silk road – Techdirt (original) (raw)

Stories filed under: "silk road"

Creator Of Silk Road 2.0 Did Double The Business, Sentenced To Only Five Years In Prison

from the that's-like-three-lifetimes-in-the-US dept

In 2015, the man behind darknet drug marketplace Silk Road, Ross Ulbricht, received two consecutive life sentences from a New York judge. Her rationale was that Ulbricht was no different than a “dangerous Bronx drug dealer.” No leniency was given. The government, which participated in its own share of misconduct during the investigation, argued Ulbricht should be personally financially-responsible for every drug transaction on the Silk Road: a total of $184 million.

The government got its win — all of it. But it was only temporary. Silk Road 2.0 swiftly took the original’s place, run by another young man who knew he was going to be pursued by law enforcement across the world as soon as he fired it up. Long before it was shut down, Silk Road 2.0 was double the size of the original Silk Road, proving once again that sellers and buyers of illicit substances will find each other, no matter how many roadblocks governments erect.

The operator of this marketplace was arrested in San Francisco — just like Albricht was. But that’s where their stories drastically diverge. For one, the person arrested in San Francisco was not the founder of Silk Road 2.0. That title belonged to Dread Pirate Roberts 2 (DPR2). That person, Thomas White, was arrested by the UK’s National Crime Agency.

Unlike Ulbricht’s prosecution — which played out in public thanks to our justice system’s presumption of openness — White’s prosecution occurred in secret, shielded from the public eye by UK law. White was arrested in 2014, but his sentence has only now been handed down. Ulbricht got two life sentences and $184 million in fees from a US court for running the Silk Road. The creator of Silk Road 2.0 — doing double the business of Silk Road 1.0 at its peak — is looking to be out of prison years before his inspiration sees freedom.

[A] court in Liverpool, England, sentenced Thomas White, a technologist and privacy activist, for crimes committed in part while running Silk Road 2 under the DPR2 persona, among other crimes committed under another persona. White pleaded guilty to drug trafficking, money laundering, as well as making indecent images of children, and was sentenced to a total of 5 years and 4 months in prison.

There’s your compare-and-contrast. In the US, drug crimes are the worst crimes. In the UK, crimes are crimes and the rehabilitation prisons can’t provide are recognized and people are sentenced accordingly. I’m sure the DOJ is marveling at this miscarriage of justice and wondering why they bothered pitching in with an investigation that only resulted in a 5-year prison sentence.

And where Ulbricht spent his time locked up pretrial, thanks to the government getting his bail denied because of two murder-for-hire charges it later dropped, Thomas White spent his time out in the open with access to a computer. As Joseph Cox points out, White was pretty well-known in the world of security research, thanks to contributions he made while awaiting trial and sentencing.

On Twitter he mused about security and privacy topics, and has appeared under his own name in articles in Motherboard, Forbes, and more as an expert on Tor and other subjects. He previously ran a website archiving large data breaches that anyone could download, including the MySpace breach, data from hacked affairs website Ashley Madison, and customer information from a Muslim-focused dating site called ‘Muslim Match.’

Our government argues lengthy sentences for drug cases are needed to deter others from drug dealing. Seeing how quickly the new Silk Road replaced Ulbricht’s version makes it clear lengthy sentences aren’t deterring anything. I’m not even sure the DOJ believes its own bullshit at this point. Prison is punishment and our system is set up to provide as much punishment as possible in every case. Other places in the world recognize the limited societal value of taking decades away from people for selling products people want to buy.

Filed Under: dread pirate roberts 2, sentencing, silk road, silk road 2.0, thomas white, uk, us

Appeals Court Upholds Life Sentences For Silk Road Mastermind

from the 'plus-cancer'-sentencing-enhancement-considered-reasonable dept

Ross Ulbricht — sentenced to two life sentences for running a dark web drug marketplace — has just had his appeal rejected by the Second Circuit Appeals Court. Ulbricht raised several challenges to the verdict and sentence, including the denials of his motion to suppress, motion for a new trial, and several alleged errors by the district court. He also challenged the reasonableness of the sentence (which certainly seems unreasonable): two life sentences plus a judgment holding him personally financially responsible for every drug transaction on the Silk Road ($184 million).

