By Carl Weiss
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| Extent of Silk Route/Silk Road. Red is land route and the blue is the sea/water route. (Photo credit: Wikipedia) |
In ancient times the route
known as the Silk Road was a major source of trade that connected East and
West. Delivering everything from Chinese
silk to spices and precious gems, this trade route used everything from camels
to fragile wooden boats to create a web of commerce that covered the known
world. Two millennia later, this concept
was reborn online in a web portal of the same name. The chief difference is that while the digital
Silk Road did indeed concern itself with connecting a worldwide web of virtual
traders, these entrepreneurs did not deal in frankincense and myrrh, but in a
cornucopia of contraband that openly advertised everything from cannabis to
Cocaine and firearms to forgeries.
Allegedly operated by 29-year
old Ross Ulbricht, who went by the moniker Dread Pirate Roberts, this eBay of
the underworld plied its trade more or less in the open for some two years
until the illicit empire came crashing down after the FBI arrested him on
October 1 in San Francisco. Busted in of all places a public library, the
arrest was the culmination of a cyber-sleuthing operation that had taken more
than a year and involved the FBI, the ATF, and US Customs. Among other things, Ulbricht was charged with
drug trafficking, money laundering and attempted murder.
By the following day, news of
the arrest was making headlines around the world. By Thursday of the same week, the infamous
website had been shut down and a notice was posted by the authorities that notified
any interested party that the site had been seized by the Feds. Also confiscated was a digital wallet that
contained thousands of Bitcoins reportedly worth more than four million
dollars. During the height of the illegal enterprise, Ulbricht allegedly racked
up commissions of $20,000 per day totaling more than $80 million according to
authorities. During the two years that
the site operated, it was reported that nearly one million anonymous customers
conducted some $1.2 billion in sales through the portal.
What was not surprising was
that it was possible to conduct the sale of contraband online. What was surprising was the sheer volume of
the operation, combined with a level of sophistication that made it very hard
for the authorities to follow the customers of Silk Road or the money that
traded hands. (In fact, all transactions
made on the site were conducted using Bitcoins, a so called crypto currency
that uses encryption to control transactions.)
What was also surprising were
the lengths to which the operator of Silk Road was allegedly prepared to go to keep
the portal operating. According to an article in the Guardian, “Chillingly,
the FBI indictments also claimed Ulbricht had ordered two hits against people
whom he thought might expose his clients, one against an "employee"
of Silk Road in January 2013 and then against someone, who was in fact an
undercover agent, threatening to leak the names of his clientele. In the first
hit, police say Ulbricht offered $40,000 for the job, and asked for "proof
of death" in the form of a video.”
Also
surprised were two of the men who had rented a room in their San Francisco home
to Ulbricht. He had answered a
Craigslist ad and identified himself to the other two tenants as Josh, a Texas
man who had just moved back to the states from Sydney, Australia. For a man who was purportedly raking in
$20,000 per day, Ulbricht apparently spent very little since his rent was only
$1,250 per month and according to his housemates, he almost never went out and
made it a habit to eat in.
In fact, many people who read the headlines in
the San Francisco Examiner were shocked that Ulbricht had chosen to live and
operate in San Francisco. Stranger still was the fact that while he had been
running Silk Road he had even granted interviews to journalists.
Quote from the Guardian: "When you start giving interviews like the
CEO of an established company, it's just wrong," says Pavel Durov, another
29-year-old technologist who recently visited San Francisco and had been
following the story of the Dread Pirate.”
Indeed, the 29-year old Texan
acted as though he was CEO of a Silicon Valley startup, rather than one of
America’s Most Wanted. Had he been
running his far flung online enterprise from say Rio de Janeiro it would have
made prosecution that much more difficult.
This in itself is almost an
irony, considering the fact that every transaction made on Silk Road was so
closely guarded. Using the same
technology created by the Department of Defense to hide military
communications, Silk Road was able to transmit information using a computer
network called TOR. (The Onion Router)
TOR’s job was to encrypt and transmit data using a number of different
servers. This would make it not only
exceedingly difficult to collect and decrypt the entire message, but it would
also make it nearly impossible to track the identity and location of the
networks users. Indeed, this was Silk
Road’s unique selling proposition. They
routinely told prospective clients that no matter what they promoted on the
site that neither their activities nor their identities could be traced by law
enforcement.
While the FBI hasn’t exactly
been forthcoming on how they were able to not only identify the server
locations, much less mirror Silk Road’s content in order to zero in on the bad
guys, this much is certain. In the end
the Feds used the same kind of underhanded tactics that supported the network
in order to bring it down.
From a blog in Online CasinoNews: “Nicholas Weaver, a researcher at the International Computer Science
Institute in Berkeley, California specializing in network security and
underground economics, says his best guess from reading court papers is
that feds were able to crack the computer codes used to keep Silk Road operational,
after which they could access the servers and grab IDs and addresses. Armed
with that info, the G-men could find the physical servers and work with local
law enforcement where the servers were located to seize them and then
ultimately, the perps as well.”
Of course, it also didn’t
hurt that the FBI had put the strong arm on Ulbricht’s right hand man, Curtis
Clark Green, who recently confessed to being a member of Silk Road. Green was also one of the people on whom
Ulbricht reportedly put out a contract.
Court documents filed against Ulbricht alleges that he had become aware
of an employee’s contact with federal agents and had offered $80,000 to have
the employee killed. While Green’s name
was not revealed in the complaint it is implied, since Ulbricht is currently
being held at the Metropolitan Detention Center in Brooklyn, while Green was
conditionally released.
The real tragedy was not that
it took federal agents the better part of two years to put paid to one of the
most brazen criminal enterprises to ever hit the Internet. The real tragedy is that less than one month
after Silk Road went dark it is back in business, according to cnn.money.com
“Silk Road 2.0 emerged Wednesday alongside a number of
other sites offering similar services. The new Silk Road, like the original, offers
everything from prescription medication to heroin. The new Silk Road owner also
took on the pseudonym of former leader Ross Ulbricht, Dread Pirate Roberts. According to one former Silk Road user, the
site was rebuilt by most of the major players who were heavily involved in
day-to-day operations of the former site.”
Just like any number of other
online portals, as long as there is a marketplace of willing buyers and
sellers, there will always be those who are ready, willing and able to set up a
venue to facilitate them. Aside from
Silk Road 2.0 there are other sites looking to fill this illicit vacuum,
including such portals as Black-market Reloaded and Sheep Marketplace. (Quoted from cnn.money.com)
While the Feds were able to
put one online operator of black market goods out of operation, the question is
whether this act killed the snake, or simply cut it into a many-headed hydra
that will come back to life bigger and badder than the original like an iron fist in a silk glove?
Carl Weiss is co-host of Working the Web to Win which airs every Tuesday at 4 pm Eastern.
