Silk Road Shut Down, Founder Arrested, $3.6 Million Worth of Bitcoin Seized

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Silk Road Shut Down, Founder Arrested, $3.6 Million Worth of Bitcoin Seized

Posted by Unknown on Wednesday October 2, 2013 @04:41AM from the breaking-the-law dept.

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.

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Tor compromised by MetalliQaZ · 2013-10-02 04:44 · Score: 5, Insightful

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.

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"Here Lies Philip J. Fry, named for his uncle, to carry on his spirit"
1. Re:Tor compromised by Anonymous Coward · 2013-10-02 04:51 · Score: 5, Insightful
  
  *(Maybe. We don't know really.)
  Silk Road, however, is exceptionally well known as an illicit enterprise, so despite anonymity of packet data (or not...) they're targeted anyway.
  If known to be engaging in criminal activity, Tor is not really going to save you or be the critical flaw in your plan, either.
2. Re:Tor compromised by Bulge+Temptingly · 2013-10-02 04:52 · Score: 5, Informative
  
  Nope, apparently Canadian authorities turned up some fake ID in a routine postal search.
3. Re:Tor compromised by Anonymous Coward · 2013-10-02 04:55 · Score: 5, Informative
  
  it appears that agents found Ulbricht after Canadian border authorities routinely checked a package intended for his San Francisco home and discovered nine fake identification cards within, which Ulbricht allegedly was seeking to obtain to rent more servers to power Silk Road as it massively expanded.
  source: http://www.forbes.com/sites/alexkonrad/2013/10/02/feds-shut-down-silk-road-owner-known-as-dread-pirate-roberts-arrested/
4. Re:Tor compromised by Drachs · 2013-10-02 04:55 · Score: 5, Interesting
  
  If I was guessing, I'd guess it was bitcoin, not Tor that did him in. He was moving way too much volume to hide all that. After all, the block chain is public. The FBI only has to lean on the various organizations that turn bitcoin into cash. If it gets the addresses of all their wallets, all their customer account information, and the identity of some coins that were spent on the silk road, it only has to work backwards to see who turned those coins into cash. People think bitcoin is anonymous, but it keeps a record of every transaction. This is probably the beginning of the end for bitcoin. I'm not sure it's mature enough to sustain itself without the black market support.
5. Re:Tor compromised by Anonymous Coward · 2013-10-02 04:57 · Score: 5, Informative
  
  Nope.
  http://krebsonsecurity.com/wp-content/uploads/2013/10/UlbrichtCriminalComplaint.pdf
  TLDR version:
  A user named altoids advertised SR on various forums very early on.
  Later the same user wanted some dev work done, used a gmail address as contact.
  Same gmail address leads to a LinkedIn profile ... and a name and address.
  Seize that dudes computers.
  Find keys to the kingdom for the SR servers.
6. Re:Tor compromised by Dunbal · 2013-10-02 05:06 · Score: 5, Insightful
  
  it seems that the Tor system is compromised by the snoops.
  The safest option is to assume that EVERYTHING is compromised nowadays. Your OS. Your security certificate server. Your ISP. Your VPN. SSL. Your webcam. Everything.
  
  --
  Seven puppies were harmed during the making of this post.
7. Re:Tor compromised by gl4ss · 2013-10-02 05:09 · Score: 5, Interesting
  
  ...a canadian routine postal search? sounds a bit of fabrication(you know, finding evidence illegally and then fabricating something for a bust). I seriously doubt they have fakeid smelling dogs.
  but was he really hosting the operation from san fransisco? why, why on earth? why have anything tying him to it at home??
  
  --
  world was created 5 seconds before this post as it is.
8. Re:Tor compromised by root_brewski · 2013-10-02 05:12 · Score: 5, Informative
  
  From Forbes: "Agents found Ulbricht after Canadian border authorities routinely checked a package intended for his San Francisco home and discovered nine fake identification cards within, which Ulbricht allegedly was seeking to obtain to rent more servers to power Silk Road as it massively expanded." Link: http://www.forbes.com/sites/alexkonrad/2013/10/02/feds-shut-down-silk-road-owner-known-as-dread-pirate-roberts-arrested/
9. Re:Tor compromised by TheSpoom · 2013-10-02 05:18 · Score: 5, Insightful
  
  Wait, so after all the NSA bullshit, he was caught by Canada? Oh, the irony.
  
  --
  It's better to vote for what you want and not get it than to vote for what you don't want and get it.
  - E. Debs
10. Re:Tor compromised by Minwee · 2013-10-02 05:34 · Score: 5, Funny
  
  Sorry about that.
11. Re:Tor compromised by Anonymous Coward · 2013-10-02 05:40 · Score: 5, Insightful
  
  Not a surprise, they routinely open whatever packages the NSA tells them to.
12. Re:Tor compromised by Beardo+the+Bearded · 2013-10-02 05:44 · Score: 5, Informative
  
  It's not a "lucky coincidence". I'm Canadian and I buy some stuff online. Here's why they tend to open packages:
  1. Canadian Border Services gets $5 for every package they open. (I call this the "putting their dick in it" fee.) You can not appeal this fee.
  2. As you have more stuff sent to you, they tend to open more of your packages. My ex-wife ordered lots of stuff online (mostly knitting supplies) and towards the end of her interest in her hobby, they were opening 90% of her packages. Mine were rarely opened.
  3. They get a little more openy when you're doing your own brokerage. FedEx and UPS charge about $40 for brokerage, so some people do it themselves for $10. This requires you to go down to the border (or quasi-border), which in my city is the airport.
  So it wasn't a tip-off, it was just CBS looking for extra cash.
  