On the Fourth Amendment grounds, the appeals court panel determined IP addresses have no more expectation of privacy than dialed phone numbers — no warrants needed. Ulbricht pointed out a lot has changed, even in terms of jurisprudence, since 1979’s Smith v. Maryland decision (the basis for the Third Party Doctrine) but the appeals court isn’t interested in setting new precedent [PDF link].

[W]hatever novel or more intrusive surveillance techniques might present future questions concerning the appropriate scope of the third-party disclosure doctrine, the orders in this case do not present such issues. The recording of IP address information and similar routing data, which reveal the existence of connections between communications devices without disclosing the content of the communications, are precisely analogous to the capture of telephone numbers at issue in Smith… The substitution of electronic methods of communication for telephone calls does not alone create a reasonable expectation of privacy in the identities of devices with whom one communicates. Nor does it raise novel issues distinct from those long since resolved in the context of telephone communication…

Ulbricht struck out on every other appealed issue as well. The court found the warrants issued to search Ulbricht’s accounts and devices were broad, but sufficiently particular. That the FBI may have had to dig through plenty of irrelevant files just to get what it was looking for is irrelevant. The judges point out simple keyword searches would have been defeated by actions Ulbricht took to obscure the contents of files, like name a folder of Tor chat logs “mbsobzvkhwx4hmjt.”

As for the supposed errors committed by the trial court, the one discussed the longest is the denial of Ulbricht’s motion to obtain grand jury evidence used in the indictment of DEA agent Carl Force, who stole Bitcoin and sold the movie rights to his Dread Pirate Roberts investigation, all while still on the clock. The court agrees Force’s actions were reprehensible and reflected badly on the government, but the evidence itself was of no value to Ulbricht’s defense. (Obviously, this theory can’t be tested post facto.) The court, however, makes the point that there’s little use in attacking the credibility of a witness the government isn’t interested in making available.

The government’s commitment to eliminating all evidence that came from Force’s work on the Silk Road investigation further undermines Ulbricht’s claim that he needed the information to avoid a possible injustice. Had Force been called as a government witness, or had any of the government’s evidence relied on his credibility, his character for truthfulness would have been at issue during the trial, and information that impeached his credibility would have become highly relevant. Ulbricht’s reliance on the general fact of cooperation among different government agencies and different U.S. Attorney’s Offices does not undermine the government’s explicit representations that none of the evidence presented at trial derived from Force, and nothing in the record suggests that those representations were false. Ulbricht had no need to rely on the grand jury investigation of Force to attack the credibility of the actual government witnesses or the integrity of its other evidence.

The appeals court goes on to deny every challenge, leaving Ulbricht back where he started: facing life without parole. The judges aren’t entirely unsympathetic to Ulbricht’s challenge of the sentence’s reasonableness, but they note this is how American society as a whole has decided drug dealers should be treated.

At this point in our history, however, the democratically-elected representatives of the people have opted for a policy of prohibition, backed by severe punishment. That policy results in the routine incarceration of many traffickers for extended periods of time.

This indictment of the public is no more reasonable than the sentence handed to Ulbricht because you go to the polls with the candidates you have. And many candidates have made long careers out of long drug sentences, thanks to endless PR campaigns by our nation’s law enforcement agencies, who themselves rely on draconian policies to keep themselves federally funded.

And there were aggravating factors which cannot be undone simply because actions bought and paid for apparently were never carried out.

[T]he facts of this case involve much more than simply facilitating the sale of narcotics. The district court found by a preponderance of the evidence that Ulbricht commissioned at least five murders in the course of protecting Silk Road’s anonymity, a finding that Ulbricht does not challenge in this appeal. Ulbricht discussed those anticipated murders callously and casually in his journal and in his communications with the purported assassin Redandwhite.

[…]

The attempted murders for hire separate this case from that of an ordinary drug dealer, regardless of the quantity of drugs involved in the offense, and lend further support to the district court’s finding that Ulbricht’s conduct and character were exceptionally destructive. That he was able to distance himself from the actual violence he paid for by using a computer to order the killings is not mitigating.

