On Oct. 1, 2013, federal agents entered
a public library in San Francisco. They arrested 29-year-old Ross Ulbricht. Ulbricht ran the largest, most sophisticated
online market for illegal drugs in history. He named it Silk Road, a reference to the ancient trade routes that connected China to
Europe beginning in the 2nd century BC. Ulbricht hoped to create his
own modern-day marketplace. Except his would sell hardcore
drugs and other illegal goods. Over the two years and ten
months that Silk Road operated, federal prosecutors say it processed
nearly $214 million in sales using Bitcoin. The site operated on a hidden part of the internet
called the dark web. Prosecutors say a journal the FBI found on Ulbricht's computer stated he wanted “to create a website where
people could buy anything anonymously, with no trail whatsoever that
could lead back to them.” Unfortunately for Ulbricht, he did
leave a trail of digital breadcrumbs that would ultimately take him
down and his empire with it. Ulbricht was born on March
27, 1984, in Austin, Texas. He was a boy scout, attaining the highest rank
of eagle scout just like his dad had done. He had a happy childhood. Growing up an easy-going hipster but
serious student who scored 1460 on his SATs - within the 96th percentile - and got a full ride to the University of Texas
at Dallas* (NOT Austin), where he studied physics. He then won another full
scholarship for a Master’s at Penn State in materials
science and engineering. It was at Penn that he evolved
into a hardcore libertarian…a political philosophy that advocates individualism
and minimal state involvement in people’s lives. He was a fan and follower of
libertarian economist Ludwig von Mises who opposed government
interference in the economy. When then-presidential candidate Mitt Romney
asked what is America’s greatest challenge, Ulbricht responded like
this on his YouTube channel. I think the most important thing is
getting us out of the United Nations. Ulbricht wanted to create a world free
from institutional or governmental control. That mindset led him to create
Silk Road in January 2011. You couldn’t type in a regular web address to
get to Silk Road or use a regular web browser. You needed software called Tor
that works as a web browser. Tor was developed by the U.S. Navy as a way
of communicating privately over the internet. It conceals the real IP address
of computers on the network to hide the identity of the user and it
can’t be traced by the government. Silk Road’s address used a bunch of random
numbers and letters that ended with dot onion. Ulbricht made the site by
teaching himself how to code. When he needed more help he reached out
on a Bitcoin community forum, writing: “I'm looking for the best and brightest
IT pro in the bitcoin community to be the lead developer in a venture
backed bitcoin startup company.” Anyone interested was to contact him
via his email: rossulbricht@gmail.com Making his email public would
later come back to haunt him. He also got coding help from a buddy
of his from undergrad, Richard Bates. Ulbricht had no choice but to eventually
tell his friend what he was up to. He also told his girlfriend Julia Vie. One day, he showed her the psychedelic mushrooms he was growing and selling as a
starter product on his new website. Silk Road would eventually be a
marketplace for all kinds of drugs: Weed. Cocaine. LSD. Ecstasy. Heroin. This fit Ulbricht’s libertarian mindset. He believed that whatever someone decided to put
in their body was their choice and no one else’s, least of all, the government’s.
Ulbricht also believed everyone had the right to self-defense when guns
started appearing on Silk Road. However, he realized he didn’t need the controversy
and soon took weapons off the site. After getting his business up and running – he
turned his attention to attracting customers. He decided to write a post on a Magic
Mushrooms forum called the Shroomery, pretending to be someone who
happened to come across Silk Road. He used the username “altoid”, posting:
“I'm thinking of buying off it, but wanted to see if anyone here had
heard of it and could recommend it.” He included a link with instructions
on how to access Silk Road. I came across this website called Silk Road.
