Thread: Feds shut down $1.2 BILLION criminal internet marketplace

Feds shut down $1.2 billion criminal internet marketplace

By Jana Winter
Published October 02, 2013 FoxNews.com

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  Federal authorities shut down Silk Road, an underground marketplace responsible for distributing illegal drugs and other black market goods and services. (Department of Justice)

Federal authorities have shut down what they called the “most sophisticated and extensive criminal marketplace on the Internet today,” an underground operation responsible for distributing illegal drugs and other black market goods and services.

The site’s alleged owner, Ross William Ulbricht, was arrested and $3.6 million in anonymous digital currency known as Bitcoins was seized. The site, which did about $1.2 billion in sales, was taken over by federal authorities, according to court documents unsealed Wednesday in the Southern District of New York.

Ulbricht was alleged to operate a website responsible for distributing hundreds of kilograms of illegal drugs and other illicit goods and services, including fake IDs and computer hacking-related services. He was indicted on charges of drug conspiracy, computer intrusion offensives conspiracy, and money laundering conspiracy.

Ulbricht, 29, used the aliases "Dread Pirate Roberts," "DPR," and "Silk Road" while operating the site, authorities said.

He appeared in federal court in San Francisco on Wednesday and was scheduled to reappear Friday for a detention hearing.

The government seized approximately 26,000 Bitcoins in the largest ever seizure of the online currency designed to be as anonymous as cash.

The website, described as “a sprawling black-market bazaar,” was used by several thousand drug dealers and unlawful vendors to distribute hundreds of kilograms of illegal drugs including heroin, cocaine and LSD as well as other illicit goods and services in over 1000,000 buys from January 2011 to September 2013, the court papers alleged. The site also allegedly laundered hundreds of millions of dollars from the illegal transactions.

According to court papers, the site had nearly 13,000 listings under categories including “Cannabis,” “Dissociatives,” “Ecstasy,” “Intoxicants,” “Opioids,” “Precursors,” “Prescription,” “Stimulants” and “Psychedelics.”

As of September 2013, there also were 159 listings in the “services” category, which included vendors offering to hack into Facebook, Twitter and other social media accounts of the customer’s choosing, allowing them to “Write, Upload, Delete, View All Person Info” among other information.

One listing offered tutorials on “22 different methods” for hacking ATM machines while. another offered criminal services, including access to a “Blackmarket Contact List” described as a list of “connects” for “services” such as “Anonymous Bank Accounts,” “Counterfeit bills,” “Firearms and Ammunition,” “Stolen Info [credit card, Paypal]” and “Hitmen (10+ countries.)”

Silk Road Hidden Website was designed to facilitate illegal commerce by providing anonymity to its users via “The Onion Router” or “Tor” network. The site required transactions to be paid in Bitcoins.

Since November 2011, undercover law enforcement agents made multiple purchases of controlled substances from Silk Road vendors and the payments for those substances were then involved in money laundering transactions on the Silk Road website, according to the civil forfeiture complaint made public on Wednesday.

The site generated sales revenue of over $9.5 million Bitcoins, which prosecutors estimate equal about $1.2 billion in sales and about $80 million in commissions.

Undercover agents bought various drugs, including heroin and cocaine, as well as hacking services, including malicious software such as remote access tools allowing a hacker to remotely control and steal information from infected computers, according to court records.

The papers alleged that while Ulbricht managed a small staff of online administrators, he alone controlled the massive profits generated from the site. He is also accused of having “been willing to pursue violent means to maintain control of the website and the illegal proceeds it generates for him,” according to the criminal complaint.

Specifically, in March 2013, Ulbricht, “in connection with operating the Silk Road website, solicited a Silk Road user to execute a murder of another Silk Road user, who was threatening to release the identities of thousands of users of the site.”