[…]

[I]n evaluating Ulbricht’s character and dangerousness, the most relevant points are that he wanted the murders to be committed, he paid for them, and he believed that they had been carried out. The fact that his hired assassin may have defrauded him does not reflect positively on Ulbricht’s character. Commissioning the murders significantly justified the life sentence.

In the end, it appears Ulbricht was the guy he never wanted to be: a violent drug dealer. He may have fired up the Silk Road with the best of worst intentions — a utopian deep web drug market that could have removed some of the danger associated with buying and selling drugs. But by the end of it, he was apparently ordering hits and rationalizing away the sale of cyanide.

The sentence upheld here reflects that, but it also indicates the government is still inconsistent, even with a stack of sentencing minimums to work with. The government got its man, but it also showed it’s willing to pin life sentences on third party marketplace facilitators, which is a bit like locking up Backpage execs because sex traffickers use their site to… oh wait.

Filed Under: 4th amendment, appeal, ross ulbricht, silk road
Companies: silk road

Ross Ulbricht's Lawyers Uncover Evidence Showing His Silk Road Account Was Accessed While He Was Imprisoned

from the TWISTS-FOR-THE-TWIST-GOD dept

The government’s Silk Road prosecution is the gift that keeps on giving. On its way to a life without parole sentence for the man behind the dark web drug marketplace, nearly everything that possibly could have happened actually happened.

As more evidence flowed in, more dirt on both sides of the prosecution was uncovered. The government appeared to engage in parallel construction to cover up evidence likely obtained by the NSA. (But the only reason for the coverup would be to protect the NSA’s “means and methods,” not to provide some sort of Fourth Amendment sanitizing. The Silk Road server was located in Iceland, somewhere the NSA could have performed an interception without troubling its domestic restrictions.)

It also emerged that government investigators had engaged in plenty of illegal activities of their own, including stealing Bitcoin, freezing accounts, and setting up a sting operation designed to rope Ross Ulbricht into hiring someone to kill a thieving employee… apparently set up by the same DEA agent engaged in the theft.

Also uncovered during the trial was the fact that the government had paid Carnegie Mellon researchers to develop a method to de-anonymize Tor users.

Now, there’s this, reported by Jason Koebler of Motherboard:

Attorneys for Ross Ulbricht, the man convicted of running the Silk Road online drug marketplace under the pseudonym “Dread Pirate Roberts” say they’ve discovered evidence that someone logged into the Dread Pirate Roberts account on the Silk Road forums six weeks after Ulbricht was arrested. Ulbricht was in federal custody at the time.

[…]

Ulbricht was arrested on October 2, 2013. The Silk Road marketplace was taken down that same day, but the forums stayed up until November 22. His attorneys say that someone logged into the DPR account on the forum November 18.

These new details were uncovered by forensic analysts who studied backups of the Silk Road forums that were entered as evidence by the government during Ulbricht’s first trial. Ulbricht’s attorneys Dratel and Lindsay Lewis say that government tampering calls into question the evidence used to convict Ulbricht.

This could mean a few things. One possibility is that law enforcement agents continued to operate and access DPR’s account after the investigation had concluded. Or it may point to one of Ulbricht’s original defenses: that someone else actually ran Silk Road. It may be that Silk Road was run by multiple people, but the government was only able to track down Ulbricht.

Ulbricht’s attorney seems to believe it’s the last possibility on that list:

It’s unknown whether other Silk Road administrators had the username and password for the DPR account, whether there actually were other “real” DPRs, or whether government officials were somehow able to get the DPR login credentials.

“They had access only to Ross’s laptop,” Lewis told me. “I don’t think they had access to the login credentials.”

It could very well be that the government believes there were multiple DPRs, but felt that one DPR was more than enough for the purposes of prosecution. If so, its handling of this case echoes that of journalist Matthew Keys, who the government hung out to dry over 40 minutes of website defacement performed by someone else. Zero effort has been made to punish those who actually participated in the small-scale hacking of the LA Times website. The government seemed more than satisfied to let Keys carry all of this weight on his own.

