On May 31, 2017 the United States Court of Appeals for the Second Circuit unanimously affirmed the conviction and life imprisonment of Ross Ulbricht for drug trafficking and crimes associated with his creation and operation of the online marketplace known as Silk Road. Among others challenges, Ulbricht argued on appeal that he should have been allowed to introduce evidence regarding former government agents who pled guilty to stealing Bitcoins as they investigated Silk Road and Ulbricht. The Second Circuit disagreed, finding that while “the shocking personal corruption of these two government agents disgraced the agencies for which they worked,” it had nothing to do with whether Ulbricht operated Silk Road. The Second Circuit similarly found Ulbricht’s other arguments unavailing, namely that (1) the government’s violated his Fourth Amendment rights through the use of pen registers and trap and trace devices to monitor IP addresses associated with internet traffic to and from Ulbricht’s wireless home router, and the search and seizure of his laptop and Facebook, Google accounts; (2) he was denied a fair trial due to the preclusion of certain testimony and evidence; and (3) it was improper for the court to consider six drug-related deaths relevant to his sentencing.
Silk Road was the largest online black market at the time of its shutdown in 2013 and the first known darknet market. Browsing anonymously, Silk Road users principally bought and sold drugs, false identification documents, and computer hacking software using Bitcoins. The government believes Silk Road customers exchanged approximately $183 million worth of illegal drugs, as well as other goods and services, through the site. The FBI reported in October 2013 that it ultimately seized 144,000 Bitcoins, worth $28.5 million at the time. Ulbricht was caught with more than $18 million in Bitcoins on his laptop.
Future posts at this blog will shine a light into other darknet markets, how some darknet market participants prey on others using schemes designed to steal digital currencies, and on law enforcement efforts to combat the crime that sometimes occurs in such markets.