You probably thought the Silk Road or Silk Route was the path trod by early traders between Europe and China exchanging the riches of the East for those of the West. I did, at least until I read about the digital Silk Road, an underground website that made buying and selling recreational drugs nearly as easy as shopping online for a book.
In a swoop reminiscent of the closure of Megaupload and the arrest of its founder, Mr. Dotcom in New Zealand, the FBI shut down Silk Road and charged its 29-year-old administrator, known as Dread Pirate Roberts, for drug trafficking and computer hacking conspiracy.
Apparently unhampered by the US Federal financial shutdown, the FBI moved to close what it described as the "most sophisticated and extensive criminal marketplace on the internet today” and [also] accused Mr. Dread of money laundering. The government also said he spent $150,000 on a hit man to try to get rid of a blackmailer who threatened to expose users of the site. And you thought Breaking Bad was an amazing story!
Dread, or Ross William Ulbricht (if you prefer his rather boring real name), was arrested whilst working on his laptop in the science fiction section of a San Francisco library, but the lead-up to that arrest will surely become part of a blockbuster movie some day.
It is alleged that Ulbricht ran Silk Road on ‘The Onion Router’ or ‘Tor’ network, an internet network designed to hide the identities of users by making it almost impossible to identify computers used to access or host websites. Payment was in Bitcoin, the high-profile virtual currency that also affords its users a high degree of anonymity. Authorities claimed they ‘seized’ $3.6 million of Bitcoin, but how you physically seize a virtual currency could be an interesting story on its own.
Silk Road managed to operate for over two and half years despite its notoriety by keeping one step ahead of the law and, presumably, the NSA and its fantastic PRISM operation. It did this by using Tor, [a] technology that provides a decentralized method of distributing information across the internet. The technology itself is not illegal but it appears to be very popular with cybercriminals, according to the FBI.
Not satisfied with selling recreational drugs in this ‘secure’ fashion, Silk Road ventured in much harder stuff including ecstasy, cocaine, heroin and LSD, and eventually into forged government issued documents, including fake IDs and passports. Talk about living dangerously.
It is believed a simple mistake by Ulbricht led to his arrest when he posted two questions, in his own name, to a website that provides help for coders. It was one of those questions, ''How can I connect to a Tor hidden service using curl in php?'' that caught the attention of the FBI (one wonders if the NSA might have helped with this part).
There must also be many anxious ‘customers’ of Silk Road not only looking for their next fix but also wondering if the FBI, with access to the inner workings of Silk Road, can track them down in due course.
Not surprisingly, news of Silk Road’s closure appears to have hit the value of Bitcoin.
One site that posts prices for various exchanges suggests the currency has fallen around 20%. The Winklevoss twins will be none too pleased with that news!