Silk Road shutdown: The rise and fall of one of the web’s most successful and naive cyber criminals

From: ExtremeTech

By Graham Templeton

Ross William Ulbricht was like a lot of people of his generation: he was opinionated, well read, and had a diverse education in the ways of the world. He watched as thirty slowly approached, increasingly speaking out to his friends about the way things Ought To Be. He achieved multiple degrees and even published a book on materials science — but it wasn’t enough. He wrote long and introspective posts on Facebook and Google+ detailing his view of freedom; to Ulbricht true freedom was a realistic, achievable ideal, ready and waiting for anyone daring enough to reach out and grasp it in every aspect of life. On the surface, Ulbricht seemed to be a fairly standard internet libertarian, a fan of Ron Paul on YouTube, an armchair idealist with more interest in advocating free action than exercising it. There was just one thing that set Ross William Ulbricht apart: he just so happened to be one of the most wanted men on the planet.

This week, the FBI outed Ulbricht as one of the world’s most notorious criminals, brazen and unapologetic, a man who mocked the police for their continuing inability to nail him to the wall. Best known by the alias Dread Pirate Roberts, Ulbricht was only taken down thanks to a collaboration between multiple agencies including the DEA, the IRS, and the Department of Homeland Security. In their comprehensive brief, the government alleges post-grad materials scientist, dub-step fanatic, and self-proclaimed “Investment Adviser” was the internet’s closest approximation of Pablo Escobar. We now know that Ulbricht only adopted the name Dread Pirate Roberts after he had already founded his criminal empire in February of 2011. Until then, he and his creation had been known by the same name: the Silk Road.

The Silk Road was the Deep Web’s version of an unregulated bazaar, a market for anything deemed unsavory or illegal by the traditional world. There were virtually no restrictions on sales (firearms were allowed for a short period, but later banned), and virtually no check on distribution. A seller from Australia might accept Bitcoins for a shipment of LSD to, say, Brazil. Another might accept a similar shipment as barter for work hacking a specified Facebook account. It was Ulbricht’s dream come to life: a truly free market, one unfettered by the governments whose regulations he so despised. And give him credit, since Ulbricht’s venture reportedly earned him roughly $80 million in commissions, using current Bitcoin values. By the same measure, the Silk Road was the site of more than a billion dollars in illegal transactions, and all shipments went through the conventional mail system.

Dread Pirate Roberts headed up the Silk Road with an iconic arrogance that only escaped being laughable because it floated atop an undeniably successful venture. As DPR, Ulbricht spoke about the moral righteousness of his project, the evil of those who would stop him, and the intellectual prowess of those who saw value in his work. To hear DPR tell it, users of the Silk Road were freedom fighters — which made Ulbricht their king. It was a passionate group — but for some time it remained small and inbred. Ulbricht needed the Silk Road to grow.

The biggest weakness of the Deep Web is also its greatest strength: it’s really hard to find anything. That’s great if you want to set up an exclusive chat room for your real-world criminal enterprise, but terrible if you want to make an onion site your actual business. How do you drive customers to a site that’s all but impossible to find? Well, you advertise, of course. In mid-2011, Ulbricht took to a number of the most relevant forums under usernames including “altoid,” pushing a new Bitcoin venture called the Silk Road — and one of these accounts linked to an email address: rossulbricht@gmail.com.

The government’s complaint against Ulbricht details some truly damning activities.

This was the starting point for what is among the biggest arrests in the history of cyber crime, and the latest in a string of fundamental blows to the security of the Deep Web. Officials crawled from one banal social media update to the next — around the time he was pushing the Silk Road to online early adopters, his LinkedIn profile claimed he was working on an “economic simulation” designed 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 displays an almost adorable inability to distinguish between philosophical anarchism and actual subversion of law — but his venture into the world of crime did not stay amusing for long.

As investigators put together their most damning evidence that Dread Pirate Roberts was the public face of Ross Ulbricht, things took a violent turn. A user with the handle FriendlyChemist began threatening Ulbricht with releasing information about thousands of Silk Road users — essentially the worst possible threat to the site’s continued existence. Ulbricht, it seems, did not hesitate. Perhaps it was simple exposure to the darkest layers of the criminal underworld, but faced with the collapse of everything he had built this bookish student of chemistry turned to one of his own site’s most heinous products: contract killing.

The government brief alleges to have direct records of Ulbricht soliciting a user named redandwhite to “execute” FriendlyChemist. He even went so far as to claim he’d recently had a “clean hit done for $80K,” though this could just have been posturing to drive down redandwhite’s asking price. Regardless, in that instant Dread Pirate Roberts proved one of the most basic tenants of real piracy: you can only go so long before you have to make someone walk the plank.

Though authorities can find no record of a death matching what they know about his contract killing, Ulbricht apparently received photographic evidence that the deed was done. He expressed satisfaction with the job, and went back to running his empire, secure that the Silk Road would remain anonymous. The wall of silence surrounding the online drug market may very well prove impenetrable for its users, but the Dread Pirate himself was very much known to authorities. They were building a mountain of circumstantial evidence linking Ulbricht to DPR, from similar forum signatures to intercepted mail.

The Silk Road had a simple but efficient design

It’s worth noting that Ulbricht was aware he was being investigated for some time before his arrest, yet never warned the users of his site. When Homeland Security questioned him about a number of pieces of fake identification bound for his address, he even name-dropped the Silk Road as a place one might hypothetically purchase such things. He was, quite definitively, a different man than the one who had started the Silk Road. The sensitive and introverted academic who once said his mid-term goal was to “make more friends and… focus on being more connected to people,” was now thumbing his nose at federal investigators. The online persona, dripping with bravado, had now become the man.

Perhaps the greatest testament to Ulbricht’s achievement is the fallout of his capture. Bitcoins took an appalling dip in value both because the arrest was a huge hit confidence in the online currency and because the Silk Road represented such an enormous fraction of overall Bitcoin transactions. Though Bitcoin values do seem to be rebounding somewhat as of this writing, it’s unclear how much the currency will ever recover from such a high-profile blow to the idea that Bitcoin profits are free from meaningful government oversight.

The value of a Bitcoin took a tumble after Ulbricht’s arrest

The premise of the Silk Road did not break down. At no point in their investigation did authorities subvert encryption or track any untrackable connections; the report itself claims that it’s practically impossible to do so. Rather, they exploited minuscule human mistakes, tracking Ulbricht not through his hidden criminal connections but the open, licit record of social media. At one point while traveling in San Francisco he spent some time administering the Silk Road on an unencrypted network at an internet cafe less than 500 feet from his hotel. Only physical seizures led to meaningful accumulation of the state’s evidence, and those only came due to Ulbricht’s personal missteps, which were numerous and occasionally outright dumb. When he was eventually arrested at a public library, he was carrying a substantial amount of evidence on his person.

Dread Pirate Roberts founded and operated an international drug trafficking empire for years, thumbed his nose at global authorities, made tens of millions of dollars in personal profit, and only went down due to his basic naiveté about integrating personal and criminal enterprise. This forces us to ask: If someone like Ross William Ulbricht could do all this, what might a real criminal accomplish?