On Tuesday morning, Ross Ulbricht, the now-admitted founder of the Silk Road online black marketplace, returned to a federal courthouse in the Southern District of New York City. Ulbricht is accused of trafficking drugs on the Internet, narcotics-trafficking conspiracy, computer-hacking conspiracy and money-laundering conspiracy for his role as the creator of the Silk Road.
Specifically, the government aims to prove that Ulbricht is the man behind the online persona Dread Pirate Roberts, the administrator of the Silk Road. The defense is arguing that Ulbricht created the marketplace but was overwhelmed and sold it shortly after. They say he was tricked into getting involved when the real DPR knew a bust was coming and left Ulbricht "holding the bag."
The prosecution has the burden of proof to convince the jury that Ulbricht was DPR and so deserves to spend his life behind bars. Its entire case hinges on something known as “transferred intent.” This doctrine allows the government to attempt to convince the jury that Ulbricht is responsible for the activities of the website itself, whether or not he was directly involved. Potentially this could lead to a situation where websites such as ebay or Amazon are held responsible for the actions of their customers. Or perhaps a news website might be liable for threats made in the comment section. Ross’s mother, Lyn Ulbricht, has said that if the precedent is set during her son’s trial it could “put a chill on the internet.”
For the first two days of the trial, the government spent a considerable amount of time detailing purchases made by undercover Homeland Security Investigations officer Jared Der-Yeghiayan. The jury saw pictures of cocaine, ecstasy, heroine, LSD and crystal meth. Der-Yeghiayan said he performed 50 to 60 undercover buys. From 2009 to 2013 he was a part of an investigation that began in Chicago's O'Hare International Airport and ended with Ulbricht's arrest in October 2013 at a San Francisco public library.
Despite the abundance of evidence that drugs were purchased on the Silk Road, evidence directly connecting Ulbricht to the purchases has yet to be seen. The prosecution argues that Ulbricht was paid a commission of each deal and thus can be held responsible.
The Silk Road website and other "hidden services" are a part of what is known as the deep web or, sometimes, the dark web. This internet beyond the world wide web offers access to products and services which are either illegal or taboo. This could include illicit drugs, fake identification cards, weapons, child pornography, or simply transactions taking place outside of the range of the government, without taxation. Customers pay for their purchases with the popular anonymous crypto-currency Bitcoin.
The process of using an anonymous currency and making transactions outside the purview of the state seems in line with Ross Ulbricht's thinking. Business Insider reported that Ulbricht's LinkedIn profile details his philosophy:
"I want to use economic theory as a means to abolish the use of coercion and aggression amongst mankind. Just as slavery has been abolished most everywhere, I believe violence, coercion and all forms of force by one person over another can come to an end. The most widespread and systemic use of force is amongst institutions and governments, so this is my current point of effort. The best way to change a government is to change the minds of the governed, however. To that end, I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force."
To create this simulation, Ulbricht went to the deep web. In order to access the deep web, users download software such as the anonymous browser TOR, The Onion Router. TOR allows users to access hidden services through web addresses that are inaccessible on the world wide web. During the court hearings, the concepts underlying the TOR browser, Bitcoin and the Deep Web seemed to overwhelm the minds of the jury. The technologies remain largely unknown to the world outside of hardcore libertarian and crypto-anarchist communities.
In last week's proceedings, the government painted a picture for the jury focusing on the illicit activities conducted using TOR, Bitcoin and the Deep Web. Lead prosecutor Serrin Turner argued that the desire for anonymity on the Internet was nearly criminal. But when Ulbricht's defense cross examined Der-Yeghiayan, it informed the jury of various other legitimate uses of Bitcoin and the growing acceptance among online merchants such as Overstock.com.
The defense continued to poke holes in the government's version of events throughout last Thursday. The jury learned how PGP signatures allow users to encrypt messages. The defense showed how these signatures are similar to a car key that can be shared, copied and used by several people without revealing who was using them and at which time. This point created doubt as to whether messages sent by Dread Pirate Roberts could be linked directly to Ulbricht.
The defense also showed that Der-Yeghiayan had investigated several other people as possible candidates for DPR. Only one month before, Der-Yeghiayan had been looking at another high-profile member of the Bitcoin community, the disgraced CEO of Mt GOX, Mark Karpeles.
Der-Yeghiayan believed Karpeles, and his right hand man, Ashley Barr, may be the masterminds behind the Dread Pirate Roberts name. He signed an affidavit stating he had probable cause to get a warrant to search Karpeles’s emails. Der-Yeghiayan also expressed frustration with a parallel Baltimore, Md., investigation that seized money from Karpeles associated with alleged illegal money transfer business, tipping him off that there was a government investigation underway.
It was also revealed that Karpeles’s attorney told Maryland investigators his client wanted to cut a deal, by saying who he thought was behind Silk Road in exchange for immunity for potential unlicensed money transfer business.
Last week, the judge dismissed the jury early to debate with the defense and prosecution about whether to allow the Karpeles bombshell to be included as testimony. The prosecution argued the detail and parallel investigation is "irrelevant" and hearsay. A decision was expected this week.
Perhaps the most damning piece of evidence the government has offered includes Ulbricht's own laptop. When he was arrested in San Francisco, agent Der-Yeghiayan was sitting at a nearby park bench on hold with a team of officers waiting to arrest Ulbricht. The DHS concocted a plan to get Ulbricht in a public place with Internet, and to catch him chatting with the undercover agent as Dread Pirate Roberts. The government’s charges against Ulbricht depend on its ability to prove that Ulbricht was in fact Dread Pirate Roberts. To secure that evidence, the arresting agents were instructed to grab the laptop first before grabbing Ulbricht.
The prosecution showed the jury images from Ulbricht's seized computer that indicate he was logged in to the back end of the Silk Road site under the section titled "mastermind." Screenshots also showed Ulbricht’s computer had an open chat with Cirrius, the Silk Road administrator that was controlled by agent Der-Yeghiayan. Additionally, and perhaps most damning, were screenshots of crumpled up pieces of paper found in Ulbricht’s bedroom apartment that had notes about Silk Road commission changes. These notes matched forum posts written by Dread Pirate Roberts in the months leading up to Ulbricht’s arrest.
The public has yet to find out exactly what led the prosecutors to Ross Ulbricht. Perhaps the investigation into Karpeles wielded some information, or, as Ulbricht's defense argues, Ulbricht created the Silk Road but handed it off shortly afterward to an individual or individuals who then began using the moniker Dread Pirate Roberts. Authorities claim they were able to track Ulbricht after allegedly locating a simple hole in his security, due to a faulty CAPTCHA page. The CAPTCHA page is a security feature that jumbles characters and asks a user to enter the characters to prove s/he is not a bot. Security experts have called this explanation “inconsistent with reality” and "impossible."
The trial is expected to run another three to five weeks before arguments conclude and the jury makes it decision. Stay tuned for a follow-up.
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