It has been five years since that iconic character from my daughter’s favorite childhood movie, the Dread Pirate Roberts, was sentenced to life in prison for the piratical life he led. Not really. But it has been five years since Ross Ulbricht, a/k/a “The Dread Pirate Roberts,” a/k/a DPR, was sentenced to life in prison for operating the Silk Road, a darknet market website where illegal narcotics, firearms and other forms of contraband were bought and sold using a secure web browser known as Tor. The website, with Ulbricht as its master, operated for several years, selling goods worth billions of dollars before the government seized the website and arrested Ulbricht. Following a jury trial, Ulbricht was convicted on multiple counts of a federal Indictment.
The aftermath of the Ulbricht prosecution has spawned a number of interesting prosecutions. In addition to the prosecution of the normal assortment of co-conspirators, two members of the federal task force investigating the Silk Road were also charged with criminal conduct involving the Silk Road. Shaun Bridges, a former Secret Service Agent, was sentenced to nearly six years in prison for stealing nearly $800,000 in Bitcoin from the Silk Road. Another federal agent responsible for investigating the Silk Road, Special Agent Carl Force of the Drug Enforcement Administration, received a six and one half year sentence for taking payments from Ulbricht to misdirect the investigation.
It now appears that corrupt government agents were not the only ones stealing from Ulbricht. On November 3, 2020, the U.S. Attorney for the Northern District of California filed a civil complaint seeking the forfeiture of over $1 billion dollars in Bitcoin connected to the New Silk Road. According to the Complaint, over 100,000 customers used the Silk Road generating vast amounts of revenue in the process. The government was able to identify one transaction on April 9, 2013, where a Bitcoin addressee that received the 70,411.46 Bitcoin from Silk Road sent 69,471.082201 (approximately $14 million at the time of transfer) to address 1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8Hbhx (hereafter “1HQ3”). Later in April, a small fraction of the funds was provided to BTC-e, a Bitcoin services company. The remainder of the funds was left untouched from 2013 until the government’s seizure of the funds in 2020.
Although not directly related to the case, it is noteworthy that in 2017, the owner of BTC-e, Alexander Vinnik, a Russian citizen was arrested in Greece. Following his arrest, the United States, the Russian Federation and France all sought his extradition to face criminal charges in each country. In the United States, he is charged with operating an unlicensed money exchange, conspiracy, and unlawful currency transaction. In January of 2020, he was extradited to France where he remains.
According to the government’s investigation, 1HQ3 was owned or controlled by a hacker identified in the Complaint as Individual X. In 2013, Individual X hacked into the New Silk Road and was able to divert over 70,000 Bitcoin from the Silk Road into his or her own account. Despite threats from Ulbricht, Individual X did not return the Bitcoin, and it remained untouched on the account until seized by the U.S. government. Today, the Bitcoin is worth over $1 billion. According to the Complaint, Individual X has agreed to forfeit the Bitcoin to the government.
It is not known how much money was transferred during the time of the Silk Road’s operations between 2011 and 2013, but the amounts involved were vast and remain, in large measure, untraced. The Silk Road was seized by the U.S. government several years ago, but the U.S. government and other governments around the world continue to attempt to penetrate its secrets. Even as these attempts continue, persistent press reports point to new versions of the website dubbed Silk Road 3.0 and Silk Road 3.1. The battle continues.
 As of the date of publication, a single Bitcoin is worth approximately $18,000. See, https://markets.businessinsider.com/currency-converter/btc_united-states-dollar.
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