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Dead End on Silk Road: Internet Crime Kingpin Ross Ulbricht's Big Fall

It was the eBay of vice, an online hub of guns, drugs and crime. But its alleged founder soon learned that you can't rule the underworld without spilling some blood

Ross Ulbricht
Julia Vie
February 4, 2014 9:00 AM ET

On October 1st, 2013, inside the science­-fiction section of the Glen Park library in San Francisco, one of the Internet's most-wanted men sat typing quietly on his laptop. He'd allegedly assumed multiple identities and made nearly half a billion dollars in under three years. He was said to be as grandiose as he was cold-blooded, championing freedom while ordering hits on those who crossed him.

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None of the geeks milling around the stacks that day, nor even those closest to Ross Ulbricht, suspected that the slight, pale 29-year-old was, according to prosecutors, the notorious hacker known as Dread Pirate Roberts. He was allegedly the founder of Silk Road, an online illegal­goods bazaar that had been dubbed the eBay of vice. A Texas native with a master's in materials science and engineering and a mop of brown hair, Ulbricht bore such a resemblance to Robert Pattinson that girls stopped him in the street to take their picture with him. The library was near where he had been living since moving to the city a year earlier. He liked to come here for the silence and the free Wi-Fi.

But at 3:15 p.m., the quiet was broken when, out of nowhere, a young woman in street clothes charged toward Ulbricht yelling, "I'm so sick of you!" and grabbed his laptop. Ulbricht leapt from his seat to grab it back, when the half dozen other readers at nearby tables suddenly lunged for him, pushing him up against a window. Hearing the commotion, the librarian rushed over to assist Ulbricht. "Go back to your desk," the woman who had started it all told her. "We're making an arrest."

Stripping off their civilian shirts to reveal FBI vests, the agents told Ulbricht to turn around. He had no expression when they cuffed him. As they led him toward the door, the female agent turned to the mystified onlookers and said, "Surprise!"

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Seven weeks later, during Ulbricht's bail hearing in a New York courtroom, few were more surprised to see him in prison khakis, sitting before a federal judge, than his family and friends, watching anxiously from a back row. They listened as federal prosecutors accused Ulbricht of running an elaborate illegal enterprise, "the most sophisticated and extensive criminal market­place on the Internet today."

Named after the ancient Asian trade route that linked merchants from East to West, Silk Road was a dizzying illicit emporium, with neatly organized categories of drugs and weapons, complete with photos and descriptions. There were fake IDs, bogus passports, driver's licenses, social security cards. Hacking tools were on tap, including tutorials for robbing ATMs and software programs for taking control of someone's computer. There were hackers for hire too – even assassins for hire. "Hitmen," one post listed, "(10+ countries)."

Silk Road existed in the Deep Web, the vast ocean of hidden sites (roughly 500 times as many as the ones you surf) that Google and other search engines can't easily access. Much of the Deep Web is too dynamic to be indexed – such as library catalogs, job classifieds, medical databases – but it's also home to sites that don't want to be found, because they're dealing in illegal goods.

Ironically, the federal government helped transform the Deep Web into a haven for outlaws. In the mid-Nineties, scientists at the U.S. Naval Research Lab conceived of a way to surf the Net without being tracked or identified – a necessity for government communication and foreign dissidents. With federal funding, free software called Tor, which stands for The Onion Router, was developed and released in 2002 to bring this to life. When used with a Web browser, Tor functions like an invisibility cloak, encrypting your locations as well as the destinations you surf. It didn't take long for surfers trading in child porn, drugs and other contraband to create sites that could only be accessed using Tor. And Silk Road was among them.

For even greater stealth, transactions on Silk Road used Bitcoin, the digital currency introduced in 2009. With its value set by supply and demand (currently trading at about $1,000 for one Bitcoin), it's being increasingly accepted by a variety of businesses, from the NBA's Sacramento Kings to Subway sandwich shops. But what made it perfect for Silk Road was its lack of government oversight and the ability to complete transactions without involving banks.

According to a recent study by Addiction journal, nearly 20 percent of drug consumers in the U.S. used narcotics bought on Silk Road. By facilitating more than a million transactions, the site generated the equivalent of more than $1.2 billion in revenues during its two-and-a-half-year run. With approximately $420 million in commissions, the feds allege, it made Ross Ulbricht one of the most successful entrepreneurs of the dot-com age.

It purportedly made him a deadly one too. Assistant U.S. Attorney Serrin Turner claims Ulbricht spent $730,000 of his earnings on hiring hitmen to kill six of his enemies. "While portraying himself as a champion of 'freedom' on the Silk Road website, opposed to the use of any kind of 'force' against others, he was in fact a quite ruthless criminal," as Turner put it, "one who, with seeming ease and lack of conscience, nonchalantly ordered murders for hire amidst fixing server bugs and answering customer-support tickets."

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