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Christian Science Monitor
October 27, 2013
Federal authorities revealed in court documents released Friday that they seized nearly $29 million in virtual currency from the operator of an underground website the FBI describes as “a sprawling black market bazaar.”
Ross Ulbricht, a currency trader in San Francisco, was arrested Oct. 1 for allegedly creating and operating the Silk Road website. He was charged with narcotics trafficking, money laundering, computer hacking, and soliciting a murder-for-hire.
Mr. Ulbricht denied he was the Silk Road operator using the online name Dread Pirate Roberts. According to San Francisco Magazine, he has not proclaimed his guilt or innocence. He is currently awaiting extradition to New York City.
The arrest revealed the growing presence of Bitcoin, an online virtual currency that is recognized by very few governments and is operated via a mobile app or computer program that creates a virtual “wallet” people can use to send and receive the currency. The FBI says it seized 144,336 bitcoins from Ulbricht. According to Forbes, it is the largest seizure of bitcoins to date.
According to the website bitcoin.org, the value of all bitcoins in circulation by the end of August 2013 exceeded $1.5 billion.
According to court documents, Silk Road generated $1.2 billion in sales since January 2011 and collected commissions worth $80 million. Described as “the most sophisticated and extensive criminal marketplace on the Internet today,” the operation used a handful of servers located worldwide that were networked to create anonymity among its users. Unlike normal currency, the use of bitcoins was intended to make its exchanges difficult to trace.
“The site has sought to make conducting illegal transactions on the Internet as easy and frictionless as shopping online at mainstream e-commerce websites” and “has been used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to well over [a] hundred thousand buyers,” according to court documents.