It's a Tor hidden service that claims to allow you to buy and sell anything online
anonymously. I'm thinking of buying off it, but wanted to see if anyone here had
heard of it and could recommend it. He did the same on a Bitcoin site in a
forum about buying and selling heroin, describing Silk Road as “an anonymous amazon.com” It wasn’t long before buyers showed up. To limit scams, there was a rating system
for sellers, similar to Amazon reviews. If a seller sold bad drugs and got a
poor rating, it would hurt their sales. The drugs arrived by mail
with fake return addresses. They’d be slipped inside CD and DVD cases. Some sellers got even more creative and
put them in little ripples of cardboard. The packages had printed mailing
labels rather than handwritten ones to look like they came from a legitimate business. Ironically, that backfired. The printed labels
actually attracted the suspicion of authorities. In the summer of 2011, Department of Homeland
Security agent Jared Der-Yeghiayan learned of a small, neat package with a printed address going
through Chicago’s O’Hare International Airport. It contained a single pink pill of
ecstasy which was also suspicious because usually, they shipped in bulk. Soon, two or three packages began arriving, then 50, then up to 1000 a day! Many came from the
Netherlands which is a notorious source of drugs. Agent Der-Yeghiayan visited an address where
one of the packages was to be delivered, chatted with the roommate of the buyer, who said
the drugs came from a site called Silk Road. Der Yeghiayan had never heard of Silk Road before. He did some digging online and
came across an article written by Gawker journalist Adrian Chen in June 2011. Chen wrote: “Making small talk
with your pot dealer sucks. Buying cocaine can get you shot. What
if you could buy and sell drugs online like books or light bulbs? Now
you can: Welcome to Silk Road.” The article attracted 3 million
views and put Silk Road on the map. Not only did Silk Road soon attract the
attention of thousands of drug dealers and buyers but also politicians like senator Chuck Schumer
who called for the site to be shut down. The U.S. government was concerned
but not only about drug sales. As Nick Bilton detailed in
his book American Kingpin, Homeland Security agent Der-Yeghiayan feared that
a terrorist organization could enter the country and then buy something from
Silk Road to harm Americans. He convinced the U.S. Attorney's
Office in Chicago to take on the case. As Silk Road came into the spotlight,
Ulbricht’s college friend Richard who helped him with programming said
he urged him to shut it down. Ulbricht and his girlfriend Julia broke
up soon after the launch of Silk Road. She said one of the reasons was because of the
insane pressure she felt to keep his secret. Ulbricht lied to her and Richard, telling them he had sold the business to someone else
and no longer had anything to do with it. He moved to Australia for a while
and lived with his sister in Sydney. Around this time, he was contacted through the site by a person going by
the name “Variety Jones”. Variety Jones became his right-hand man and
someone Ulbricht described as a “real mentor”. Neither knew the others’ true identity. Variety Jones pointed out the gaping
holes in security on Silk Road. Ulbricht decided to encrypt
all the files on his computer. This is the actual laptop
he used to run Silk Road. He put in a “kill switch” that would
automatically shut down his device by pressing a predetermined key in case
authorities rushed in at the last minute. He also prepared an escape
plan if needed, including: destroy laptop, hard drive, find a place to
live on Craigslist for cash with a new identity. Variety Jones came up with Ulbricht’s infamous
pseudonym on Silk Road: Dread Pirate Roberts A reference to the fearsome captains
from the film The Princess Bride who passed the name on to a chosen successor. In the same way, Ulbricht hoped to one day pass on the name Dread Pirate Roberts
to someone who might succeed him. Variety Jones got him to see how
big Silk Road could grow to be. Ulbricht wrote in a personal journal disclosed
by prosecutors: “Silk Road is going to become a phenomenon and at least one person will tell
me about it, unknowing that I was its creator.” In two short years, Silk Road grew to more than
100,000 users with sales of nearly $214 million The Feds were left scratching their heads as they still had no clue who was the
mastermind behind Silk Road. Who was this Dread Pirates Roberts?
