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Tuesday, July 16, 2024 | Back issues
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Silk Road Trial Ends With Tour of Murky ‘Deepnet’

MANHATTAN (CN) - Both prosecutors and defense attorneys depicted the world of Silk Road as a sordid and untrustworthy place on Tuesday.

For prosecutors, it was a place where a former Eagle Scout from Texas named Ross Ulbricht lusted for money and power as the "digital kingpin" of an underground drug site that traded over $182.9 million in narcotics around the world.

But Ulbricht's attorneys portrayed Silk Road as another dark corner of an already murky Internet, a land where "deception and misdirection" helped frame their client.

Neither side disputes that more than $18 million in digital currency was found on Ulbricht's computer, and the "mastermind" page in Silk Road listed that amount under "cold bitcoins."

Nor do the parties contest that journal entries found on Ulbricht's computer show that his first sales on the website were "several kilos of high shrooms" that he grew near his home in Austin, Texas.

Assistant U.S. Attorney Serrin Turner said that Silk Road was Ulbricht's "baby," one that he nursed from its founding to his Oct. 1, 2013, arrest.

He scoffed at the defense's attempt to paint the Silk Road as an "economic experiment" their client started and then passed on to one or more administrators.

"He wasn't forming a content-neutral economic experiment," Turner said. "He was setting up a drug website."

Silk Road's leader Dread Pirate Roberts, or DPR, takes his name from a character in a William Golding novel turned 1980s film "The Princess Bride."

Just as the fictional Dread Pirate assumes many identities, Ulbricht's attorney Joshua Dratel contended that his client passed on Silk Road to one or more unknown operators, who set him up to protect their multimillion-dollar enterprise.

"One of the fundamentals in this case is that DPR and Mr. Ulbricht cannot be the same person," Dratel said.

As expected, Dratel doubled down on an accusation he made earlier at trial that digital currency entrepreneur Mark Karpeles, who ran the now-defunct bitcoin exchange Mt. Gox, had the "motivation" to frame his client.

Karpeles made headlines earlier this year by reportedly losing $400 million of his clients' funds before surfacing in Japan.

He was a "major player" in the bitcoin market, Dratel noted.

Evidence showed that the digital currency's value skyrocketed - from more than $100 per coin to $1,200 - on the day of Ulbricht's arrest.

Calling this defense "absurd," prosecutor Turner noted chats logs found in Ulbricht's laptop exposed the multiple DPR theory as "a bogus cover story."

"It's a con," Turner said. "It's a bogus cover story to fool people into believing there's a rotating command of the site."

In one of those chat logs, a Silk Road administrator named "Variety Jones" suggested using Dread Pirate Roberts name as a cover because the movie character is associated with a rotating command, Turner noted.

Turner said that DPR had referred to this when speaking to another referentially named site administrator, Inigo, about "my little alibi."

"I'm clever, so I can bs when I need to," DPR told Inigo.

Turner hoped this remark would embolden the jurors. "[Ulbricht] still thinks he's clever," the prosecutor said. "He thinks he can pull one over on you."

Government agents found the Inigo and Variety Jones discussions among "hundreds" of chat logs, journal entries, business spreadsheets and other "damning" files in Ulbricht's Samsung 700Z laptop on the day of his arrest, Turner said.


The details of the chat match many of the details found in Ulbricht's emails, journal entries and Facebook posts, the prosecutor noted.

Calling the chat logs "phony," Dratel countered that these documents could have been "edited, sprinkled with facts from Mr. Ulbricht's life" by anybody with access to his client's Gmail account.

"You can create an entire fictional episode on the Internet and not know whether it was real or not - let alone beyond a reasonable doubt," Dratel said. "Think if someone tried to frame you."

Ridiculing this position, prosecutor Turner said: "There were no little elves who put all that evidence on his computer."

The lawyers delivered conflicting accounts of Ulbricht's arrest inside San Francisco's Glen Park library during arguments over the reliability of the data.

Two government witnesses - Department of Homeland Security agent Jared Deryeghian and FBI computer scientist Thomas Kiernan - gave firsthand testimony about how an intricate operation allowed investigators to swipe that laptop in an unencrypted form.

While logged on to the account of a Silk Road administrator he had taken over, DerYeghian said that he asked Ulbricht to log on to the DPR account from a café next to the library.

Kiernan testified that he was inside the library and positioned himself behind the defendant to take pictures of Ulbricht's screen, while two other agents posed as a bickering couple to create a diversion.

