updated 01:15 pm EDT, Wed October 2, 2013
Owner accused of murder-for-hire scheme
The Federal Bureau of Investigation has allegedly arrested the owner of the Silk Road service, known for its use by black-market drug sellers. A copy of the criminal complaint filed against Ross Ulbricht accuses him of a number of charges, including narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy. Attempts to access the Tor site encounter a takedown notification with logos from the Internal Revenue Service, Department of Justice, Department of the Treasury, Homeland Security and the Drug Enforcement Agency.
The complaint (PDF), which was posted by security blogger Brian Krebs and referenced by Max Keiser, suggests Silk Road was used for more than $1.2 billion worth of business between February 2011 and July 2013, though the number is based on the current BitCoin exchange rate and does not reflect the true value of transactions converted into USD before the digital currency spiked in value earlier this year.
The FBI claims to have tracked down Ulbricht starting with the first public references to the Silk Road site. Posts on Shroomery.org and Bitcointalk.org under the handle "altoid" in 2011 were interpreted as the owner's first attempts to advertise the site. A later post under the same name appeared to be an offer to hire someone for a "venture backed Bitcoin startup company" and referred interested parties to firstname.lastname@example.org.
Customs and Border Patrol officials later intercepted a package of counterfeit identification documents with Ulbricht's picture but a different name. Homeland Security officials then visited the recipient address in San Francisco, where Ulbricht was living, and verified his true identity on his Texas driver's license. Agents further claim to have traced Silk Road administrative activity to an Internet cafe located 500 feet from the residence.
The FBI claims to have to have used undercover accounts to make a large number of drug purchases, noting that the incoming products have matched descriptions and generally shown "high purity levels" in laboratory tests.
The agency also accuses Ulbricht of participating in a murder-for-hire scheme in which he paid the Bitcoin equivalent of $150,000 to murder a Silk Road user who was threatening to extort $500,000 under the threat of exposing the identities of sellers and buyers. The alleged victim was located in British Columbia and the FBI was unable to tie the online chats to an actual murder, leaving such charges off the criminal complaint.