Who was the captain of the ship? It became somewhat of a competition amongst the various government agencies to be the
one to identify Dread Pirate Roberts. To better understand how Silk Road
operated, Department of Homeland Security agent Der-Yeghiayan posed as a
buyer and made 52 undercover purchases. He also seized thousands of packages, linked certain sales back to their
source, and arrested several people. His biggest get came when he tracked
down a Dread Pirate Roberts’ employee, a moderator on Silk Road’s
user forums called “cirrus”. He forced her to hand over her account
and then, he pretended to be her. Der-Yeghiayan posing as cirrus got assignments
directly from Dread Pirate Roberts. He was not the only federal agent
chatting with the boss of Silk Road. DEA agent Carl Force was part of a task force
in Baltimore that was also investigating. Force used the username “Nob” and posed as a drug
dealer originally from the Dominican Republic who smuggled millions of dollars worth of
cocaine and heroin into the U.S. every year. He was on friendly terms with Dread Pirate
Roberts, who had no idea he was speaking with a DEA agent. An agent who, in a twist
in the tale, turned out to be corrupt. Force convinced Dread Pirate Roberts to
pay him $50,000 in Bitcoin by claiming he had “insider” information
from a government employee. When Force reported the conversation to
the DEA, he claimed he never received any payment when in fact, he funneled
the Bitcoin into a personal account. And believe it or not, a SECOND
agent who worked on the same Baltimore task force was also stealing,
Security Service agent Shaun Bridges. When Silk Road customer support rep Curtis
Clark Green was arrested at his home with a kilo of coke, Bridges used Green’s admin access to
steal 20,000 Bitcoin from other user accounts. That was worth $350,000 dollars and swelled
to $820,000 by the time Bridges liquidated it. Dread Pirate Roberts thought Green
to be responsible for the theft. He wanted to rough him up and got
egged on by his mentor Variety Jones. Dread Pirate Roberts knew Green’s real
identity because as a condition for being on Silk Road’s payroll, staff had
to hand over their government ID. So Dread Pirate Roberts turned to Nob (aka DEA
agent Carl Force) to beat up Green. Nob agreed. However, Dread Pirate Roberts then
changed his mind and messaged: "Can you change the order to
execute rather than torture?" Dread Pirate Roberts said he had “never
killed a man or had one killed before, but it is the right move in this case.” He didn’t want to risk Green giving
up information to the authorities as he knew Green had been arrested
when he searched him up online. Nob agreed to do the job for $80,000 in Bitcoin. Ulbricht later received photos of a dead Green. Except he wasn’t really dead. Agent Force staged Green’s death
complete with photos of him on the floor covered in Campbell’s Chicken & Stars soup. The Dread Pirate Roberts is said to have ordered
hits on five others whom he felt threatened by. Silk Road had been prey for
blackmailers and extortionists. However, there was no proof
that anyone was ever killed. Ulbricht was never charged with murder for hire. The government agencies were still nowhere closer
to figuring out who was Dread Pirate Roberts. The DEA enlisted the help of the
FBI’s Cyber Crime unit in New York as it had more technological know-how
and experience with the dark web. FBI special agent Chris Tarbell knew that
in order to catch Dread Pirate Roberts, they had to wait for them to make a mistake. And according to the FBI, the
Dread Pirate Roberts did finally slip up about a year after the
agency started investigating. In May 2013, investigators noticed
coding errors - vulnerabilities on the Silk Road website that leaked IP addresses. As a result, they discovered the Silk Road
servers were housed in a data center in Iceland. By the way, Ulbricht’s defense
team doesn’t buy this explanation. They believe the NSA spied illegally and
tipped off the FBI to the servers’ location. Agent Tarbell flew to Reykjavik
where Icelandic authorities gave him a drive with information from the servers. The FBI had access to a treasure trove of
data: They could see the number of transactions processed. Who logged in and out.
And crucially, Tarbell and his team had identified that the master
computer Silk Road servers talked to, the one Dread Pirate Roberts used to
log in to Silk Road, was named “Frosty”. And Dread Pirate Roberts was logging in with
an encryption key that ended with frosty@frosty They could also tell Dread Pirate
Roberts recently used internet from a San Francisco cafe to log in
to a Silk Road server via a VPN. By the spring of 2012, Ulbright had
returned home from Australia and eventually moved to San Francisco
to live with a childhood friend. So now the FBI had the name of the computer
and could focus their search on San Francisco. But still, no idea of Dread
Pirate Roberts’ real identity. That piece of the puzzle would be filled in by Gary Alford who worked for the
IRS…the Internal Revenue Service. As a tax investigator, he was assigned
to follow the money but instead, discovered the identity of Dread Pirate Roberts. Alford figured that whoever
started Silk Road would have had to drum up interest in it long
before that Gawker article came out. So he decided to do Google searches
for Silk Road prior to June 2011. That’s when he stumbled on Ulbricht’s online posts where he pretended to be someone who
happened to come across Silk Road. Alford noted the username for the posts: “altoid”. He also noticed another post
where “altoid” asked for IT help on the Bitcoin forum which included
his personal email: rossulbricht@gmail.com Someone with the username Altoid also posted on
Stack Overflow with a question related to Tor. Soon after, that user changed
the alias from Altoid to Frosty. Alford didn’t know the significance
of the name Frosty at the time. But what he did have was
a real name to track down. He googled Ross Ulbricht and came across the
LinkedIn profile of a young man with rather cryptic life goals, quote: “The most
widespread and systemic use of force is amongst institutions and governments,
so this is my current point of effort.” Alford asked himself: Could Ross
Ulbricht be the brains behind Silk Road? Then came another piece of the puzzle. In July 2013, U.S. Customs and Border
Protection officers intercepted nine fake IDs coming into the U.S. from Canada. Homeland security agents decided to
pay a visit to the intended recipient. They showed up at 2260 15th
Avenue in San Francisco, the address where Ulbricht had been staying. He had moved out of the place he
shared with his friend and into a sublet he found on Craigslist
where he paid his rent in cash. He took every precaution,
including adopting a fake identity. His roommates knew him as Joshua Terrey
though he kept much of his backstory the same. He said he was from Texas. Worked in IT
which is why he was always on his computer. And had recently returned
home from Australia which made not having a cell phone less suspicious. “Joshua” kept to himself and
ate steak dinners for one. When the agents questioned Ulbricht, they
observed that he became “visibly nervous”.
