicted that you would "deliberately forget" creation 2000 years ago...
The US govt seized my bitcoins which silk road kept for me. I am not a US citizen. I have not committed a crime involving us soil or citizens. Will I be able to reclaim my bitcoins? I was actually keeping them there as a safe haven.
You will probably not be able to get your coins back. They have been seized via civil forfeiture. To get your coins back, you will need to establish proof that you are the owner of the coins and that you qualify for an "innocent owner" defense under 18 USC 983(d). Specifically, you will need to show that you "(i) did not know of the conduct giving rise to forfeiture; or (ii) upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property."
So, can you show that you did not know that drugs and other illicit materials were being traded on Silk Road? If not, can you show that you tried to get your coins out as soon as you learned this was the case? If not, then goodbye money. You shouldn't have knowingly comingled funds with criminals.
Beyond the unlikelihood of successful recovery, I would point out that attempting to claim your coins may put you at risk of criminal charges for your own actions. I note that you specifically mention that you "have not committed a crime involving us soil or citizens" (emphasis added). If you have used your coins to participate in a crime elsewhere or have participated in activity that is legal elsewhere but criminal in the US (e.g. trade in controlled substances), you may run afoul of money laundering charges (18 USC 1956-1957) and RICO (18 USC 1961-1968).
I highly recommend you consult a real attorney first. (I am not one!) Be honest with them; you have attorney-client privilege in the US and in many other countries, and they cannot give good legal advice without all the facts. Don't be reckless, though. Since you're a foreign national, any calls to the US will most likely be monitored according to recent news, and the DEA is accused of using information they can't legally obtain to fake up a "clean" evidence trail that can't be constitutionally impeached. If possible, you may wish to seek an attorney local to your country who works with US law internationally.
Final note: I am not a lawyer. This should not be construed as legal advice, and I may be quite wrong on several aspects of the above. If you are in serious trouble, consult a real attorney and not Slashdot.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
You perspective is common, but I think flawed. We need to have law and order in a civil society, even when there are great injustices also taking place. As a thought experiment, imagine that you are living in South prior to the Civil War. Women can't vote and people are actually enslaved right in your very own town. Now you find out that a guy in town is passing off counterfeit money. Do you arrest and prosecute the guy, or do you let him go because what he is doing is a trivial crime because one of the most unspeakably horrible crimes that man has ever perpetuated upon man is occurring at the same time?
Anyway, my 2 cents...
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Now, onto how he got caught... An agent involved in the investigation ("Agent-1"), found the first few references to SR on the internet from somebody only identified as "altoid", attempting to promote the site in its beginning days, in January of 2011.
In October of the same year, a user also going by the name of "altoid" made a posting on Bitcoin Talk titled "a venture backed Bitcoin startup company", which directed interested users to "rossulbricht at gmail dot com".
That email address is what led to DPR's downfall.
---
After identifying "altoid", they started connecting the "DPR" identity to Ulbricht pretty quickly.
Ulbricht's Google+ page and YouTube profile both make multiple references to the a website dubbed the "Mises Institute". DPR's signature on the SR forums contained a link to the Mises Institute.
DPR cited the "Austrian Economic theory" along with the works of Ludwig von Mises and Murray Rothbard, all of which are closesly associated with the Mises Institute.
Server logs show that someone logged onto the SR administration panel from San Fransisco around the same time that Ulbricht was staying in San Fransisco.
Multiple fake IDs were intercepted by U.S. Customs & Border Patrol while on their way to an address which Ulbricht was living at the time.
These IDs all carried photos of Ulbricht but had false names and details. This was around the same time that DPR stated in a message that he was acquiring some fake IDs to buy new servers.
When questioned by Homeland Security about the fake IDs, he refused to answer any questions but then stated that anyone could purchase such things using "Silk Road" and "Tor".
The address which Ulbricht was staying at was being rented in cash and he was living with housemates who knew him under a name which corresponded with one of the fake IDs.
He posted on StackOverflow using his real name, inquiring about how to use curl/PHP to grab things off Tor, before quickly changing the name to "frosty" (with a fake email: frosty@frosty.com)
Thought my money is on NSA and parallel construction.
One of the more significant recent revelations is that the govt uses "parallel construction" in building a cae. If possibly illegal surveillance is used to catch you, they -- after the fact -- construct a legal scenario for how they MIGHT have caught you that will pass muster w/ a judge.
Sent from the iPad I found in your car.
If he's an ally in the fight against slavery, you're damned right you don't do anything about it. And in this case, what we're talking about is a modern equivalent to the underground railroad. DPR enabled the oppressed to live freer at great personal risk. That's worthy of respect.
Give me Classic Slashdot or give me death!
What value does law and order have to the slave? Law and order is nothing more than a tool, and when that tool is wielded by evil, it serves evil. A society where injustice is enforced by the government and cheered on by patriots is no society that is worth having.
Think about it, if you were the slave in your scenario, would you really care that an abolitionist had counterfeited currency? Hell no! If you thought that counterfeiting would lead to your freedom, I bet you would run the presses yourself.
Give me Classic Slashdot or give me death!
It's pure BS.
Since the eighties, everybody knows that Roberts is not one man, but a series of individuals who periodically pass the name and reputation to a chosen successor. Everyone except the successor and the former Roberts is then released at a convenient port, and a new crew is hired. The former Roberts stays aboard as first mate, referring to his successor as "Captain Roberts", and thereby establishing the new Roberts' persona. After the crew is convinced, the former Roberts leaves the ship and retires on his earnings.
This guy, Ross Ulbricht, made a number of critical mistakes irrespective of his use of TOR. For example, he posted on the shroomery.org forums using the user name "altoid" and then again a few days later on bitcointalk.org with the same user name. The court documents aren't clear on whether or not he was using TOR at the time he made those posts or when or how he created those accounts in the first place. Apparently, these were some of the earliest public posts promoting what would ultimately become the Silk Road. Eight months after that, the "altoid" identity was used again on the bitcointalk forum to advertise for an "IT pro in the Bitcoin community" to hire for a job with a "venture backed Bitcoin startup company". This was critical because the email address for the job posting was rossulbricht at gmail. So this guy used his real email address (which contained his real name) posting as "altoid", the same account that had earlier promoted the Silk Road concept on both shroomery and bitcointalks: epic fail. . From there it was proverbial cake for the authorities to monitor his Google accounts and trace the IP address of his logins to an Internet cafe in San Francisco. They also found that he had an account on the Mises Institute website (an Austrian Economics organization) under Ross Ulbricht and the Silk Road website also linked to the Mises Institute website. Yet more evidence, albeit circumstantial, that Ulbricht was the one behind Silk Road. Game, Set and Match to the the 3 letter agencies and the USSS. Have a nice day.