Feds Take Wind Out of Dread Pirate Roberts' Sails
Ex-Austinite accused of being one of the Internet's biggest crime lords
In The Princess Bride, it's a shock when Princess Buttercup works out that the Dread Pirate Roberts is actually Westley, the innocuous stable hand. Now it turns out that the man allegedly behind one of the Internet's biggest online illegal drug markets – screen name "Dread Pirate Roberts" – is some guy from West Lake Hills.
On Oct. 2 the FBI issued a complaint against Ross William Ulbricht, a 29-year-old Austin native, alleging that he ran Silk Road, one of the Internet's biggest black markets for criminal enterprises. In the complaint, Ulbricht is charged with conspiracy to traffic narcotics, hacking conspiracy, and conspiracy to launder money. A second indictment, out of Maryland, adds hiring a hitman to the pile.
The Silk Road name was taken from the old overland trading routes between China and Europe, but Ulbricht wasn't helping trade silk and tea. The FBI estimates that Silk Road "has been used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to well over a hundred thousand buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions." In total, they estimate it hosted roughly $1.2 billion in sales, and creamed $80 million in commission.
According to the complaint, Ulbricht set up Silk Road on The Onion Router (TOR), an Internet network designed to make it basically impossible to track the physical location or virtual identity of a user. As the complaint states, "Although TOR has legitimate uses, it also is known to be used by cybercriminals seeking to anonymize their online activity."
The FBI complaint alleges that Ulbricht was not only the brains behind the site, but also its system administrator and chief programmer, and deliberately designed it to be more amenable to criminals when he created the user category of "superstar vendor." Through a stealth mode, it offered extra protection to users who were at "risk of becoming a target of law enforcement."
Silk Road ran on "Bitcoins" – the virtual (and virtually unregulated) currency of the Internet. When the Feds busted Ulbricht and seized his Bitcoin account, he had the equivalent of $3.4 million in it, which they claim came from commissions on criminal sales. In fact, according to the Daily Dot, Ulbricht's big slip-up was that, when he was setting up the site, he used his easily traceable Gmail account to try to hire a Bitcoin expert.
Aside from drugs, the FBI alleges that vendors on Silk Road offered everything from hacking tools to stolen bank account info and even hitmen. In the Maryland complaint, Ulbricht is alleged to have hired a Silk Road user to kill a former employee of the site who had been arrested. He paid the user $40,000; unfortunately for him, the user was actually an undercover agent, and the feds sent him a faked photo of the crime scene, claiming they had destroyed the body.
This may not have been a one-off. The FBI complaint alleges that Ulbricht was prepared to use "violent means" to run his operation, and that, around March 29 of this year, he "solicited a murder-for-hire of a certain Silk Road user, who was attempting to extort money from [him]" after a Canadian nicknamed FriendlyChemist threatened to publish the names and addresses of 5,000 Silk Road users and about two dozen vendors that he had hacked from another Silk Road vendor's account.