He didn’t admit to purchasing the fake IDs
- let alone that he bought them so he could rent additional servers to deal with Silk
Road’s growth as well as security issues. Prosecutors later claimed he
prepared for a life on the run including seeking citizenship
on the island of Dominica. Ulbricht volunteered to the agents who
showed up at his door that “hypothetically” anyone could purchase anything they
wanted on a site called Silk Road. The agents had never heard of Silk Road and were
apparently unaware of any federal investigations. But they did document the incident. So when IRS agent Gary Alford ran another search
on Ulbricht, he found that Homeland Security file on the fake IDs - which cemented
his belief that they had the right guy. The pieces of the puzzle finally came
together when Alford got on the phone with the other agencies to see what they all had. Alford mentioned the username
“Frosty” that he had found on a forum. That floored FBI agent Tarbell
- who knew Frosty to be the name of the computer Dread Pirate Roberts used. Bingo. They knew Ross Ulbricht
was Dread Pirate Roberts. In their pursuit of evidence, federal
agents followed him everywhere. They also had a subpoena for Gmail and noticed
that whenever Dread Pirate Roberts logged into Silk Road, Ulbricht was also signed into
his Google account. And whenever Dread Pirate Roberts logged out, Ulbricht
also logged out of his Google account. But they knew this wouldn’t be enough to nail him. They needed concrete evidence. They had to catch Ulbright
while his laptop was open and he was logged in on Silk
Road as Dread Pirate Roberts. An unlocked computer was also necessary
so agents could access his files. This would be difficult to pull off. Authorities knew their best bet was to catch
him off guard and arrest him in a public place. Homeland Security agent Jared Der-Yeghiayan was
still pretending to be Silk Road staff member cirrus and continued to maintain
contact with Dread Pirate Roberts. This communication was crucial
to the plan they hatched. On October 1st, 2013 at 3:08 pm local time,
Der-Yeghiayan saw Dread Pirate Roberts log on. Ulbricht was sitting in the
science fiction section of the San Francisco public library’s Glen Park branch. Der-Yeghiayan started up a conversation with
Dread Pirate Roberts while posing as Cirrus. hi
are you there hey
how are you doing? i'm ok, you?
good. can you check out on one of the flagged messages for me?
The flagged messages were in the main administrative section that only
Dread Pirate Roberts could access. Dread Pirate Roberts responded:
sure let me log in
ok you did bitcoin exchange before
you started working for me, right? Ulbricht asked this for security reasons because
only the real cirrus would know the answer. Luckily for authorities, the real Cirrus had
told them how to answer the security question. Agent Der-Yeghiayan hoped he
recalled correctly when he typed: yes, but just for a little bit It was a nerve-racking moment. not any more than that
no. I stopped because of reporting requirements damn regulators eh?
