Trail of digital breadcrumbs leads FBI to Silk Road online crime bazaar

Two-year manhunt for man behind marketplace for drugs and hitmen ends.

Two-year hunt for man behind marketplace for drugs and hitmen

NEW YORK // From an internet cafe in San Francisco, a 29-year-old free-market evangelist who called himself “Dread Pirate Roberts” used untraceable web services, an international network of servers and anonymous digital currency to run, beyond the reach of the law, a global online exchange of cocaine and heroin.

For two years, cybercrime experts from the FBI had pored over the secretive online drug bazaar known as Silk Road. The underground operation had become, by the time the FBI shut it down this week, the venue for illegal transactions worth US$1 billion (Dh3.67 bn), according to prosecutors.

Seeking the mastermind behind it, investigators began collecting clues: an anonymous posting to a website devoted to hallucinogenic mushrooms, recurring references to an Austrian school of economics, and early hints left on public sites such as Google and LinkedIn.

A big break came in July, when a routine inspection of inbound mail from Canada turned up a parcel containing nine counterfeit IDs – each with a different name, but all featuring a photograph of the same man.

According to a 33-page criminal complaint unsealed on Wednesday in Manhattan federal court, the man in the photos was Ross Ulbricht, Silk Road’s alleged overseer.

FBI agents arrested him on Tuesday at the Glen Park library in San Francisco, where he had gone to log onto a computer, a source said.

The criminal complaint against Ulbricht shines a light on the darker side of internet commerce.

In it, special agent Christopher Tarbell of the FBI’s New York office described Silk Road as “the most sophisticated and extensive criminal marketplace on the internet today” – a virtual bazaar where buyers could find everything from heroin and hacking software to contact information for hit men in more than 10 countries.

Ulbricht stands accused of drugs trafficking, money laundering, computer-hacking conspiracy and, in an indictment unsealed yesterday in Maryland, of attempted murder.

The genius of Silk Road’s design, and the reason it eluded the FBI for so long, according to the complaint, was its impenetrability.

The site was accessible only on a so-called Tor network, one which is designed to conceal the true internet addresses of computers using it. Its exclusive reliance on Bitcoin, an anonymous digital currency, added another layer of protection for its buyers and sellers.

Since November 2011, Mr Tarbell’s team made more than 100 purchases of drugs from Silk Road vendors, accepting shipments of ecstasy, cocaine, heroin, LSD and other drugs posted from 10 different countries, including the US, according to the complaint.

During the FBI’s bid to identify the individual behind Silk Road, an agent on Mr Tarbell’s team combed through internet postings and discovered the earliest mention of the site was in January 2011, on an informational website about “magic mushrooms”.

The posting, by someone with the username “altoid”, alerted the site’s visitors to Silk Road and asked if anyone had tried it. Two days later, someone using the same username posted a similar message on “bitcointalk.org,” a discussion forum for the virtual currency.

“The two postings created by ‘altoid’ on Shroomery and Bitcoin Talk appear to be attempts to generate interest in the site,” Mr Tarbell wrote.

In October 2011, altoid surfaced again on the Bitcoin forum, seeking an “IT pro” to help build a Bitcoin startup company and directing potential job candidates to the Gmail account of someone named Ross Ulbricht.

From a Google profile associated with the account, the FBI learned that Ulbricht had an interest in the Austrian school of economics, and the Ludwig von Mises Institute in Auburn, Alabama. According to the group’s website, it functions as a centre of Libertarian political and social theory.

Agents started to make a connections between Ulbricht and Silk Road. The site’s webmaster, who identified himself as Dread Pirate Roberts, made regular references to Austrian economic theory and the teachings of Ludwig von Mises to justify Silk Road’s existence.

Mr Tarbell’s team in New York tracked the Silk Road webmaster’s online logins to an internet cafe on Laguna Street in San Francisco, near an apartment in which Ulbricht was living.

All the while the FBI were closing in, word of Silk Road and its bazaar of illicit goods and services was spreading around the internet.

In August, Forbes.com posted an interview with Dread Pirate Roberts that it said was conducted via messages sent through the site.

“The highest levels of government are hunting me,” the cyber entrepreneur said. “I can’t take any chances.”

* Bloomberg News