The case of United States v. Ulbricht, which is being called The Silk Road Trial, began last week in Manhattan, New York. Silk Road was an online black market where users could anonymously buy and sell various illegal items, especially drugs. It was able to stay anonymous and untraceable by operating on Tor (“The Onion Router”) network, an anonymous web browsing system, and by requiring all transactions to be paid in Bitcoin, an anonymous electronic currency. Ross Ulbricht, the alleged founder and kingpin of Silk Road, was arrested on October 1st, 2013, in a public library in San Francisco by Homeland Security Special Agent Jared Der-Yeghiayan. After a grand jury indictment, Ulbricht’s trial started this week in a Manhattan courthouse.
Assistant U. S. Attorney Timothy Howard began his opening statement by explaining how law enforcement officers caught Ulbricht communicating online using the pseudonym Dread Pirate Roberts (DPR), the leader of Silk Road. Joshua Dratel, Ulbricht’s defense attorney, used his opening statements to argue that Ulbricht was not DPR and was not associated with Silk Road as it was when it was shut down. He did, however, admit that Ulbricht was the founder of Silk Road. Dratel stated that Ulbricht had originally created Silk Road as a “free-wheeling, free market site, that could sell anything, except for a couple items that were harmful.” However, Ulbricht later gave the site to others, who made it into the black market that it eventually became.
On the second day of the trial, Howard brought Special Agent Der-Yeghiayan to the witness stand. He explained how while working undercover, he infiltrated the ranks of the Silk Road staff and communicated directly with DPR. He set a trap by finding out where DPR was going and initiating an online conversation with DPR about some Silk Road business. As DPR messaged with Der-Yeghiayan, federal agents closed in on DPR’s location at a public library and found Ulbricht signed in as DPR on the other end of Der-Yeghiayan’s conversation.
Dratel’s cross-examination of Der-Yeghiayan took the trial in a different direction. Dratel tried to present evidence that Dread Pirate Roberts was not his client Ulbricht but instead was Mark Karpeles, founder of the Mt. Gox Bitcoin exchange. This is in line with previous investigative work that Der-Yeghiayan did on Karpeles in relation to Silk Road. Dratel then posited that Karpeles used Ulbricht as a scapegoat to lead investigators away from himself. Dratel claimed Karpeles used Ulbricht because he was “the perfect fall guy” due to his ties to the founding of Silk Road. The prosecution objected to these claims as hearsay but the judge denied the objection, stating that the defense was presenting facts to allow the jury to “draw inferences.”
This case will speak to the relationship between drug enforcement and technology laws. The evidence presented will likely address the technical characteristics of Bitcoin and Tor, looking at what makes them so hard to trace. These new and clandestine technologies complicate drug enforcement and prosecution. Perhaps the outcome of this case will reopen discussions about whether technologies like Tor and Bitcoin should be tolerated, regulated, or uninhibited.