This new information doesn’t make the government’s case look any more solid. Plenty of government deception and misconduct was uncovered during the trial and yet it was still able to obtain a life without parole sentence for Ulbricht and a $184 million fine. Now it looks like the government may have rung up the wrong Silk Road mastermind… or more likely, only one of them. The best case scenario for the government is that it was one of its own logging in and looking around, although it will still have to explain how it got ahold of Ulbricht’s login info.

Filed Under: dpr, ross ulbricht, silk road
Companies: silk road

Secret Service Agent Who Pleaded Guilty To Stealing Bitcoin From Silk Road Trying To Change His Name

from the flight-risk-or-concerned-about-opm-hack dept

Back in March, an absolutely crazy story came out about two members of the Baltimore-based law enforcement team that were trying to track down Dread Pirate Roberts who was behind the original Silk Road. An FBI team out of NY beat the Baltimore DEA/Secret Service team to finding Ross Ulbricht, leading to a weird situation in which, hours later, the Baltimore folks filed their own indictment with somewhat different charges, including a trumped up fake murder of a former Silk Road employee, that was supposedly “carried out” by an undercover agent, later revealed to be DEA agent Carl Force, who Ulbricht contacted for help. The story was crazy and cinematic, but apparently that wasn’t even half of it, because the story in March revealed that two members of the Baltimore team, including Force, had stolen hundreds of thousands of dollars from Silk Road. It also revealed that the “murder for hire” plot against the ex-employee only happened after the Secret Service agent, Sean Bridges, stole Bitcoin from Silk Road, leading Ulbricht to think that it was the former employee, Curtis Green.

So, yes, you had a DEA agent, Carl Force, who was already moonlighting for a Bitcoin company, and who used his position as a DEA agent to steal a bunch of money from a customer of that Bitcoin company, befriending Ross Ulbricht of Silk Road while supposedly “investigating” him. Then, you had a colleague of Force’s, the Secret Service agent Bridges, go and steal a bunch of Bitcoin from Silk Road immediately following the arrest of Curtis Green, one of Ulbricht’s top lieutenants. Green revealed his admin login, and Bridges just went in and took a ton of money. Ulbricht then contacted Force, to help him kill Green, because Ulbricht believed that Green had stolen the money that Bridges had actually stolen. It’s so complicated it feels like it needs a graphic to explain it all, but even that might be too confusing.

Either way, earlier this summer, Force pleaded guilty, and earlier this week Bridges also pleaded guilty. In both cases, some interesting additional information came out. With Force, it was that, prior to his own arrest, he’d apparently sold the rights to his story of tracking down Ulbricht to Fox for $240,000. As the government pointed out, this was a conflict of interest (you think?).

With Bridges, it’s that he had been attempting to change his name and social security number, leading the judge to wonder if he was a flight risk. According to Joe Mullin at Ars Technica:

Before the proceeding ended, prosecutor Katherine Haun mentioned that the government had just received information that gave them concerns that Bridges could be a flight risk.

“The defendant had been actively trying to change his name and social security number in the state of Maryland,” she told the judge. “That’s very concerning.”

According to Hahn, Bridges had tried to change his last name to be the same as his wife’s last name and change his first name to “a very odd name.” She also noted that Bridges had handed over four firearms after he was charged, and if he changed his name he could again be able to acquire weapons.

Bridges’ lawyer came up with an excuse that is so ridiculous that it literally made me laugh out loud. Bridges wasn’t trying to change his first name, last name and social security in order to disappear from the law, or to avoid the reputational harm of being known as a former Secret Service agent who stole hundreds of thousands of dollars from an operation he was investigating… but because he was so, so worried about the recent OPM hack of government employee files. Bridges, of course, was a government employee:

Bridges’ lawyer said his client’s name change attempts had been a response to concerns about identity theft following the widely reported hacking into US federal government personnel files.

“Those of who work in the federal government have to deal with that,” said Seeborg. “When you’re concerned with flight risk, activity of this kind sends up a lot of red flags. I?m not surprised they?re bringing this to my attention.”

