Mastermind Behind Silk Road Convicted on All Charges

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Prisoner hand on barbed wire fence

American web developer Ross Ulbricht was this week convicted on seven Federal charges, including trafficking drugs on the internet, computer hacking and money laundering.

Following a three-week long trial, a jury found that the 30-year-old had planned, created and run the Silk Road, an anonymous online black market which enabled users to trade prohibited items including drugs, weapons and stolen goods.

Transactions were facilitated by the online cryptocurrency Bitcoin, which has the capacity to bypass government controls and obscure payment sources.

Ulbricht was arrested in October 2013 in a San Francisco public library after he attempted to log on to the website under the pseudonym ‘Dread Pirate Roberts.’

He had been the subject of a lengthy FBI investigation which allegedly uncovered substantial evidence linking him to the site, including online chat transcripts, website reports, maintenance logs and journal entries detailing his progress on the site’s development.

At the time of his arrest, Ulbricht had been in contact with an undercover FBI agent who was posing as a Silk Road employee.

The court also heard allegations that Ulbricht attempted to arrange the murder of up to six people, including one user who threatened to publish personal information about the site’s users unless he was paid $500,000.

Evidence was presented in court that Ulbricht had paid at least $150,000 to a member of the Hells Angels motorcycle club to carry out a single killing.

It is somewhat surprising that such evidence was admitted into evidence, as Ulbricht was not charged with conspiracy to murder or any similar offence, and it might be argued that the evidence should have been excluded on the basis that it was unfairly prejudicial.

Ulbricht’s lawyers defended the allegations, arguing that their client had created the website as an ‘economic experiment’ which was later sold to others who were responsible for running the illegal empire.

The defence position was that Ulbricht had been lured back to the website towards the end of the enterprise by the ‘true’ mastermind behind the Silk Road – Mark Karpeles; the CEO of Bitcoin exchange Mt. Gox.

Ulbricht’s lawyers asserted that his laptop had been hacked, and incriminating evidence planted on it in order to frame him, stating that data could ‘so easily be fabricated, edited, distorted, moved and manipulated.’

But the prosecution countered by labelling this as a ‘desperate attempt to create a smokescreen.’

Ulbricht launched the Silk Road in 2011 and ran it until it was subsequently dismantled by government agencies in 2013.

During its lifetime, it facilitated an estimated $213 million in illegal transactions, with Ulbricht allegedly taking a cut from each sale on the website.

It is claimed that drug-related sales accounted for around 70% of the site’s transactions.

Agents who arrested Mr Ulbrict allegedly found evidence of $18 million worth of Bitcoins in his accounts.

Ulbricht is yet to be sentenced and faces a maximum penalty of life imprisonment, however his defence team has vowed to appeal the verdict.

Over the course of the three-week trial, Ulbricht’s lawyers called for a mistrial numerous times, arguing that the prosecution should not have been allowed to admit evidence that had been obtained without warrant by FBI agents.

Defence counsel also argued that several prosecution witnesses should not have been allowed to give testimony.

Will the Closure of the Silk Road Have an Impact on the Online Drug Trade?

Despite law enforcement agencies heralding the site’s closure as a major victory in the war against online drug trafficking, it is not yet clear whether the end of the Silk Road will have any long-term impact on online drug trades.

The closure of the Silk Road has already spawned numerous other knock-off sites offering similar services.

And anyone familiar with online file-sharing site The Pirate Bay, which allows users to share pirated digital content, will be aware of the site’s ability to spontaneously regenerate each time its servers are targeted and dismantled by authorities.

The Pirate Bay illustrates just how easy it is for online users to circumvent the law, even in the wake of legal disputes.

Supporters of the Silk Road argue that it provided a safe outlet for people to buy a range of goods.

Like sites such as eBay, buyers on the Silk Road were able to provide feedback and reviews to sellers, which informed any potential buyers of the quality of the seller’s goods.

Despite this, purchasing drugs and other goods from websites such as the Silk Road is not without its risks.

The proliferation of the site saw a number of people being prosecuted for drug and money laundering offences.

One of these people was Dylan Terry Richardson, an Australian man who was charged with drug importation and drug supply after allegedly importing $15,000 of methamphetamines.

He was arrested after Customs intercepted a parcel addressed to him which allegedly contained 15 grams of methamphetamine.

A subsequent search of Richardon’s New Zealand home unearthed various forms of drug paraphernalia, while an investigation asserted that he had purchased the drugs on the Silk Road.

Another Australian man, Paul Leslie Howard, allegedly imported drugs using the Silk Road 11 times.

He was charged after Customs allegedly intercepted mail containing large quantities of MDMA and cocaine.

He was ultimately found guilty of importing a marketable quantity of a border-controlled drug.

However, these arrests account for just a tiny fraction of the website’s total sales, suggesting that authorities have had limited success in dismantling the online drug market.

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Ugur Nedim

Ugur Nedim

Ugur Nedim is an Accredited Criminal Law Specialist with 25 years of experience as a Criminal Defence Lawyer. He is the Principal of Sydney Criminal Lawyers®.

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