Feds Arrest Washington Man Tied to Silk Road 2

MANHATTAN (CN) - As the second week of a conspiracy trial for the Silk Road's admitted founder began Tuesday, law enforcement took a Washington man into custody for allegedly managing the notorious website's reboot.

Brian Farrell, 26, used the moniker "DoctorClu" on the Silk Road site, according to a statement from the Justice Department, announcing Farrell's arrest and 2 p.m. Tuesday court appearance in Seattle.

A resident of Bellevue, Wash., Farrell is charged with conspiracy to distribute heroin, methamphetamine and cocaine related to his alleged assistance in the management of the Silk Road 2.0 website.

Silk Road 2.0 went online in November 2013 after the government seized the first Silk Road website and arrested Ross William Ulbricht, the man who has since copped to creating it.

Though attorneys for Ulbricht recently conceded before a federal jury in Manhattan that their client got the online marketplace off the ground, they blame the Silk Road's subsequent handlers for its descent into the trade of illegal drugs and other criminal activity.

Prosecutors say Farrell "was a key assistant" to the operator of the Silk Road 2.0 site, Blake Benthall, aka "Defcon," who was arrested in San Francisco in November 2014.

"Since its launch in November 2013, Silk Road 2.0 was used by thousands of drug dealers and other vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to buyers throughout the world, as well as to launder millions of dollars generated by these unlawful transactions," the Justice Department said in a statement. "As of September 2014, Silk Road 2.0 was generating sales of at least approximately $8 million per month and had approximately 150,000 active users."

Prosecutors say Farrell belonged to "small staff of online administrators and forum moderators who assisted Blake Benthall with the day-to-day operation of the website."

In addition to overseeing the site's programming code underlying the website, this inner circle handled the commission rates imposed on vendors and customers of the website, and the massive profits that the business generated, according to the criminal complaint.

Farrell allegedly approved new staff and vendors for the website, and organized the shutdown of a competitor.

A search warrant served at Farrell's Bellevue home earlier this month produced $35,000 in cash as well as silver bullion and various types of drug paraphernalia, the government says.

Meanwhile back in Manhattan on Tuesday, a federal judge in the same courtroom where Ulbricht's trial is developing sentenced a Bitcoin exchanger to four years in prison.

Robert Faiella, a 55-year-old resident of Fort Myers Beach, Fla., pleaded guilty in September 2014 to having knowingly transmitted nearly $1 million worth of Bitcoins to customers that exchanged them for drugs on Silk Road's anonymous black market bazaar.

Faiella ran his underground Bitcoin exchange under the user name "BTCKing" on Silk Road from December 2011 to October 2013, relying on Manhattan-based company BitInstant to fill orders, the Justice Department said in a statement.

In addition to spending four years in federal prison, Faiella must forfeit $950,000.

U.S. District Judge Jed Rakoff imposed the sentence against Faiella, about a month after handing down a two-year term to the Bitcoin exchanger's co-defendant, BitInstant CEO Charles Shrem.

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