Those agents then grabbed the laptop before Ulbricht could close it, Kiernan said.

Prosecutors say that the episode caught Ulbricht "red-handed with his hands on the keyboard."

For Dratel, however, Silk Road's security-savvy leader would never have left hundreds of incriminating files on a laptop connected to an unsecured WiFi in a public place.

Silk Road operated as a Tor hidden service on the Deepnet. Every user was obligated to use encryption to protect their anonymity though an intricate system of pseudonyms, fake addresses, and "tumblers" mixing up their anonymous currency.

But Ulbricht saved secret encryption codes in a file named "key," left crumpled notes about product rankings in his wastebasket, kept all of his digital currency easily traceable, and left his an email address in a want ad for employees of his illicit website, prosecutors say.

In March 2013, Ulbricht also allegedly changed the Silk Road server's name to "frosty," short for his childhood nickname "Rossty Frosty" that appears in his private emails.

Calling these alleged security gaffes "too convenient," Dratel went down the list of the mistakes while asking jurors: "Would DPR do that?"

He added: "It's not a virtuoso piano player who can't boil an egg. It's a virtuoso piano player who can't play 'Happy Birthday.'"

The government agreed that Silk Road's leader DPR started paying for information about a criminal investigation against him around this time, and Dratel contended this is when the alleged set up began.

Dratel added prosecutors could not account for one of the files on Ulbricht's computer, a "to do" list text file dated six hours after his client's arrest.

Assistant U.S. Attorney Timothy Howard did not address this alleged inconsistency during his rebuttal. Instead, he brushed off the remarks as "wild conspiracy theories that don't hold water."

Though he called Ulbricht a "digital kingpin of an underground criminal enterprise," Howard told jurors that "no perfect cyber-criminal" exists.

"Ladies and gentlemen, criminals make mistakes all the time," he said. "That's how they get caught."

Silk Road's defenders contend that the website tamed the drug trade by moving it from the streets into the anonymous safety of the Deepnet.

Turner opined that the actual "legacy" of Silk Road is that over "lowering the bar for drug dealing."

A former heroin dealer turned government informant Michael Duch testified that Silk Road's offer of safety and anonymity lulled him off the wagon with a means to finance his addition.

"With Silk Road, what once became unthinkable for [Duch] became a no-brainer," Turner said.

Duch testified that he wound up making as much as $70,000 per month, selling more than 31,000 bags of heroin across the United States.

Most of that money went toward more drugs, and his health took a nosedive before his October 2013 arrest, Duch said.

Although Ulbricht is not charged with murder-for-hire in New York, prosecutors presented two days of evidence suggesting that DPR ordered hits on at least five men who threatened his business.

One of them, known by his online handle "FriendlyChemist," threatened to expose the Silk Road's top vendors and thousands of its clients if DPR did not pay him $700,000, evidence showed.

The other targets had allegedly conspired in the blackmail, according to messages between DPR and a user "RedAndWhite," purporting to represent a Hells Angels-linked drug cartel based in western Canada.

While bitcoins changed wallets before the dates of each supposed hit, Canadian authorities never found any homicides matching the dates and details discussed in the chats. Turner suggested that DPR got played because he was "not the criminal super-genius that the defendant makes him out to be."

"Thank goodness that any murders didn't occur," he added.

Dratel cast doubt on whether the transactions ever occurred at all.

"The Internet is not what it seems," Dratel said. "The very first witness, a government agent, assumed multiple identies on the Silk Road website."

Other than the drug offenses, Ulbricht is also charged with offenses related to money laundering and forgery services also found on the Silk Road.

Department of Homeland Security agent Dylan Critten testified that he intercepted nine fake IDs with Ulbricht's picture sent to his house.

When confronted with the package, Ulbricht told the agent that it was "hypothetically" possible to acquire such IDs "over the Tor browser" through a website called Silk Road, Critten testified at the time.

"He's not going bar-hopping with those IDs, ladies and gentlemen," Turner said. "He's getting worried about a life on the lam."

Evidence has also shown that Ulbricht considered applying for Dominican citizenship.

On Wednesday, a jury will hear instructions on the three counts of narcotics trafficking, one criminal conspiracy count, and three separate counts of hacking, false identification and money-laundering conspiracies.

If convicted on the top charge, Ulbricht could be sentenced to life in prison.

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