Web of intrigue led to Silk Road creator

The jury took fewer than four hours to convict Ross Ulbricht, the creator of Silk Road, of running a multimillion-dollar drug trafficking operation from his laptop computer. Ulbricht (30) was convicted on all seven counts related to the trafficking and faces 20 years to life in prison when he is sentenced in May.

The trial thrust into the spotlight the issues of internet security and the so-called dark web of hidden websites on browsers that anonymise traffic. It also explored the operations of bitcoin, the virtual currency, that was the currency of choice on Silk Road.

The case also tested the boundaries of applying laws normally associated with capturing drug dealers selling on street corners to the internet.

“The legacy of Silk Road,” prosecutor Serrin Turner told the jury, was that it “lowered the barriers of drug dealers to reach customers” more than could ever be reached on the street.

Criticism came from libertarian groups, some of which believed the government was criminalising the activities of anyone who operated a website.

Several supporters of Ulbricht – some of whom said they did not personally know him – attended parts of the trial to protest the government’s reach. One of his supporters in the court shouted after the verdict: “Ross is a hero.”

The trial had all the intrigue of a high-stakes thriller.

Federal agents led the jury into their investigation, as they intercepted drugs in vacuum-sealed packets at a Chicago airport, and logged in to computers to assume the identity of a Silk Road employee.

A college classmate testified about when he learnt Ulbricht had created Silk Road, while another federal agent described confronting Ulbricht at his San Francisco apartment just weeks before his arrest with nine counterfeit driver's licences.

The central question for the jury was whether Ulbricht, a physics major from Austin, Texas, was Dread Pirate Roberts, a pseudonym adopted from the fictional character in the novel The Princess Bride, and the ruthless mastermind operating the Silk Road website.

Mr Turner and his fellow prosecutor, Timothy Howard, relied heavily on digital evidence recovered from Ulbricht's laptop, including personal journals, private chat logs, files for aliases, encryption keys, bitcoin wallets and addresses.

They showed the jury private chat logs from Roberts alerting Silk Road staff that he was going to be out of town next to Ulbricht’s personal emails containing receipts of airline tickets.

They matched Ulbricht's Facebook posts about a trip to Thailand to a chat message in which Roberts tells a Silk Road adviser that he is running around a jungle with girls.

Using Ulbricht’s words, taken from the journal entries on his laptop, prosecutors told of Ulbricht’s ambition to turn Silk Road into a “phenomenon”.

Richard Bates, a college classmate of Ulbricht, testified that in 2011 Ulbricht told him: "I'm working on a website where people can buy drugs." Mr Bates said he remembered "seeing the homepage, seeing the green camel [logo] for the first time".

Expenses for a cabin rental where Ulbricht produced magic mushrooms to sell on Silk Road to launch the website matched a drug laboratory manual and receipts found on Ulbricht’s laptop and Gmail account.

Ulbricht’s ambitions were met, they said. He instituted vendor agreements and required commissions on sales.

Silk Road generated $200m in revenues and $13m in commissions, it was estimated.

Mr Howard said Ulbricht would do anything to protect his “baby”. He read screeds of private chat messages in which Roberts solicited the murder of five Silk Road users who threatened the website from someone he believed was a Hells Angels member. The “hits” discussed matched entries on a log located on Ulbricht’s computer. The prosecutors told the jury there was no evidence anyone was harmed.

Ulbricht's lawyer, Joshua Dratel, told the jury that his client had created the website but said he handed it to someone else when it became too much for him to handle. Ulbricht was framed – perhaps by Mark Karpelès, the founder of Mt Gox, the largest bitcoin exchange until its collapse, or someone else – and lured back only when the real Dread Pirate Roberts felt law enforcement closing in on him, Mr Dratel said. Mr Karpelès has denied any involvement and has not been accused of any wrongdoing.

Ulbricht’s lawyer argued that it was possible that someone else had put the voluminous files on Ulbricht’s laptop by hacking into his computer when he was online using an open portal.

In a sense, he put the internet on trial, pressing the jury to be wary as files could be changed or manipulated online and asking them to question whether anyone could ever know who was on the other side of a computer screen.

– Copyright The Financial Times Limited 2015