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.