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Recapping Week Three Of The Silk Road Trial

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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.

Cold winds and snow buffeted the walls of the Daniel Patrick Moynihan United States Courthouse last week as jurors heard more of the Government’s case in the Silk Road Marketplace trial against Ross WIlliam Ulbricht.

Ulbricht is being prosecuted for creating the Silk Road Marketplace and allegedly facilitating the purchase and sale of illicit goods and drugs.

In week three of the trial, the jury learned how a google search led the IRS to Ross Ulbricht and how activities referenced in Ulbricht’s personal emails were also found in private chats between Silk Road’s main administrator, Dread Pirate Roberts, and his associates.

Also in week three, the Government called to the stand a former heroin dealer who testified that he sold drugs online through Silk Road in order to feed his growing addiction.  On the final day of week three, an FBI contractor shared with the court his bitcoin transaction analysis which tied over 4,000 bitcoin transactions from Silk Road servers to wallets found on Ross Ulbricht’s personal laptop.

In an effort to bring a dramatic finish to a thorough and hard-hitting week of testimony, the Prosecution capped their arguments Thursday afternoon by finally bringing up the murder for hire plot Dread Pirate Roberts was allegedly involved in.

All in all, it was another difficult week for the Ulbricht Defense Team.

The Google Search That Led Authorities To Ross Ulbricht

After Monday’s proceedings were cancelled due to extreme winter weather, Week Three began with the testimony of IRS Special Agent Gary Alford.  Working with the New York Organized Crime Drug Strike Force, Alford was in charge of an investigation aimed at finding the identity behind Dread Pirate Roberts.  The Special Agent shared a step by step account of how his online searches led him to Ross Ulbricht.

He started with a simple google search limited to results on or before January 31st, 2011 (Silk Road was known to have been started some time in February 2011) for the terms “ silk road” and .onion.  This search pointed him to a BitcoinTalk Forum post about a hypothetical drug market that used bitcoin.  On this post, was a quote from a user named Altoid asking other users if they had heard of the Silk Road Marketplace on TOR and asking them to visit silkroad420.wordpress.com to learn how to access the site.  Alford also found another similar post advertising silkroad420.woordpress.com from someone using the username Altoid, this time on an online forum dedicted to psychadelic mushrooms.

The Special Agent went on to search the BitcoinTalk Forum for previous posts from  username Altoid.  From here, Alford found a post by “Altoid” advertising a tech position with a bitcoin start-up.  The post encouraged applicants to email “RossUlbricht@Gmail.com”.

Ulbricht’s Emails Sync With Dread Pirate Roberts’ Private Chats

Now that the Feds had pinned Ross Ulbricht as their primary suspect, Special Agent Alford obtained a search warrant compelling Google to share Ulbricht’s personal emails with the Government.  With access to Ulbricht’s email, the Prosecution was able to connect activities referenced in DPR’s private chats to statements made by Ulbricht through his email or social media accounts.

Talk of travel plans were included in the Government’s examples of similarities between DPR chats and Ulbricht’s communications.  The Government showed screenshots of DPR talking about travelling alongside screenshots from CheapAir.com showing a flight Ulbricht had booked during the same time period.  Also referenced was a Facebook photo album with pictures of Ulbricht in Thailand while at the same time DPR talked of running around “ “beaches and jungles with some girls”.

Perhaps the most compelling evidence was a private chat with DPR and an associate talking about the need to work with a statistician to measure the efficacy of their bitcoin tumbling system (bitcoin tumbling is the process of combining bitcoin transactions randomly with other transactions so as to disguise the genesis of the transaction).  In the message, DPR says he knows someone and will reach out.  Shortly after he replies to the same TOR chat quoting a statistician friend of his.  The Government then presented, in the form of email screenshots, evidence showing the quoted conversation as having taken place in Ulbricht’s email.

Testimony From A Heroin Addict Turned High Volume Silk Road Vendor

On Wednesday, the Government called Michael Duch to the stand.  Duch was a Silk Road heroin vendor who, according to his testimony, became an online vendor to help feed his growing heroin addiction.  Duch recounted his history as an addict and shared with the court that at one point he was injecting 60 – 100 bags of heroin a day.  He told the jury that at the height of his online trade, he was bringing in $60,000 – $70,000 a month in drug sales.

The witness also shared stories of his customers who were anxiously trying to get more heroin before they experienced withdrawal symptoms.  One user wrote, “I’m throwing up, the worst of the worst withdrawal symptoms, and plus I have life-destroying pain”.  When Prosecutors asked Duch how he felt about contributing to the addiction of his customers, he said, “It was something that bothered me on a daily basis”.

Searching Servers And Seizing Bitcoin

On the final day of week three proceedings, the jury heard from former FBI Agent, Ilhwan Yum about the results of a bitcoin transaction analysis he conducted on Bitcoin wallets found on Silk Road servers and Ulbricht’s seized laptop.  Yum, who played a major role in the seizure of Silk Road’s servers, found a total of 2,105,127 bitcoin addresses on Silk Road servers and 11,135 on Ulbricht’s laptop.

He then conducted an analysis on transactions sent from Silk Road wallets to bitcoin addresses on Ulbricht’s computer.  Yum found that there were just under 4,000 transaction originating with Silk Road wallets and sent to wallets found on Ulbricht’s laptop.  These transactions totaled 700,254 bitcoins ($13,359,552 when averaging bitcoin price over the duration of the bitcoin transfers).

 The Murder For Hire Plot Rears It’s Ugly Head

Before proceedings ended on Thursday, the Government began telling the story of Dread Pirate Roberts’ alleged murder-for-hire plot.  The Prosecution shared a string of messages between DPR and the apparent hitman that began following DPR’s receipt of threats to reveal thousands of Silk Road user identities.  In response to receiving the threats, DPR reached out to the supplier who was said to have been owed the $500,000 bounty from the original threat.  The supplier, who used username “redandwhite” was then hired to kill “FriendlyChemist” before he revealed any information that could damage Silk Road.  The jury heard a message from Dread Pirate Roberts to “redandwhite” that read, “In my eyes, FriendlyChemist is a liability and I wouldn’t mind if he was executed”.

While Ulbricht is not being charged for the alleged murder for hire plot in the New York Federal District, a ruling from the court before the trial stated the Prosecution would be able to enter in to the record evidence supporting the allegation.  As the story was told, many in the jury became visibly distraught over what they had heard.  While they will not be deciding on that charge in particular, it will likely weigh heavily as they decide Ulbricht’s fate.

 Heading Into Final Week

Week four was yet again full of very strong evidence linking Ross Ulbricht to Silk Road’s Administrator, Dread Pirate Roberts.  With evidence tying DPR Chats to Ulbricht’s email and the bitcoin analysis showing thousands of transactions from Silk Road wallets to bitcoin addresses Ulbricht controlled, as week five continues, the Defense Team will certainly have their work cut out for them.  The Government will rest their case on Monday and the Defense’s arguments are expected to wrap up by mid-week.  We will very likely hear a verdict in this case before Friday.

Featured Image: Courtroom drawing / AP / Elizabeth Williams