Silk Road, a popular online black market for buying drugs and other illicit services, has been shut down by the FBI. The site's proprietor Ross Ulbricht, whose identity remained a mystery until today, was arrested Tuesday afternoon in San Francisco in connection with running a massive money-laundering operation and ordering the murder of another Silk Road user.
Ulbricht, 29, known online as "Dread Pirate Roberts," will appear in federal court in San Francisco today. Federal prosecutors filing court paperwork in New York have accused Ulbricht of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy. The 39-page criminal complaint states that Ulbricht attempted to use the site itself to hire a hitman to murder a Silk Road user who threatened to release the identities of thousands of users. The attempt was unsuccessful, but Ulbricht was allegedly offering $150,000 for the job.
Silk Road was part of the "Deep Web" — a hidden corner of the Internet accessible via Tor, a browser-like tool meant to obscure identities online. Unlike generic online marketplaces, Silk Road transactions were paid for in Bitcoin and the anonymity assumed on the Deep Web made it a popular place for illegal activity. A 2011 story by Gawker found a broad range of illegal drugs ranging from ecstasy and LSD to heroin and methamphetamine easily available for purchase on the site. (Marijuana, however, was still the site's biggest seller.) According to court papers, the site had processed $1.2 billion in sales to date and profited about $80 million in commissions.
In addition to Ulbricht's arrest, the Feds also seized 26,000 Bitcoins — or about $3.6 million. The Bitcoin seizure has some offline drug dealers who were using Silk Road as a source worried about the fallout of the bust. Although the site was meant to be anonymous, the FBI tracked Ulbricht to his San Francisco apartment using information from Comcast and a collaboration with U.S. Customs and Border Patrol and the Department of Homeland Security. Ulbricht's former roommate told the Verge that he believed Ulbricht was making a living by trading Bitcoin. Although he apparently ran the site by himself from a variety of San Francisco cafes, he was busted Tuesday afternoon at the Glen Park Library.