In response to the Silk Road takedown, Senator Charles Schumer, D-N.Y., who urged federal authorities to go after the site in 2011, said:
“Sayonara to Silk Road. Over two years ago, I called on the DEA and DOJ to put the kibosh on this outrageous virtual illegal-drug bazaar, and I am pleased that today they hung a ‘Closed for Good’ sign on Silk Road’s door. “I congratulate the DEA agents and the law enforcement personnel at the Department of Justice for their hard and successful work in shutting down this marketplace, which in only two and a half years generated a staggering $1.2 billion in sales of drugs, computer hacking material, and other illegal and dangerous goods. The country is safer now that this open market for law-breaking has been shuttered.”

http://www.foxnews.com/tech/2013/10/02/feds-shut-down-12-billion-criminal-internet-marketplace/

Criminal complaint: http://cdn3.sbnation.com/assets/3326...lComplaint.pdf

RELATED

http://www.alipac.us/f19/everything-...k-road-289106/

Silk Road drug busts: 8 more arrested

AP 4:19 p.m. EDT October 8, 2013


This frame grab from the Silk Road website shows thumbnails for products allegedly available through the site.(Photo: AP)

Story Highlights

• Silk Road was an online black market bazaar where visitors could buy and sell hard drugs
• Sales were in bitcoins, an independent form of online cash
• FBI nabbed site mastermind Ross Ulbricht at a library in San Francisco

LONDON (AP) — Authorities in Britain, Sweden, and the United States have arrested eight more people following last week's closure of Silk Road, a notorious black market website which helped dealers to sell drugs under the cloak of anonymity, officials and media said Tuesday.

In the U.K., the country's newly-established National Crime Agency warned that more arrests were on the way.

Most if not all the arrests took place within a couple of days of last week's capture of Silk Road's alleged mastermind, Ross Ulbricht, in San Francisco, suggesting that authorities may now be busy unraveling the network of drug dealers who made fortunes peddling illicit substances through the site.

Britain's National Crime Agency said it had seized millions of pounds (dollars) worth of bitcoins, the electronic currency used on the site, and the agency's director general, Keith Bristow, said in a statement that other online drug dealers should expect a knock on their door.

"These latest arrests are just the start; there are many more to come," he said.

Silk Road gained widespread notoriety two years ago as a black market bazaar where visitors could buy and sell hard drugs using bitcoins, a form of online cash which operates independent of any centralized control. A so-called "hidden site," Silk Road used an online tool known as Tor to mask the location of its servers.

While many other sites sell drugs more or less openly, Silk Road's technical sophistication, its user-friendly escrow system and its promise of near-total anonymity quickly made it among the best known.

Officials say the black market website brokered more than $1 billion in sales before the FBI collared Ulbricht at a public library on Oct. 1. In its complaint, the bureau said it had managed to copy the contents of the site's server — something one expert said would likely provide international authorities with detailed information about the site's dealers.

"Any large sellers on Silk Road should be very nervous," said Nicholas Weaver, a researcher with the International Computer Science Institute in Berkeley and the University of California, San Diego.

Silk Road's eBay-style customer review system means that months' worth of sales history are now in law enforcement hands, Weaver said in an email, while the traceable nature of bitcoin transfers means the FBI "can now easily follow the money."

Britain's Crime Agency said its arrests were carried out only hours after Ulbricht was detained. It called the suspects "significant users" of Silk Road and described them as three men in their 20s from the northern English city of Manchester and a man in his 50s from southwestern England.

U.S. authorities have charged two people in Bellevue, Washington, a city just east of Seattle, after identifying one of them as a top seller on Silk Road. He was arrested on Oct. 2, while his alleged accomplice turned herself in the next day.

In Sweden, two men from the coastal city of Helsingborg were arrested on suspicion of distributing cannabis over Silk Road, the local Helsingborgs Dagblad reported Tuesday. The newspaper did not say when the pair had been detained.

Britain's Crime Agency, which became operational only this month, said the arrests sent a message to criminals that the anonymity touted by sites like Silk Road is an illusion.

