In a New York City federal courthouse, one of the most interesting and exciting trials of the past decade is happening right now. The case has it all – drug running, aliases, staged murders, hitmen, and an unstable currency. But actually understanding what the hell Silk Road was and why it’s interesting is a little had to parse. Don’t worry, we’ve got you covered.
So, what is Silk Road?
What was Silk Road you mean. Silk Road was an online marketplace where anyone could buy literally anything using a digital currency called Bitcoin (which you may have heard of). Drugs, stolen credit cards, passports, everything you can imagine was sold on Silk Road, all under the cover of anonymity.
Ah, so if it was anonymous, who’s on trial here?
Ross Ulbricht, a seemingly nondescript, out-doorsy 29-year-old who is thought by the federal government to be the mastermind behind the marketplace. He carried out his work under the pseudonym “The Dread Pirate Roberts.” Yes, the character from A Princess Bride.
How’d Ulbricht get caught if this guy was so good at covering his tracks?
It took a while, but a federal agent actually went undercover as a Silk Road user and then an administrator. He worked on what was essentially the “help desk” part of the site, putting in long hours and getting paid in Bitcoin for his labor. The agent, Jared Der-Yeghiayan, began to gain the trust of Ulbricht, who was an Eagle Scout and lived in a modest apartment in San Francisco, unbeknownst to even his roommates as a drug kingpin.
So this guy was running a secret cartel? That’s pretty cool.
Yeah, I guess, but it comes with all the baggage of a cartel as well. The federal government is alleging that Ulbricht ordered several contract killings through the online marketplace, hiring hit men that were actually undercover federal agents. The government even went so far as to fake the death of an informant to prove that it was Ulbricht who was really pulling the strings.
Is the government’s case against Ulbricht pretty airtight, or does he stand a chance of getting off?
The first week of the trial has been pretty extraordinary. After the federal government opened the trial with a pretty persuasive argument that Ulbricht was in fact The Dread Pirate Roberts, the defense immediately conceded that Ulbricht had created the site. However, they claim that Ulbricht quickly handed off control of the site to Mark Karpeles, the CEO of Mt. Gox.
Mt. Gox? Is that a Super Mario level?
Close. Mt. Gox was a Bitcoin exchange based in Japan. It handled 70% of all Bitcoin transactions in the world and played a huge role in the rise and precipitous fall of the supposedly anonymous currency. CEO Mark Karpeles has been implicated in several schemes to buff up the value of Bitcoins and is in the middle of being investigated on fraud charges by the federal government after Mt. Gox went bankrupt in 2013.
So the defense's case is that the government has the wrong guy?
Exactly. Ulbricht’s defense lawyer, Joshua Dratel, told the court: “We have the name of the real mastermind and it’s not Ulbricht.” The defense is now making the case that Karpeles was the man wearing the Dread Pirate Roberts mask and not Ulbricht. Just like the actual film and novel Princess Bride, where its revealed the Dread Pirate Roberts identity has been passed down from pirate to pirate, the defense is arguing that Ulbricht was only the first of many.
Is that true, though?
Possibly! Ulbricht was arrested at a public library while working on the backend of Silk Road, at a moment the federal government believed would constitute a smoking gun in regards to his guilt. If the defense is going to convince anyone that Karpeles (or anyone else) was behind Silk Road, they’re going to have to produce some very convincing evidence. And produce they have! After getting federal agent Der-Yeghiayan to admit that Karpeles was a main suspect in the case, federal agents moved to block an interview the Dread Pirates Roberts gave to Wired in 2013 where the writing sounds remarkably like Karpeles and the DPR admits that he inherited the site and was not its creator.
But why would Karpeles do it if he was already running a successful business at the time?
Silk Road represented a huge market for Bitcoin, with over $1.2 billion in revenue. To raise the value of bitcoin, the defense alleges that Karpeles built up the illicit drug-buying site to popularize the pseudo-currency and, in the process, make himself millions.
Wow, this is insane.
And it was only the first week of the trial! Even yesterday, the federal government moved to block the 2013 Wired interview -- probably because it's far too damaging to the state's case. Get ready for even more twists along this wild, wild Silk Road.
Follow Maxim Senior Editor Max Rivlin-Nadler at @MaxMaximMag.
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