In 2012, the world’s drug market was completely
upended by the Internet.
The widespread adoption of bitcoin and the
invisibility of the Dark Web allowed a bright,
but misguided 28 year old libertarian to suddenly
become one of the world’s biggest drug kingpins.
After finishing his Masters degree in physics
at Penn State, Ross Ulbricht tried online
day trading on the stock market, but failed;
he tried to start a videogame company and
failed; and tried to run an Internet used
bookstore, but found little success in that
too.
Then, assessing that the war on drugs was
a complete failure, and inspired by potential
uses for bitcoin, Ulbricht got the idea that
would change his life forever.
He would create a website where people could
buy anything anonymously and have it shipped
to their actual addresses, with no trail leading
back to the transaction.
Silk Road went live in January, 2011 with
the sale of the magic mushrooms Ulbricht had
cultivated himself.
He ran the site under the name DPR -- or Dread
Pirate Roberts -- a clever nod to the film
The Princess Bride.
It wasn’t long before the site started to
look like Amazon and eBay, with user profiles
and reviews that cemented Silk Road’s legitimacy.
Thousands of listings featured everything
from Colombian cocaine to black tar heroin
to Oxycontin to guns.
The vast majority of the orders went through
without a hitch.
One year later, as the site was booming, the
Department of Homeland Security put together
a task force called Operation Marco Polo to
bring it down.
Special Agent Carl Force explored the site,
learned about Dread Pirate Roberts, and figured
that the anonymity of the marketplace was
its achilles heel.
Force was an undercover specialist, and created
a new identity on Silk Road: Eladio Guzman,
a blind-in-one-eye drug cartel member from
the Dominican Republic.
Screen name: Nob.
He messaged Dread Pirate Roberts immediately
with a bold opening to buy Silk Road.
DPR responded the next day: “I’m open
to the idea.
What did you have in mind?”
And just like that, Agent Force was in.
For the next year, they messaged each other
on TorChat almost nightly.
As Silk Road gained popularity, earning Ulbricht
tens of millions of dollars in bitcoin from
commissions, Nob was gaining the all-important
trust of the still anonymous Dread Pirate
Roberts.
What happened next is incredible.
Agent Force, aka Nob, arranged for a shipment
of cocaine to Curtis Green a Mormon grandpa
in Utah and dedicated Silk Road forum-moderator
whom DPR had hired to help him run the site.
When Green accepted the cocaine, the SWAT
team busted in and arrested him for receiving
drugs.
For several days Green was inactive on Silk
Road.
And when Ulbricht saw that Green’s admin
account had been used to steal $350,000 in
bitcoin, he freaked out and put out a hit
on Green.
And who did he turn to to carry out the deed?
None other than his trusted associate, Nob,
aka, agent Force.
So Force and the FBI faked Green’s torture
and death.
They even made a video and sent it to DPR
to convince him.
Nob was now indispensable to DPR, who paid
him $80,000 for carrying out the “hit.”
In another crazy twist, agent Force has been
now charged with keeping some of the seized
money for himself, and with being a paid mole
for Silk Road, selling Ulbricht information
about the government’s investigation.
Around the time of Curtis Green’s arrest
in Utah, the New York-based Cyber Squad 2
team was beginning their investigation of
Silk Road.
They spent countless hours figuring out how
to crack the Tor network that Ulbricht was
hiding behind.
Meanwhile Ulbricht was letting his guard down,
growing arrogant in his belief that the site
would never be found.
But after reading a user’s warning on a
Reddit thread that a misconfiguration somewhere
in the site’s code was leaking its IP address,
the cyber squad was able to eventually find
it and trace it back to Silk Road’s server
at an ultra-modern facility in Reykjavik,
Iceland.
After travelling there and obtaining from
local law enforcement the server’s mirror
drive, the agents were able to recreate the
entire Silk Road system back in their lab.
This gave them superuser access, allowing
them to see everything, including DPR’s
every move.
They saw how he extracted his cut from a bitcoin
escrow account every Saturday night.
They read his 1,400 pages of chat logs and
learned DPR had ordered the assassinations
of others who had tried to blackmail him.
In the end, what brought Dread Pirate Roberts
and Silk Road down was the reality that what
you post on the Internet, stays on the Internet.
At one point in 2013, Ulbricht -- using the
handle “Altoid” -- had asked a question
about Tor on a Stack Overflow forum, a post
that also listed an email address: rossulbricht@gmail.com.
That was the break the investigators had been
waiting for.
Within days, after a perfectly orchestrated
operation that busted him in the San Francisco
library by momentarily distracting him as
agents grabbed his laptop before he could
close it, Ulbricht was caught red-handed and
arrested.
More than $20 million in bitcoins were seized
from Dread Pirate Roberts and Silk Road was
shut down.
Ulbricht will go down in history to some as
a pioneer who opened the door for drug sales
to flourish in cyberspace, and having been
convicted of those crimes, will spend the
rest of his life in prison.
This video was heavily inspired by the fascinating
two-part, in-depth piece from Wired magazine,
reported by Joshuah Bearman, linked below.
And you can learn a lot more about the future
of crime by downloading a free copy of the
audiobook Future Crimes, with a one-month
trial at audible.com linked below.
If you liked this report, hit that like button
to help it spread, and watch more TDC by clicking
on the video on the left documenting 10 of
the biggest unsolved heists in world history,
or our investigation of the world’s biggest
criminal, Russian President Vladimir Putin,
on the right.
Until next time, for the two man team here
at The Daily Conversation, thanks for watching.
