On October 2, 2013, the Federal Bureau of Investigation arrested Ross William Ulbricht, a.k.a. “Dread Pirate Roberts,” in connection with operating Silk Road, an online drug marketplace, and executing a murder-for-hire of a site user. FBI officials shut down the Silk Road website hours after Ulbricht’s arrest and seized approximately $3.6 million in Bitcoin, making it the second largest Bitcoin seizure in history. The criminal complaint against Ulbricht filed by prosecutors in the Southern District of New York charged Ulbricht on three counts: narcotics trafficking, computer hacking, and money laundering.
Described as an “Amazon.com of illegal drugs” and an “eBay for drugs,” Silk Road provided an online forum for trading everything from Fentanyl lollipops to ecstasy to heroin. Silk Road was launched in February 2011 and made public by Gawker and other news outlets a few months later. New York Senator Chuck Schumer called on the DEA and Department of Justice to dismantle the website, describing it as “a certifiable one-stop shop for illegal drugs that represents the most brazen attempt to peddle drugs online that we have ever seen.” So, why did it take so long to take down Silk Road?
Law enforcement has struggled to bring down secretive online bazaars like Silk Road, even as sites continue their illegal operations because of the openness of the Internet in a relatively unregulated sphere. In the present matter, Silk Road benefited from two major innovations. First, Silk Road, like many other online black markets, was launched on the so-called “secret internet” or “Deep Web” by utilizing the Tor Network. Second, it protected anonymity further by adopting Bitcoin, a cryptographic currency that operates in a peer-to-peer electronic cash system, as its only form of acceptable currency.
By operating in the Deep Web, Silk Road was hidden from browsers and search engines. Christopher Budd, an independent consultant at Trend Micro, has described the quest to take down these secret websites as an “ongoing game of whack-a-mole.” To crack down on Silk Road, FBI officials had to break Tor’s encryption methods or “break” a Tor user to penetrate its anonymizing encryption services. Tor made identifying the physical location of computers operating or visiting Silk Road’s marketplace essentially impossible by running Internet activities through multiple computers.
Bitcoin transactions helped Silk Road preserve the anonymity of transactions as well. Satoshi Nakomoto, who created Bitcoin on January 3, 2009, had hoped to create a currency impervious to regulatory policies and political interests. Bitcoin transactions are processed and secured by Bitcoin miners and do not require intermediate financial institutions. Though Silk Road adopted Bitcoin to make its transactions relatively anonymous, Bitcoin transactions are inherently public because they are broadcast to the entire network in a decentralized model that allows users to verify chains of ownership, given “block chains” of digitally signed transactions.
The takedown of the Silk Road marketplace has invigorated efforts to pursue its users. Hours after Ulbricht’s arrest, the National Crime Agency of Britain took four men in Britain on drug charges with suspected ties to Silk Road, reflecting the international scope of the crackdown. Keith Bristow, the N.C.A’s director general stated, “These arrests send a clear message to criminals; the hidden Internet isn’t hidden and your anonymous activity isn’t anonymous.” The continued efforts, however, to track down Silk Road’s users and the rest of Ulbricht’s Bitcoin fortune, estimated at over 600,000 Bitcoins or $80 million, face significant hurdles. The ambiguous “seizure” of digital currency and continuing efforts to penetrate Tor emphasize the limited reach of law enforcement and regulation in a broader campaign to tackle the “Deep Web” and criminals lurking in its corners.