Somehow, among the millions of others concerned about the OPM hack, you don’t hear too many stories about them trying to change their first and last names along with their social security number…

Filed Under: bitcoin, carl force, flight risk, ross ulbricht, sean bridges, silk road

Evidence Suggests DOJ Got A Gag Order Silencing Reason Over Its Bogus Subpoena

from the gag-order-problem dept

A week and a half ago, we wrote about a story from Ken “Popehat” White revealing a highly questionable subpoena from the DOJ sent to the Libertarian website Reason.com, concerning some silly comments made by users there. The comments were talking about killing the judge who was presiding over the Ross Ulbricht/Silk Road trial, but were the usual comment nonsense that no one takes seriously. Except… the DOJ sometimes gets a little overzealous whenever comments even obliquely mention killing judges. As we mentioned, a few years ago, we were contacted by the US Marshals service under similar circumstances — but never received a subpoena. When we told them that we wouldn’t be removing the comment, they said they understood and we never heard anything else.

With Reason, things appear to have gone a lot farther since there was a subpoena. But, now White is raising a further issue: did the DOJ also get a gag order on the subpoena preventing Reason from speaking about it. He quotes two anonymous sources while admitting that’s not particularly trustworthy. Instead, let’s focus on the other evidence which is fairly compelling. At the top of the list: when White called the US Attorney in charge of the investigation, he suggested there was a gag order:

First, AUSA Velamoor told me during our call on June 5, 2015 that he “believed” there was a gag order. I was skeptical at the time because it doesn’t make sense to issue a subpoena to a libertarian news organization before you have the gag order in hand….

Second, in thinking about the call with AUSA Velamoor, I remember that he asked me when someone gave me the subpoena. In retrospect, that inquiry makes sense if he obtained a gag order after issuing the subpoena, such that the timing of the disclosure was legally significant.

At the very least, this suggests that the DOJ had thought about a gag order, whether or not it actually got it. But that leads us to the second, rather compelling bit of evidence. Reason’s absolute silence on this:

Third, Reason has now gone ten days without commenting on the story. This story ? the federal government using grand jury subpoenas to uncover anonymous commenters ? is squarely in Reason’s wheelhouse, and would normally provoke justifiable outrage from them. A slight delay in commenting was consistent with them waiting until their lawyers figured out what was going on; this prolonged silence strongly suggests compulsion.

In fact, it actually goes a step further. Reason didn’t totally go without comment. It actually posted the following message to its site:

Please refrain from any discussion of the subject of the article at Popehat.com and its contents on our site.

Thanks.

Once again, that would tilt the scales in favor of a gag order.

And, as White notes, if there is a gag order, that’s insane and it’s quite likely that Reason is challenging it in court — though it can’t talk about it. Yet.

Unless the government has evidence we don’t know about ? and there’s reason to doubt that ? it is shocking and outrageous that the U.S. Attorney’s Office sought a gag order and continues to enforce it.

Think about it. This is an order telling an American publication that writes about freedom and abuse of government power that it can’t talk about an abuse of government power. It is classic prior restraint, which is one of the most disfavored forms of censorship in American law.

As White further notes, there are very, very few cases in which such a gag order is allowed, and it’s very, very difficult to believe that any of those apply to a situation with some angry commenters on a website.

And… to make matters even more stupid, this gag order is particularly ridiculous in light of the fact that Popehat has already written about the story and it’s been covered by tons of other media outlets as well.

The government did not merely seek an order gagging a magazine about a subpoena designed to pierce the anonymity of people commenting about a controversial case on a political website. The government has, apparently, continued to insist that the gag order be maintained even after the existence and content of the subpoena has been very widely publicized. What conceivable justification can there be now to prohibit Reason.com from discussing the subpoena, the gag order, and their significance? At this point, the gag order on Reason doesn’t prevent the commenters from learning anything. The only thing it prevents is Reason discussing, and criticizing, and questioning the government’s decision to subpoena commenters and gag them.

As White rightly notes, this appears to be a frightening abuse of power, now being used to restrict further discussion of an initial abuse of power. Both abuses deserve widespread scrutiny.