  --
  
  ---
  ECHELON is a government program to find words like bomb, jihad, plutonium, assassinate, and anarchy.
13. Re:Tor compromised by kermidge · 2013-10-02 06:14 · Score: 5, Insightful
  
  From reading an article on this before coming here, I'm still flabbergasted that he was using servers in the U.S. Color me naive but I don't see where that made sense.
  Second thing, after reading more, is why the blazes did he have anything to do with SR sent directly to himself?
  I realize 20-20 hindsight and all, but c'mon, seems to me that's all 'security 101' stuff, no?
14. Re:Tor compromised by Anonymous Coward · 2013-10-02 06:51 · Score: 5, Insightful
  
  What we can learn from this as well as history, is they can take down the silk road site all they want, there will be 5 more to take its place and learn from its mistakes before you can say drug war.
  
  Even after all these years I find it hard to accept that so many people have a problem with people they don't even know doing things they never would have heard about had it not been for the theft and abuse of their own rights and money. Strange world we live in...
15. Re:Tor compromised by TheCarp · 2013-10-02 08:07 · Score: 5, Interesting
  
  > Legalization of heroin or other highly addictive drugs would be disastrous.
  I hear this a lot; but what is it even based on? I used to be just a "legalize pot" guy, but the more I looked at it, the more I found that drug prohibition didn't solve, or even help, a single problem.
  Do you know what percentage of people in burn units in the US (ever been to a burn unit btw? not a fun place) are there for cooking meth? Its about half. Yes....HALF the people in burn units. How the hell did we get here?
  Meth has been around since the fucking 1930s. Never before in history could you say half of the people being treated for severe burns came from meth cooking, why now? The answer is fairly simple.... the DEA pushed other drugs off the market, and in the vacuume, people looking to make a quick buck or get their fix, asked "What is the easiest stimulent drug I can make at home" turns out...meth was the winner.
  So they took a problem...and made it worst. They did that with fucking everyting. Would we have IV drug use without prohibition? Sure, a few. However, I doubt it would be nearly as popular. I mostly doubt it because, people were using other drugs before meth became so available.
  Krokodil or however they spell it.... is desomorphine. Everything I read about it indicates it would be a fine drug for opiate addicts. Its fairly short acting, it produces less respiratory distress (ie its safer). However.... its also cheap to produce in your kitchen from codiene. Why are people doing it? Because they can't buy anything cheaper! Who the hell would whip up something in their kitchen and inject it, if, for a similar price, they could buy it?
  Look at the swiss heroin study, allowed users cheap, fairly priced heroin and gave them a safe place to shoot up. Quickly the subjects of the study ceased illegal activities and got jobs.
  Frankly the claims of problems with legalization sound no different and are based on no more sound evidence than claims that accepting homosexuality is going to turn children gay.
  
  --
  "I opened my eyes, and everything went dark again"
16. Re:Tor compromised by ancientt · 2013-10-02 08:47 · Score: 5, Insightful
  
  He promoted the website using his real name attached to a gmail account with his real name as part of the address. They may not have found that out until they were ready to make a bigger case against him, but as I was reading the criminal complaint and saw that, I was dumbfounded that anyone could actually be that dense about security. Reading an older article, I see where he was asked if he was worried about law-enforcement agencies trying to track him down. He said "I have confidence in our security measures."
  
  --
  B) Eliminate all the stupid users. This is frowned upon by society.
17. Re:Tor compromised by ProzacPatient · 2013-10-02 10:21 · Score: 5, Funny
  
  One alternative would be to buy a car wash
Didn't expect this... by SgtKeeling · 2013-10-02 04:47 · Score: 5, Interesting

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
Re:HOW?? by i+kan+reed · 2013-10-02 04:51 · Score: 5, Insightful

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.
Re:HOW?? by Anonymous Coward · 2013-10-02 04:52 · Score: 5, Insightful

Yup. NSA -> FBI -> Parallel Construction Filter -> Arrest.
Tor was not designed to protect against an adversary that has a global view of all traffic.
Re:strange summary FTA by Anonymous Coward · 2013-10-02 04:57 · Score: 5, Funny

They didn't. They used their backdoor.
So how long... by Em+Adespoton · 2013-10-02 04:58 · Score: 5, Funny

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?
Re:Billion ... with a B by gandhi_2 · 2013-10-02 05:32 · Score: 5, Funny

War on Drugs? Don't know.
The War on Incorrect Usage of "Begs the Question" however, we are obviously losing.

--
THL phish sticks
Re:HOW?? by LifesABeach · 2013-10-02 05:41 · Score: 5, Interesting

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.
DEA & parallel construction? by Valdrax · 2013-10-02 06:00 · Score: 5, Insightful

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.

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Value of bitcoins by halcyon1234 · 2013-10-02 06:30 · Score: 5, Funny

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

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UTF-8: There and Back Again
Re:HOW?? by Hatta · 2013-10-02 08:43 · Score: 5, Insightful

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.

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