Editor’s Note: John Bush is the Editor in Chief of the Liberty Beat daily radio news service and host of the weekly Bitcoin podcast SovereignBTC.
Ross Ulbricht, the creator of the Silk Road online black marketplace, is facing a number of federal charges related to allegations that he facilitated the illegal activity of marketplace users.
Week one of the trial ended with the defense’s cross examination of the state’s first witness, the undercover agent who infiltrated the Silk Road. While much information shared during the week was complex and technical, here are four important facts to remember as week two begins.
1. “I am Silk Road, The Market, The Person, The Enterprise, Everything” – Dread Pirate Roberts
The trial began with Assistant U.S. Attorney Timothy Howard laying out the case against Ross William Ulbricht, whom the prosecution claims was the “kingpin of a digital criminal empire.” The state is hoping to convince the twelve person jury that Ross Ulbricht not only created Silk Road, he was the mastermind behind it’s day to day operation. In order to accomplish this, Howard and his team are relying on the testimony of an undercover agent, confidential informants, and a computer expert from the FBI.
2. “On The Internet, Everything Is Not What It Seems” – Joshua Dratel
Defense Attorney Joshua Dratel’s opening statement began with the unexpected admission that Ross Ulbricht did in fact create the Silk Road website. He explained that Ross built the website as “a free market site where you could buy anything” and that after just a few months he found it to be “too stressful” and he “handed it off to others.”
To win the case, Dratel must create enough doubt in the jury’s mind that they believe it’s possible that Ross Ulbricht may have never been in control of the username Dread Pirate Roberts, Silk Road’s main administrator.
3. Cirrus, The Criminal Enterprise Destroyer
The State’s first witness was Homeland Security Investigations Special Agent, Jared Der-Yeghiayan. Working undercover with the goal of taking down the identity behind Dread Pirate Roberts, Der-Yeghiayan successfully infiltrated the Silk Road, conducting over fifty drug buys from forty dealers in ten countries.
Special Agent Der-Yeghiayan’s shining moment was obtaining access to the Silk Road username Cirrus, a trusted profile that was one of ten staffers working directly for Dread Pirate Roberts. Assuming the role of forum moderator and customer service specialist, the special agent worked ten to twelve hours a night and was paid $1,000 in bitcoin a week.
Der-Yeghiayan also played a major role in the October 2nd, 2013 arrest of Ulbricht. On day two of the trial, jurors learned how Der-Yeghiayan, through the username Cirrus, initiated a chat with Dread Pirate Roberts on the day he was arrested, asking him to check something on the backend of the Silk Road Website. Once Agent Der-Yeghiayan believed Dread Pirate Roberts was logged in to the site, he gave the signal to initiate Ulbricht’s arrest.
Shortly after, FBI agents in plain clothes pounced on Ulbricht as he sat working at the Glen Park Library in San Francisco. The arresting agents were instructed to first grab Ulbricht’s computer so as to avoid it being closed and possibly encrypted. When law enforcement examined Ulbricht’s computer, they found a page opened on the back end of the Silk Road website along with an active chat underway with Cirrus.
4. The Karpeles Conspiracy
During Joshua Dratel’s cross examination of the state’s witness, those in the audience familiar with Bitcoin were shocked to hear that at one point, early in his investigation, Der-yeghiayan’s primary suspect was disgraced Mt.Gox CEO, Mark Karpeles.
Der-Yeghiayan believed that Karpeles had created Silk Road as a means of driving up bitcoin prices as he launched his newly acquired online exchange. He bought the exchange in February, 2011, just one month after the Silk Road opened for business. The evidence the defense shared with the jury to further this theory was the fact that the server for the website SilkRoadMarket.com, an open-web Silk Road advertisement site, was registered by a company owned by Karpeles.
Dratel may be furthering this theory as it shows the jury that Ulbricht was not the only suspect and that if Der-Yeghiayan was wrong about Karpeles, he may be also be wrong about Ulbricht.
Week one of the Ross Ulbricht trial played out like a courtroom drama, complete with plot twists, plenty of objections, and a bombshell revelation on the final day of the week’s proceedings. If week two is half as exciting and intriguing as week one, the jury and those following along are in for a wild ride.