If you’ve spent time researching the dark web, you’ve likely come across the name “Ross Ulbricht.” Many know him as the founder of the popular dark-web marketplace, the Silk Road, but most don’t know the whole story. Learning about Ulbricht’s infamy and why he was given a double life sentence is essential to understanding the potential for illicit funds to be transferred via cryptocurrency.
What is the Silk Road?
The Silk Road was a dark-web marketplace founded by Ross Ulbricht in 2011. Users could buy and sell drugs, weapons, hacked passwords, and other illegal items using Bitcoin. People typically used virtual private networks and Tor, a browser that disguised users’ IP addresses to protect their identities. Buyers and sellers used encrypted messenger platforms like Kleopatra to communicate.
The site got its name from an ancient trade route that linked the Middle East and Asia to the West. The route was primarily used to transport silk from China, although Western merchants also used it to transport wool, gold, and other goods to the East.The Silk Road was a short-lived internet phenomenon, as the FBI partnered with the DEA, IRS, and customs agents to shut the site down in 2013. They seized roughly 140,000 BTC and arrested numerous individuals, including Ulbricht, who made an estimated $80 million in commissions before his arrest. Still, the Silk Road set the standard for illicit online marketplaces, and countless copycat sites have popped up since its demise.
Ulbricht’s early life
Ulbricht studied physics at the University of Texas. He went on to pursue a master’s degree in materials science at Pennsylvania State University. While in college, Ulbricht became fascinated with Ludwig Von Mises, an Austrian economist and advocate of free-market capitalism. Before creating the Silk Road, Ulbricht attempted to make a living day trading and developing video games. He later built a website called Good Wagon Books which sold books online.
Ross Ulbricht and the Silk Road
When Good Wagon Books’ co-founder left the company, Ulbricht began planning the release of the Silk Road. Interestingly, he alluded to his plans on his public Linkedin profile, stating, “I want to use economic theory as a means to abolish the use of coercion and aggression amongst mankind. Just as slavery has been abolished most everywhere, I believe violence, coercion and all forms of force by one person over another can come to an end. The most widespread and systemic use of force is amongst institutions and governments, so this is my current point of effort. The best way to change a government is to change the minds of the governed, however. To that end, I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force.”
Ulbricht went by the pseudonym “Dread Pirate Roberts,” a reference to the Princess Bride. Much like Bitcoin’s founder, Satoshi Nakamoto, the alias was used to protect Ulbricht’s identity, and many believe more than one person was sharing the pseudonym. In mid-2011, media outlets began reporting on the Silk Road, leading to a sharp increase in daily traffic and notoriety. It’s fair to say the Silk Road was one of the initial catalysts for Bitcoin’s meteoric price boom, with one BTC being valued at $0.30 in January 2011 and skyrocketing to over $15.00 in July when the media began reporting on the illicit marketplace.
The arrest of Ross Ulbricht
Although it was difficult for the FBI to track Ross Ulbricht, they ultimately connected the Dread Pirate Roberts alias to another online handle used by Ulbricht in the site’s early days. The dark-web entrepreneur used the name “Altoid” before his more well-known pseudonym and made the mistake of requesting programming help on a public forum. In the post, Ulbricht gave his personal email address, which contained his full name.
In 2013, Ulbricht was arrested on seven charges, later receiving a hefty prison sentence. The sting operation required the cooperation of multiple law-enforcement agencies and six on-site officials. Ross Ulbricht was known to frequent the Glen Park branch of the San Francisco Public Library, where law-enforcement agents believed he worked on the Silk Road marketplace. With multiple agents stationed near the library, another using the online alias “cirrus” contacted Dread Pirate Roberts about a customer service issue that required attention. When the agent was certain that Ulbricht had opened the admin panel for the Silk Road, two agents entered the library and staged a lover’s quarrel behind him.
Ulbricht became distracted as the agents argued in the library and looked up from his computer. While he was distracted, the male agent slid the laptop to his female colleague, who then passed it to digital forensics expert Tom Kiernan. Kiernan used a specialized USB drive to extract evidence later used to sentence Ulbricht. Kiernan continued investigating the laptop, finding numerous journal entries and chats later used as evidence. In many of the journal entries, Ulbricht referred to himself as “DPR,” and detailed the early days of the Silk Road.
In one journal entry, Ross recalled using an early version of the marketplace to sell several kilos of magic mushrooms he had grown himself. According to the entry, Ulbricht had sold around 10 pounds of mushrooms in the first couple of months. He initially handled transactions by hand, but as the marketplace grew more popular, he had to add automatic payments and ways to mask IP addresses. As the site traffic continued to grow, Ulbricht had to hire employees to help manage it, leading him to meet another individual using the alias “Variety Jones.” It seems that Jones acted as a mentor figure to Ross Ulbricht, as he wrote in another entry, “VJ has helped me to see a larger vision…a brand that people come to trust and rally behind.”
In 2014, Ulbricht was charged with money laundering, conspiracy to traffic narcotics, and conspiracy to commit computer hacking and given a double life sentence plus forty years. He was suspected of paying $730,000 to contract killers targeting five people that threatened to reveal Ulbricht’s connection with the Silk Road marketplace. Prosecutors couldn’t find evidence of any of the contract killings taking place, so Ulbricht was not charged with murder for hire. Still, the judge considered some of the evidence in affirming his life sentence.
Silk Road marketplace trial misconduct
Ulbricht appealed his sentence in 2016, with his defense stating the DEA failed to disclose essential information about the investigation. The appeal centered around the misdeeds of two corrupt agents who may have tainted the investigation. The agents, Shaun Bridges and Carl Mark Force IV, exploited their access to staff accounts to steal Bitcoin during the investigation. This information was withheld during Ross Ulbricht’s initial trial. Force was given a six-year prison sentence in 2015 after evidence emerged of him threatening to reveal the true identity of Dread Pirate Roberts unless he was paid to keep quiet. One month later, Bridges was given a six-year sentence of his own.