Filed Under: comments, doj, gag order, judge, reason, silk road, subpoena
Companies: reason

Dark Markets Continue To Grow, Despite Silk Road Trial

from the anyone-think-that's-going-to-stop dept

With Ross Ulbricht sentenced to life in prison to make an example of him in the new online version of our nation’s drug wars, it raises a similar question to the one in the offline world: does this kind of thing have any impact at all? The Economist has a chart suggesting that nothing at all is changing and demand creates supply, as the number of drug listings in dark markets continue to grow, even as some of the players are shut down via law enforcement (Silk Road, Silk Road 2) or scams (Evolution):

Of course, there’s one caveat on this, which is that the data is from Digital Citizens Alliance, a known MPAA front, whose role is to undermine online internet markets of all kinds. But the general point shown in the chart is likely to be fairly accurate. As soon as one of these sites disappears, others quickly step in to fill the need. That’s generally how markets work. If there’s demand, supply will follow. In fact, data from other sources seems to support this basic point. Lots of these markets close (and very few of their operators are ever arrested), but plenty more step in to fill the void.

And, of course, the standard response to all of this is that law enforcement has to keep playing this game of whacking moles because they’d like to think that this at least puts some sort of limit on the activity by making it marginally more “expensive” for suppliers in terms of risk. Still, it seems like lots of other things online, this law enforcement/mole whacking approach isn’t particularly productive, and only serves to make the issue more diverse, more underground, less regulated and less safe.

Perhaps, rather than continue down that path, it’s time to look at alternative approaches.

Filed Under: dark markets, demand, silk road, supply
Companies: silk road

Silk Road Mastermind Ross Ulbricht Sentenced To Life In Prison

from the just-another-drug-dealer,-no-more,-no-less dept

Ross Ulbricht, the man behind the darkweb drug marketplace known as the Silk Road, has just been sentenced to more imprisonment than he has actual lives: two life sentences and “max sentences on all other charges.” In addition, the government has chosen to hold him financially culpable for every single transaction that occurred at the Silk Road — a fine of 184million—184 million — 184million—166 million of which it has already recouped through the auction of seized Bitcoins.

Ulbricht had argued for leniency, arguing his online market “reduced harm” by moving the sale of drugs off the street. This argument was greeted with contempt by the presiding judge, who called Ulbricht’s actions “thoughtful and calculated” and Ulbricht no different than a “dangerous dealer” pushing drugs in the Bronx. She also dismissed his argument as a “privileged fantasy,” stating “There’s no way Silk Road could reasonably be expected to reduce violence.”

His last-ditch attempt to rely on the kindness of the court failed just as spectacularly as most of his legal arguments during the course of the prosecution. This is how it ends (pending appeal) for The Internet’s Own Drug Dealer: a maximum sentencing coda, bringing closure to a cautionary tale of darkweb exploits, nearly non-existent operational security and a government that seemed to regularly color outside the lines of normal investigative techniques. While the story is certainly colorful and with a tech edge not normally associated with drug trafficking, Ulbricht’s legal fate is ultimately no different than any “dangerous Bronx drug dealer.”

Filed Under: life in prison, ross ulbricht, sentencing, silk road
Companies: silk road

Judge Responds To Ross Ulbricht's Request For A New Trial: Ha Ha Ha Ha, No.

from the nice-try,-though dept

This is not a huge surprise, but the judge who oversaw Ross Ulbricht’s trial for being the guy behind the original Silk Road wasted very little time in flat out rejecting his request for a new trial. To say that Judge Katherine Forrest is skeptical of his arguments would be an understatement. First, the straight up denial:

There is no basis in fact or law to grant the motion and it is DENIED.

And the basic idea behind the reasoning: overwhelming evidence that Ulbricht is guilty, according to the judge:

The evidence of Ulbricht?s guilt was, in all respects, overwhelming. It went unrebutted. This motion for a new trial urges that Ulbricht was prejudiced by that which he could not know in time, or at all. But the motion does not address how any additional evidence, investigation, or time would have raised even a remote (let alone reasonable) probability that the outcome of the trial would be any different.

It then proceeds to lay out the rather long list of evidence pointing a finger directly at Ulbricht to demonstrate just how little Ulbricht’s side has going for his argument.

As for the three arguments made for a new trial, Judge Forrest finds none of them convincing. This included the fact that the Justice Department dumped a bunch of things on Team Ulbricht less than two weeks before the trial, including the investigation into two federal officers who were stealing money themselves from Ulbricht — information that was revealed to Ulbricht’s lawyers, but which they were barred from using at the trial, as the investigation was still ongoing at the time.

