The notorious online drug market Silk Road has been shut down by the FBI, its suspected operator arrested and charged with narcotics trafficking conspiracy, computer hacking conspiracy, and money laundering conspiracy, and $3.6m worth of the bitcoin crypto-currency has been confiscated by federal agents. The site's alleged …
A Phoenix will rise from the ashes.....
When there's $1.2b turnover, it's inconceivable that it won't.
Inconceivable - I see what you did there :)
You keep using that word. I do not think it means what you think it means.
My name is Inlandrevenueservice. You killed my government. Prepare to die !
I'd say Dragons' Teeth myself.
I am guessing that when the histories are written, Silk Road will be comparable to Napster.
With all those dealers and customers left hanging, more Tor/Bitcoin drugs marketplaces will be springing up soon (if not already).
They'll probably try to avoid the mistakes of Silk Road; some of them might succeed.
Also, if this makes "street" dealing, with the associated violence, non viable, then we should all celebrate.
If any of the seller went by the Heisenberg?
or "As you wish".
So I suppose that ...
... the remaining TOR traffic just got a whole lot more legitimate.
Drug dealers who have enough scale to make real money get caught (or dead). That's a nearly universal truth. I don't think anyone will be screaming injustice.
What does suck, is now that Bitcoin has been proven as a way to finance large scale drug transactions governments everywhere will squash it. I think the whole concept of Bitcoin is kind of dumb, but a lot of people are into it. Not all if those people are into drugs but they'll be 'associated' with narcotics financing now, and that does kind of suck for them.
"Drug dealers who have enough scale to make real money get caught (or dead)"
...or protected by a US three-letter agency or the agency of some other state.
As always, it depends
What a crap comment!
Cash was, and is the primary means of financing drug deals, do we all assume that local currency should be frowned upon because it's used for illegitimate means.
All kinds of financial instruments are used in all kinds of illegal deals, so you could say that anyone using, for example, "cash" has been 'associated' with narcotics financing for a heck of a long time now.
I would also hazard a guess that just about every form of human communication has been pressed into service at one time or another by those engaged in nefarious deeds - are all those similarly tarnished?
Or is it just those associated with the "Internet" that get tarnished?
Cash is frowned upon, certainly in large quantities.
The point I was attempting to make, is that this gives governments an argument for pushing out virtual currency. They've been looking for an excuse for a while.
Cash, however, is overwhelmingly used to pay for legal transactions. Bitcoin isn't, as can be seen by it suddenly losing so much of its value.
How can they seize bitcoins? I thought they were held in a secure "wallet".
By getting the wallet's private key. That way they either hold it or transfer it to their own wallet.
At least, that's how I think they're doing it.
What I'm wondering, is what does the FBI do with them now?
I assume they go into an asset forfeiture process and then get auctioned, which will be slightly amusing to see (and perhaps slightly profitable if you're bidding).
Well they probably sold them, that would explain the dip in the bitcoin prices.
Of course that could have been a few dealers cashing out but the charts show the big sales just with a couple of hours.
Would they be allowed to sell them straight away? I know they can seize and sell proceeds of crime, but wouldn't they have to hold them until a court convicts Ulbricht before they can be disposed of?
They would probably hang on to the 'cash' anyway, Bitcoins will probably be in demand in the FBI for undercover/sting operations.
From a technical perspective, would it be possible for other users of BitCoin to know which Bitcoins landed in FBI hands from the blockchain? ie if I were an Underworld Kingpin, could I rig a system to decline BC transactions involving coins that were in Ulbricht's wallet?
After posting the above I actually read somewhere else that assets aren't "liquidated" until after a case is closed. In that case they might just hold onto them but they could still treat the bitcoins as currency (rather than a physical asset) and exchange them to USD for easier handling later. This would preserve the current value as well in a volatile market.
I'm not sure whether it's the selling of the bitcoin or the intention to sell the bitcoin that would cause its value to crash. As with shares, it's the perceived expected value that determines the current value. This explains why markets can be so volatile.
>>Well they probably sold them, that would explain the dip in the bitcoin prices.
>Of course that could have been a few dealers cashing out but the charts show the big sales just with a couple of hours.
Sounds like Insider Trading to me. You would assume they do the honourable thing and turn themselves in, rather than profiting from drugs and crime and things....
>From a technical perspective, would it be possible for other users of BitCoin to know which Bitcoins landed in FBI hands from the blockchain...
Not really no. But unfortunately - BitCoin being only really pseudo-anon - it could be possible for the Feds to figure who the BitCoins originally belogned too.
originally belonged to?
WTF? Are you telling me that you think the first person to have a bitcoin is responsible for transactions made by its current holder?
Now if they can trace transactions from each coins' inception, that would be, i think, a very large pitfall.
Re: originally belonged to?
If you could tag 'individual' bit coins then that would surely invalidate their use as an anonymous currency....
Not as bad as depicted
Bitcoin value didn't drop as much as the graph of the inflated Mt. Gox exchange rate seems to show, the Y-Axis starts at 105, not zero and only goes up to 145.