ok, which post? Der-Yeghiayan knew Ulbricht was
now looking at an admin screen. He gave the signal to the other agents
positioned in the library to make a move. A commotion soon broke out near Ulbricht. A woman yelled, “F–k you” as the man
appeared like he was about to punch her. When Ulbricht turned around to see the fight, an
agent swooped in and grabbed his opened laptop. At that point, agent Der-Yeghiayan said
Ulbricht “lunges towards the laptop. And another agent walks
behind him - bear hugs him…” Ulbricht was arrested and taken away. The man and woman who were arguing were in fact
undercover agents who created a distraction. Ulbricht’s family and friends were
shocked. How could the kind, fun, loving man they knew be the same person who ran
a global drug bazaar? They couldn’t believe it. Ulbricht was indicted on seven charges: including
distributing narcotics by means of the internet and engaging in a continuing criminal enterprise. He pleaded not guilty to all charges. The trial began on January 13,
2015 and lasted three weeks. Many of Ulbricht’s supporters showed up…believing a guilty verdict would be
a miscarriage of justice. In court, Ulbricht’s defense
attorney argued he wasn’t Dread Pirate Roberts - that he had given away
the handle and Silk Road to someone else. But the jury didn’t buy it. On February 5, 2015, a federal jury found
Ross Ulbricht guilty on all seven counts. Before sentencing, Ulbricht wrote a letter to
the judge, begging for a more lenient sentence: “I've had my youth, and I know you must take away
my middle years, but please leave me my old age. Please leave a small light at the end of the
tunnel, an excuse to stay healthy, an excuse to dream of better days ahead, and a chance to redeem
myself in the free world before I meet my maker.” On May 29, 2015, U.S. District Judge
Katherine B. Forrest delivered her sentence: "You were captain of the ship, as the Dread
Pirate Roberts, and you made your own laws and you enforced those laws in the manner that you saw
fit. So, it wasn't a world without restriction. It wasn't a world of ultimate freedom. It was a world
of laws that you created, they were your laws. It is fictional to think of Silk
Road as some place of freedom." "No drug dealer from the Bronx selling meth
or heroin or crack has ever made these kinds of arguments to the Court. It is a privileged
argument, it is an argument from one of privilege. You are no better a person than any
other drug dealer and your education does not give you a special place of
privilege in our criminal justice system. It makes it less explicable
why you did what you did." "There is no reason to make a choice between these
two people that I see that are on display - the Ulbricht who is the leader of the criminal
enterprise and the Ulbricht who is known and loved. What is clear is that people are very,
very complex and you are one of them. They are made up of many different qualities and many
characteristics with no one quality defining them. And there is good in Mr. Ulbricht,
I have no doubt, but there is also bad, and what you did in connection with Silk Road
was terribly destructive to our social fabric. Mr. Ulbricht, it is my judgment delivered
here, now, on behalf of our country, that on Counts Two and Four you are sentenced to
a period of life imprisonment to run concurrently; on Count Five you are sentenced to five
years’ imprisonment to run concurrently; on Count Six, you are sentenced to 15
years’ imprisonment also concurrent; and for money laundering in Count Seven, you
are sentenced to 20 years, also concurrent. In the federal system there is no parole
and you shall serve your life in prison. This was far beyond what the
prosecution had even asked for. Ulbricht had hoped Silk Road would become
such a success that he would be famous. According to a journal entry read
by the prosecutor to the jury, Ulbricht wrote: “I imagine that someday
I may have a story written about my life and it would be good to have
a detailed account of it.” His dream came true…but perhaps
not in the way he had imagined. The FBI later identified
Ulbricht’s mentor, Variety Jones, as Roger Thomas Clark, a Canadian arrested
in Thailand in 2015. In 2020, Clark pled guilty in a Manhattan court to conspiring to
distribute massive quantities of narcotics. As for the two corrupt officers
investigating Silk Road. Former DEA agent Carl Force was sentenced
to 6 ½ years in prison for extortion, money laundering, and obstruction of justice. Former Secret Service agent Shaun Bridges
was sentenced to nearly 6 years in prison on charges of money laundering and obstruction
of justice. He was later sentenced to an additional two years for ANOTHER theft
of Bitcoin from the U.S. government. This story took many, many hours of writing,
researching, and editing to put together. If you’d like to learn how to put
create a video from start to finish, my sponsor Skillshare can help you out. Skillshare is an online learning
community with thousands of classes. Whether you’re curious about how to write
and craft a story, how to create animations, or how to edit a video using software like
Adobe Premier, Final Cut Pro, or After Effects. For myself, the class with Polymatter
was really helpful in understanding how to make beautiful graphics, down to color choice. The classes are broken up into short
sections, there are no tests or ads. The first 1,000 people to use my
custom link in the description will get a 1 month FREE trial of Skillshare. Thanks for watching. For Newsthink, I’m Cindy Pom.