Despite the attention given to the Rogue Agents issue in defendant?s brief, this Court remains unclear (as it always was) as to how any information relating to that investigation is material or exculpatory vis-a-vis Ulbricht. Either the defense assumes the answer is so obvious that it need not explain, or its omission is purposeful. For purposes of the instant motion, this Court assumes that defendant believes he was deprived of information which would have revealed that (1) the Rogue Agents? conduct may have tainted any evidence relating to the website (since they assumed identities on the site), (2) the Rogue Agents may provide a link to someone (including themselves) who may have taken over the DPR account and framed Ulbricht, and/or (3) the Rogue Agents may know the identity of the real DPR. There is no basis in the record?including in any of what defendant has cited regarding the Rogue Agents?which supports any one of these theories. These theories are based on no more than speculation and premised on erroneous assumptions as to the scope of discovery obligations and the meaning of exculpatory evidence.

To start, there is no basis for this Court to believe that any undisclosed materials relating to the Rogue Agents would have been remotely useful, let alone exculpatory, vis-?-vis Ulbricht. The Rogue Agents did not participate in the USAO-SDNY?s investigation of Silk Road that resulted in defendant?s arrest and indictment, and none of the evidence at defendant?s trial came from the USAOBaltimore investigation in which the Rogue Agents participated. That the Rogue Agents may have exceeded the scope of their authority in the USAO-Baltimore investigation does not, in any way, suggest that Ulbricht was not the Dread Pirate Roberts. As this Court explained in an earlier (sealed) ruling on this topic, the investigation of SA Force is, if anything, inculpatory as it suggests that Ulbricht, as DPR, was seeking to pay law enforcement for inside information to protect his illegal enterprise.

Moreover, even if defendant could point to a favorable piece of evidence from the investigation of the Rogue Agents, defendant has not constructed any argument that had he had earlier disclosure, the result of the trial may have been different. There is no reasonable probability of a different outcome here: the circumstances of defendant?s arrest, and the evidence found in his own possession at the time of the arrest, are in and of themselves overwhelming evidence of his guilt.

Ulbricht’s other arguments fail, meaning it’s likely that his lawyers will now move on to the appeals court to see if it has any more luck there, but it seems like a massive long shot.

Filed Under: katherine forrest, ross ulbricht, silk road, trial
Companies: silk road

Was It The Same Corrupt Team That Investigated/Stole From Silk Road That Now Subpoenaed Reddit?

from the questions,-questions dept

On Monday, Andy Greenberg over at Wired published a story about how a Homeland Security ICE agent, based in Baltimore, had sent a subpoena to Reddit, demanding info on five users who had been posting to the subreddit r/darkmarkets, which (you guessed it!) is where lots of people discuss dark markets like Silk Road and the recently shut down (and all money taken) Evolution. It appears that the subpoenas were trying to track down more information about who was behind Evolution:

Earlier this month, a Baltimore Department of Homeland Security (DHS) Immigration and Customs Enforcement agent sent a subpoena to Reddit demanding that the site turn over a collection of personal data about five users of the r/darknetmarkets forum. The subpoena appears to be the first hint of a federal investigation of the recently defunct massive online market known as Evolution, which sold drugs, weapons, and stolen financial details. All five targets of the subpoena were involved, to varying degrees, in the Reddit discussion of that black market?s abrupt disappearance two weeks ago, in which two top administrators apparently absconded with millions of dollars worth of bitcoin belonging to Evolution?s buyers and sellers.

According to a copy of the subpoena shared with WIRED by one of the forum?s moderators who was named in the document, the DHS seeks information that includes the names, IP addresses, dates and times of site visits as well as other data that Reddit likely doesn?t possess, including the users? phone numbers and financial data. (Reddit doesn?t even require an email address to sign up.)

For what it’s worth, Reddit’s privacy policy notes that it does collect IP addresses and holds them and other info for 90 days — meaning that if any of the users weren’t careful, they may have revealed some information about themselves. Though, seriously, if you’re deeply involved in a dark market doing illegal things, and then posting publicly to a subreddit without covering your tracks, you’re basically asking to be caught.