So, a drop from 140 to 100 , since recovered to around 122.6, about 20% as opposed to the 42% the graph seems to depict at first glance.
Re: Not as bad as depicted
Lies, damned lies and statistics
Re: Not as bad as depicted
When a "real" currency drops 20% in a few hours, then it's time to worry.
Re: When a "real" currency drops 20% in a few hours
You should do a graph that starts at 75% and goes to 100%?
My name is Inigo Montoyo. You killed my server. Prepare to die.
and if we're doing quotes, '"don't get high off your own supply" goes back at least as far as '83, in 'Scarface'
Frank: "Lesson number one: Don't underestimate... the other guy's greed!"
Elvira: "Lesson number two: Don't get high on your own supply. Of course, not everyone follows the rules... "
Can't think what they were referring to, though, as no-one could buy drugs before Tor/Bitcoin, could they?
...all your base are belong to us - FBI
So the one thing that is still a mystery is how they got hold of the server itself. Because tracking down this guy seems to have been pretty easy; having your nickname or "internet handle" be easily linked to your real life name is a surefire way to get the feds on you. Especially if you're running an overtly illegal scheme.
So it seems to be less of an NSA-assisted manhunt and more of the Dreaded Pirate Roberts ... err... Ulbricht being too dumb to do illegal stuff.
Re: Identity FAIL
It's hard work being a criminal full time online, people always get caught slippin.
Re: Identity FAIL
So the one thing that is still a mystery is how they got hold of the server itself. Because tracking down this guy seems to have been pretty easy;
He probably had a post-it with the server admin's email & phone number stuck to his monitor...
Re: Identity FAIL
"He probably had a post-it with the server admin's email & phone number stuck to his monitor..."
Or sneak in when he's out and add a key logger.
Re: Identity FAIL
All the technology for finding people usually doesn't work. They find you like they did this guy, or your friend or neighbor rolls over in you. The fancy stuff gets lucky sometimes, but nothing works as well for tracking someone down than that person themselves.
I need a new drug...
"These documents were intercepted by customers and border patrol officials".
Well, with customers like those, who needs the NSA?
Anyway, for a moment there I thought this Silk Road thing was suspended as part of the US Gov shutdown.
<=== Winners say "no".
"Ulbricht made a number of operational security mistakes".
Probably linked to financial data available to certain agencies. It's alright being a bitcoin billionaire but convert it to a 'real' currency and you pop up on certain agency's OPDM (other peoples data mining) radar and become a 'person of interest'.
Doesn't need TOR-cracking abilities
It's easy to make woo-woo noises and be scared of the NSA for tracing the server, but that's probably not how it happened. Once the Feds had enough information to identify Ulbricht - and he certainly doesn't seem to have been too discreet about it, if the testimony's accurate - they would have subpoenaed his financial records, worked out to whom he was paying hosting fees, and then followed due process in/with the host's country to track down the server itself. This is standard policing, not über-spookery: "Follow the money."
Re: Doesn't need TOR-cracking abilities
Also seems to indicate the host is not in a country hostile to the west.
Oh I wonder how they broke TOR? let's look at the genesis and history of TOR:
Q: Now who developed it?
A: A notorious group of dissident anarchists known as "The U.S. Naval Research Laboratory" - the fiends
Q: Who paid for it?
A: 80% of the Tor Project's $2M annual budget comes from the United States government, with the Swedish government and other organizations providing the rest. Such evil anti establishment organisations you'd be harder to find.
This took 30 seconds of research and people are still dumb enough to fully trust TOR.
TOR project has been off-Navy for years, plenty of time to catch or fix any planted backdoors. However, people from the TOR project themselves have stated that TOR isn't built to withstand a multi-national snooping operation (precisely what the NSA does).
However, this particular dude was caught for being stupid. TOR wasn't even involved in tracing him to the source!
Notorious Silk Road founder ?
"Silk Road .. alleged founder .. was arrested in a public library"
Meanwhile listen to a good tune from yester-year ..
In the Forbes interview DPR says he is not the original DPR.
In The Princess Bride DPR is a collective nom, it is inherited by the most prolific of the pirates. It's not the same person all the time.
Why is the SR logo in the background?
The emergency payout seems to be working correctly from reports I've seen. SWIM also received their money back.
I have no doubt this was a high level user, possibly the current DPR, but there are others ready to take over the mantle.
"In the Forbes interview DPR says he is not the original DPR."
In other words, "It wasn't me! Some big boys did it and ran away."
Am I the only one unwilling to buy that as a credible defence?
- Analysis iPhone 6: The final straw for Android makers eaten alive by the data parasite?
- First Crack Man buys iPHONE 6 and DROPS IT to SMASH on PURPOSE
- TOR users become FBI's No.1 hacking target after legal power grab
- Vid Reg bloke zips through an iPHONE 6 queue from ZERO to 60 SECONDS
- Analysis Why Oracle CEO Larry Ellison had to go ... Except he hasn't