"The hidden Internet isn't hidden and your anonymous activity isn't anonymous," it said. "We know where you are, what you are doing and we will catch you."

http://www.usatoday.com/story/news/world/2013/10/08/silk-road-busts/2946925/

10/28/2013

http://www.alipac.us/f19/u-s-attorne...tcoins-290966/

Manhattan U.S. Attorney Announces Seizure of Additional $28 Million Worth of Bitcoins Belonging to Ross William Ulbricht, Alleged Owner and Operator of “Silk Road” Website

With this, the largest ever Bitcoin seizure, the federal government has now seized approximately 173,991 Bitcoins worth over $33.6 million

I.C.E. News Release

NOVEMBER 7, 2013
BALTIMORE, MD

Administrator of Silk Road website and drug vendor plead guilty to drug conspiracy

BALTIMORE — An administrator and vendor of the Silk Road website pleaded guilty to conspiracy to distribute and possess with attempt to distribute drugs, following an investigation led by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

Curtis Green, aka Flush and chronicpain, 47, of Utah, pleaded guilty Thursday to conspiracy to distribute and possess with attempt to distribute cocaine. On Nov. 5, in a related case, Jacob Theodore George IV, 32, of Edgewood, Md., pleaded guilty to conspiracy to distribute and possess with intent to distribute drugs, including heroin.

"HSI Baltimore special agents arrested Jacob George, who was the first vendor on Silk Road selling illegal drugs to be arrested," said HSI Special Agent in Charge William Winter. "Thereafter, HSI Baltimore created and led the Baltimore Silk Road Task Force to combat the illicit activities of this digital black market website. Subsequently, Curtis Green was arrested after he was identified as an administrator and cocaine distributor on Silk Road. Last month, HSI assisted in the identification and arrest of Silk Road's operator Ross William Ulbricht aka DPR. HSI will continue working with our domestic and international law enforcement partners to identify and arrest individuals who are conducting criminal activities by using networks and digital currency designed to provide anonymity, such as Tor and bitcoins."

"People who believe they can commit crimes anonymously using the internet should reconsider," said U.S. Attorney for the District of Maryland Rod J. Rosenstein.

"Special Agents of the Drug Enforcement Administration (DEA) are highly trained to locate narcotic traffickers and arrest them regardless of their location," stated DEA Baltimore District Office Assistant Special Agent in Charge Gary Tuggle. "Special Agents acting in an undercover capacity were able to locate narcotic traffickers operating in cyberspace during the course of this investigation. This sends a clear message to traffickers that even in cyberspace DEA will find you."

According to his plea agreement, beginning in November 2012, Green worked for the creator and operator of Silk Road, Ross Ulbricht, whom Green only knew by his alias, Dread Pirate Roberts. Silk Road was an online, international marketplace that allowed users to anonymously buy and sell illegal drugs, false identifications, and other contraband over the Internet. Ulbricht collected a fee for each transaction on the website.

Green's responsibilities included responding to questions and complaints from buyers and sellers, resolving disputes between buyers and sellers, and investigating possible law enforcement activity on Silk Road. As part of his role as an administrator, Green had the ability to see messages Silk Road users sent to each other, to see the details of each transaction on Silk Road, and to see the accounts - including financial information - of Silk Road users, including the accounts of Ulbricht.

In September 2011, HSI Baltimore special agents initiated an investigation into the Silk Road website. Thereafter, the Baltimore Silk Road Task Force was created to address the contraband being sold on Silk Road.

Starting in April 2012, a DEA undercover agent in Maryland (the UC), began communicating with Ulbricht about selling illegal drugs on Silk Road. That agent was one of several assigned to the Baltimore Silk Road Task Force. The UC claimed to be a smuggler who specialized in moving substantial quantities of illegal drugs. In December 2012, Ulbricht set out to find a drug dealer on Silk Road who could purchase large quantities of drugs from the UC and directed his administrators, including Green, to assist. Green assisted the UC to establish contact with a buyer, who was an established seller of drugs on Silk Road (the Vendor). The UC and the vendor negotiated a deal for one kilogram of cocaine for approximately $27,000 in Bitcoin, a digital currency that has no association with a national government, is difficult to track, and easy to move online.

Without the knowledge of either Ulbricht or the UC, Green agreed to act as a middle-man for the Vendor and take delivery of drugs. As a result, the Vendor provided Green's address to the UC as the place to which the cocaine was to be delivered. On Jan. 17, an undercover U.S. Postal Inspector delivered the cocaine to Green at his Utah residence. Shortly after Green accepted delivery of the cocaine, special agents of HSI, DEA, U.S. Postal Inspectors and the U.S. Secret Service (USSS) executed a search warrant at Green's residence and recovered the kilogram of cocaine. USSS agents also conducted a forensic examination of Green's computers and digital media seized during the search.

