MANHATTAN (CN) – Over more than a year, Department of Homeland Security investigator Jared DerYeghiayan rose from Silk Road customer to website moderator in pursuit of alleged founder Ross Ulbricht, and his second day of testimony ended by recounting the moments before the arrest of his suspect.
Silk Road’s bustling drug trade ballooned during the time of his monitoring, DerYeghiayan told a federal jury Wednesday.
When capturing a screenshot of the website on April 2, 2012, DerYeghiayan noted that he saw 2,020 individual listings under the category “Drugs.” The section exploded to 13,810 by Oct. 1, 2013, the day of Ulbricht’s arrest, evidence showed.
The upper left-hand corner of the same page displayed Silk Road’s icon of a traveler on camel-back, an allusion to the fabled path connecting Asia to the Middle East.
Directly across from that image, the right-hand corner invited users to click on a message by the website’s equally storied founder: the Dread Pirate Roberts, known for his flamboyant online persona “DPR” and his staunch libertarian politics.
During one of his online “State of the Road” addresses, DPR expressed his “love” for his customers with a heart-shaped emoticon before rhetorically asking, “Who knew that a softy could lead an international narcotics organization?”
Named after a character in “The Princess Bride,” the Dread Pirate Roberts remains a disputed identity. Prosecutors allege that he is Ulbricht’s online alter-ego, but Ulbricht’s lawyer Joshua Dratel argued during opening arguments on Tuesday that “real” pirate is still “out there.”
No stranger to controversial clients, Dratel recently defended radical preacher Abu Hamza, the hook-handed, one-eyed imam whom tabloids caricatured as “Captain Hook” during his terrorism trial in New York last year.
Dratel is now trying to strip Ulbricht of his own pirate reputation with a surprise defense that he unveiled during opening arguments.
While acknowledging that Ulbricht got the website off the ground, Dratel insisted that his client passed the website’s reins to another, purportedly unknown operator. This individual is allegedly the “real” Dread Pirate Roberts, who supposedly morphed the website into a criminal marketplace, Dratel contended.
DerYeghiayan, the undercover agent, is a key government witness for penetrating Silk Road.
Leading jurors through the agent’s journey, Assistant U.S. Attorney Serrin Turner displayed images of DerYeghiayan’s encounters on the Silk Road.
One March 6, 2013, screenshot showed the page of Dutch seller Happy Timezz, whose listing for “0,5 Gr Uncut Crack Cocaine!!” sold for 1.65 Bitcoins, a nearly untraceable online currency.
DerYeghiayan said that the currency only was worth $11 at the start of his surveillance, reached $250 per Bitcoin at its height and ended at about $100.
Buying roughly 27.43 Bitcoins for $7,000, DerYeghiayan said that he transferred the digital currency to his code-named “dripsofacid” account on Silk Road. The agent eventually completed 52 undercover drug purchases online from mostly foreign sellers in the Netherlands, Germany and other countries.
The dealers mailed the narcotics in the manner that Silk Road recommended on its “Sellers Guide”: in vacuum-packed pouches to throw off a police dog’s scent and plastic bubble envelopes to protect fragile pills, DerYeghiayan said.
Both buyers and sellers typically used pseudonyms and P.O. boxes for the addresses, evidence showed.
DerYeghiayan testified that he received the drugs near the Department of Homeland Security’s offices in Chicago and sent them out for testing. All but one of the packages of cocaine, heroin, MDMA and other drugs matched what he had ordered, he said.
Scrupulous about security, Silk Road could only be found on Tor – short for The Onion Router – a server that disguises its users’ IP addresses through a batch of proxy servers. The website mandated the use of Bitcoins for all transactions, and held all orders in escrow before processing the payments for a transaction fee.
Customers were expected to communicate through encrypted communications such as PGP, or “Pretty Good Privacy.”
DerYeghiayan said he acquired moderator status, a position with long hours and a Bitcoin salary roughly equivalent to $1,000 per week, by taking over the account of a user called “cirrus.”
Dread Pirate Roberts gave him his marching orders, DerYeghiayan said.
“He’d be the one that’d pay me,” he said. “He’d be the one that’d grant me new authorities on the website.”
And it was the Dread Pirate Roberts who introduced DerYeghiayan to hidden administrative features of an already secretive website, such as “Staff Chat,” the agent said.
DerYeghiayan testified that this application gave him the ability to gain clues about his quarry.
For example, DerYeghiayan said that he noticed that every chat with DPR was stamped in Pacific Time.
Around Sept. 10, 2010, DerYeghiayan said that Internal Revenue Service Agent Gary Alford alerted him that Ulbricht was a “pretty good match, potentially,” for his elusive boss.
Indeed, less than a month later, DerYeghiayan traveled with an FBI team to the Pacific Time Zone, where they found Ulbricht in San Francisco’s Glen Park Library. DerYeghiayan said that he drained the battery on his MacBook waiting for DPR to log onto staff chat, and he patronized the nearby Café Bello to recharge.
DerYeghiayan said that he saw Ulbricht heading to the library shortly before DPR logged on Staff Chat, and DerYeghiayan asked him to check a flagged message in order to lure him online.
Court went into recess just before FBI agent Tom Kiernan, the next witness, went into the library to effectuate the arrest.
DerYeghiayan’s third day of direct examination will continue on Thursday morning, and Dratel warned that vigorous cross-examination could fill up the rest of the day.
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