A Phoenix will rise from the ashes.....
Feds smash internet drug bazaar Silk Road, say they'll KEELHAUL 'Dread Pirate Roberts'
The notorious online drug market Silk Road has been shut down by the FBI, its suspected operator arrested and charged with narcotics trafficking conspiracy, computer hacking conspiracy, and money laundering conspiracy, and $3.6m worth of the bitcoin crypto-currency has been confiscated by federal agents. The site's alleged …
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Thursday 3rd October 2013 13:17 GMT S4qFBxkFFg
I'd say Dragons' Teeth myself.
I am guessing that when the histories are written, Silk Road will be comparable to Napster.
With all those dealers and customers left hanging, more Tor/Bitcoin drugs marketplaces will be springing up soon (if not already).
They'll probably try to avoid the mistakes of Silk Road; some of them might succeed.
Also, if this makes "street" dealing, with the associated violence, non viable, then we should all celebrate.
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Wednesday 2nd October 2013 22:17 GMT Don Jefe
Drug dealers who have enough scale to make real money get caught (or dead). That's a nearly universal truth. I don't think anyone will be screaming injustice.
What does suck, is now that Bitcoin has been proven as a way to finance large scale drug transactions governments everywhere will squash it. I think the whole concept of Bitcoin is kind of dumb, but a lot of people are into it. Not all if those people are into drugs but they'll be 'associated' with narcotics financing now, and that does kind of suck for them.
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Thursday 3rd October 2013 09:48 GMT Japhy Ryder
All kinds of financial instruments are used in all kinds of illegal deals, so you could say that anyone using, for example, "cash" has been 'associated' with narcotics financing for a heck of a long time now.
I would also hazard a guess that just about every form of human communication has been pressed into service at one time or another by those engaged in nefarious deeds - are all those similarly tarnished?
Or is it just those associated with the "Internet" that get tarnished?
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Thursday 3rd October 2013 10:10 GMT auburnman
Would they be allowed to sell them straight away? I know they can seize and sell proceeds of crime, but wouldn't they have to hold them until a court convicts Ulbricht before they can be disposed of?
They would probably hang on to the 'cash' anyway, Bitcoins will probably be in demand in the FBI for undercover/sting operations.
From a technical perspective, would it be possible for other users of BitCoin to know which Bitcoins landed in FBI hands from the blockchain? ie if I were an Underworld Kingpin, could I rig a system to decline BC transactions involving coins that were in Ulbricht's wallet?
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Thursday 3rd October 2013 10:47 GMT TakeTheSkyRoad
After posting the above I actually read somewhere else that assets aren't "liquidated" until after a case is closed. In that case they might just hold onto them but they could still treat the bitcoins as currency (rather than a physical asset) and exchange them to USD for easier handling later. This would preserve the current value as well in a volatile market.
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Thursday 3rd October 2013 12:06 GMT CommanderGalaxian
>From a technical perspective, would it be possible for other users of BitCoin to know which Bitcoins landed in FBI hands from the blockchain...
Not really no. But unfortunately - BitCoin being only really pseudo-anon - it could be possible for the Feds to figure who the BitCoins originally belogned too.
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Thursday 3rd October 2013 11:57 GMT CommanderGalaxian
>>Well they probably sold them, that would explain the dip in the bitcoin prices.
>Of course that could have been a few dealers cashing out but the charts show the big sales just with a couple of hours.
Sounds like Insider Trading to me. You would assume they do the honourable thing and turn themselves in, rather than profiting from drugs and crime and things....
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Thursday 3rd October 2013 00:31 GMT Paul J Turner
Not as bad as depicted
Bitcoin value didn't drop as much as the graph of the inflated Mt. Gox exchange rate seems to show, the Y-Axis starts at 105, not zero and only goes up to 145.
So, a drop from 140 to 100 , since recovered to around 122.6, about 20% as opposed to the 42% the graph seems to depict at first glance.
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Thursday 3rd October 2013 07:54 GMT Tim Jenkins
Re: Hello
and if we're doing quotes, '"don't get high off your own supply" goes back at least as far as '83, in 'Scarface'
Frank: "Lesson number one: Don't underestimate... the other guy's greed!"
Elvira: "Lesson number two: Don't get high on your own supply. Of course, not everyone follows the rules... "
Can't think what they were referring to, though, as no-one could buy drugs before Tor/Bitcoin, could they?
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Thursday 3rd October 2013 06:12 GMT Daniel B.
Identity FAIL
So the one thing that is still a mystery is how they got hold of the server itself. Because tracking down this guy seems to have been pretty easy; having your nickname or "internet handle" be easily linked to your real life name is a surefire way to get the feds on you. Especially if you're running an overtly illegal scheme.
So it seems to be less of an NSA-assisted manhunt and more of the Dreaded Pirate Roberts ... err... Ulbricht being too dumb to do illegal stuff.
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Thursday 3rd October 2013 09:02 GMT Magnus_Pym
"Ulbricht made a number of operational security mistakes".
Probably linked to financial data available to certain agencies. It's alright being a bitcoin billionaire but convert it to a 'real' currency and you pop up on certain agency's OPDM (other peoples data mining) radar and become a 'person of interest'.
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Thursday 3rd October 2013 09:17 GMT Jon Green
Doesn't need TOR-cracking abilities
It's easy to make woo-woo noises and be scared of the NSA for tracing the server, but that's probably not how it happened. Once the Feds had enough information to identify Ulbricht - and he certainly doesn't seem to have been too discreet about it, if the testimony's accurate - they would have subpoenaed his financial records, worked out to whom he was paying hosting fees, and then followed due process in/with the host's country to track down the server itself. This is standard policing, not über-spookery: "Follow the money."
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Thursday 3rd October 2013 09:36 GMT DJO
Tor
Oh I wonder how they broke TOR? let's look at the genesis and history of TOR:
Q: Now who developed it?
A: A notorious group of dissident anarchists known as "The U.S. Naval Research Laboratory" - the fiends
Q: Who paid for it?
A: 80% of the Tor Project's $2M annual budget comes from the United States government, with the Swedish government and other organizations providing the rest. Such evil anti establishment organisations you'd be harder to find.
This took 30 seconds of research and people are still dumb enough to fully trust TOR.
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Friday 4th October 2013 04:00 GMT Daniel B.
Re: Tor
TOR project has been off-Navy for years, plenty of time to catch or fix any planted backdoors. However, people from the TOR project themselves have stated that TOR isn't built to withstand a multi-national snooping operation (precisely what the NSA does).
However, this particular dude was caught for being stupid. TOR wasn't even involved in tracing him to the source!
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Thursday 3rd October 2013 10:01 GMT Anonymous Coward
In the Forbes interview DPR says he is not the original DPR.
In The Princess Bride DPR is a collective nom, it is inherited by the most prolific of the pirates. It's not the same person all the time.
Why is the SR logo in the background?
The emergency payout seems to be working correctly from reports I've seen. SWIM also received their money back.
I have no doubt this was a high level user, possibly the current DPR, but there are others ready to take over the mantle.