According to Jacob George's plea agreement, from at least November 2011 to Jan. 18, 2012, George sold drugs via Silk Road. George made contact with buyers via Silk Road, accepted payment electronically through Silk Road, and shipped drugs via the U.S. Postal Service (USPS) to buyers throughout the United States and in foreign countries.

The owner and operator of Silk Road, Ulbricht, collected a fee for each transaction on the website. George acquired drugs from two primary sources: he purchased some drugs including heroin from drug dealers in the Baltimore metropolitan area and he purchased synthetic drugs including methylone from suppliers in China and had those drugs shipped to him.

Green faces a maximum sentence of 40 years in prison and George faces a maximum sentence of 20 years in prison for conspiracy to distribute and possess with intent to distribute cocaine. U.S. District Judge Catherine C. Blake scheduled sentencing for Green Feb. 28, 2014 and for George Feb. 20, 2014.

Ulbricht, aka Dread Pirate Roberts and DPR, 29, of San Francisco has been indicted in Maryland on charges of conspiracy to distribute a controlled substance, attempted witness murder and using interstate commerce facilities in the commission of murder-for-hire. He faces a maximum of 40 years in prison for the drug distribution conspiracy; a maximum sentence of 30 years in prison for attempted witness murder and a maximum of 10 years in prison for using interstate commerce facilities in the commission of murder-for-hire. No court appearance in Maryland has been scheduled.

Ulbricht faces a related indictment in the U.S. District Court for the Southern District of New York.

The investigation was conducted by HSI Baltimore; DEA; U.S. Postal Inspection Service, Washington Division; U.S. Secret Service, Baltimore Field Office and the IRS Criminal Investigation, Washington, D.C. Field Office.

This Organized Crime Drug Enforcement Task Force case is being prosecuted by Assistant U.S. Attorney Justin S. Herring.

U.S. Immigration and Customs Enforcement (ICE) is the largest investigative arm of the Department of Homeland Security.

ICE is a 21st century law enforcement agency with broad responsibilities for a number of key homeland security priorities. For more information, visit www.ICE.gov. To report suspicious activity, call 1-866-347-2423 or complete our tip form.

http://www.ice.gov/news/releases/131...7baltimore.htm

Silk Road mastermind ‘spent $730K on 6 failed murder bids
By Rich Calder and Erin Calabrese
November 21, 2013 | 3:14pm



http://nypost.com/2013/11/21/silk-ro...d-murder-bids/

Silk Road forfeits $28M in Bitcoins seized from its servers

CNET

- ‎46 minutes ago‎

US Confiscates $28 Million in Bitcoins from Drug Web Site

Latin American Herald Tribune

- ‎2 hours ago‎

US: USD 28 million bitcoins forfeiture is a record

Business Standard

- ‎2 hours ago‎

2 Men Charged in NY 'Silk Road' Drug Prosecution

NEW YORK January 27, 2014 (AP)

Federal prosecutors say two men are charged in New York with conspiring to commit money laundering by selling more than $1 million in Bitcoins to users of the black market website Silk Road, which lets users buy illegal drugs anonymously.

Authorities say Charlie Shrem was arrested Sunday at New York's Kennedy Airport while Robert Faiella was arrested Monday at his Cape Coral, Fla., residence.

Prosecutors say in a news release that Faiella sold Bitcoins to users seeking to buy illegal drugs on the site through a Manhattan office.

They say Shrem personally bought drugs on Silk Road and helped Faiella exchange more than $1 million in cash for Bitcoins so they could make illegal purchases.

It wasn't immediately clear who would represent Faiella and Shrem in court.

http://abcnews.go.com/US/wireStory/m...ution-22224197

1. FBI Readies 144341 Bitcoins for Sale
   Wall Street Journal ‎- by Michael Casey ‎- 37 minutes ago
   The FBI has moved bitcoins seized as part of a crackdown against the Silk Road online marketplace to the custody of the U.S. Marshals Service ...