That said, what struck me most was the fact that this request came from Baltimore. Because right about the same time that Greenberg’s story came out, the Justice Department was revealing its criminal complaint against two of the key federal agents involved in the investigation of Silk Road, who (according to the complaint) stole a bunch of money from Silk Road, extorted Silk Road’s administrator and also engaged in a bunch of other nefarious actions, including issuing a fake subpoena to Venmo, engaging in civil asset forfeiture against Mt. Gox accounts and discussing other similar activities.

And both of those guys were… based in Baltimore. It’s not entirely clear if the two allegedly corrupt federal agents — Carl Force of the DEA and Shaun Bridges of the Secret Service — were part of this same Homeland Security investigations team, but it wouldn’t be entirely surprising to find out that it was the same team. One hopes that whoever is involved in that investigations team now, isn’t doing similar corrupt activities as mentioned in the criminal complaint against Force and Bridges. However, given how those two appeared to abuse their position, and given that there’s a high likelihood of the subpoena coming from the same team, it certainly raises some additional questions. And that’s not even mentioning the concerns about other corrupt individuals in these investigations, including a Homeland Security agent who went by the name “mr. wonderful.”

That’s not to say that the subpoena to Reddit is problematic. It may be perfectly legit (though it does appear that at least one of the people that the subpoena was digging into is just Gwern Branwen, a well-known security researcher who insists he has never sold any illegal products on dark market sites). Still, the criminal complaint from earlier this week certainly raises serious questions about any of these fishing expeditions, especially by a team coming out of Baltimore.

Filed Under: baltimore, dark markets, dea, dhs, investigation, secret service, silk road, subpoenas, subreddits
Companies: evolution, reddit, silk road

Ross Ulbricht's Lawyers Were Told About Corrupt Investigators, But Barred From Using That During His Trial

from the hello-due-process-problems dept

We already wrote about Monday’s unsealed criminal complaint against two government agents who were key players in investigating Silk Road — but who used that position to steal Bitcoins and a lot of other questionable behavior. Now it comes out that the Justice Department revealed the existence of this investigation to Ross Ulbricht’s lawyers five weeks before Ulbricht’s trial — but then blocked Ulbricht’s legal team from using that information, even as the Justice Department continued to rely on evidence from both of the apparently corrupt federal agents. Ulbricht’s lawyer, Joshua Dratel, has put out a statement pointing out some of the problems here:

In addition to keeping any information about the investigation from the defense for nearly nine months, then revealing it only five weeks prior to trial, and then moving to keep sealed and secret the general underlying information so that Mr. Ulbricht could not use it in his defense at trial, and then stymying the defense at every turn during trial when the defense tried to introduce favorable evidence, the government had also refused to agree to the defense?s request to adjourn the trial until after the indictment was returned and made public ? a modest adjournment of a couple of months, since it was apparent that the investigation was nearing a conclusion.

Throughout Mr. Ulbricht?s trial the government repeatedly used the secret nature of the grand jury investigation as an excuse to preclude valuable defense evidence that was not only produced in discovery, independent of the investigation of Mr. Force, but also which was only at best tenuously related to that investigation. In that manner the government deprived the jury of essential facts, and Mr. Ulbricht of due process. In addition, the government failed to disclose previously much of what is in the Complaint, including that two federal law enforcement agents involved in the Silk Road investigation were corrupt. It is clear from this Complaint that fundamentally the government?s investigation of Mr. Ulbricht lacked any integrity, and was wholly and fatally compromised from the inside.

Dratel suggests that the corrupt behavior of Force and Bridges raises questions about nearly all aspects of the Ulbricht case, especially since they have already showed that they abused their access to the Silk Road platform in a way that could change the site and account information.

Additional information shows that Force not only acted as “Chief Compliance Officer” for CoinMKT while still employed as a DEA agent (and abusing his ability to use government databases for the job), but as a report from Sarah Jeong at Forbes shows, he also reached out to Mt. Gox CEO Mark Karpeles:

And then even asked about working with Mt. Gox as well, with this bizarre “American government and economy will crash in the next five years” statement:

Just about a month later, when Bridges was the affiant on helping the government seize millions of dollars from Mt. Gox (just days after withdrawing the money he himself allegedly stole from Silk Road), Force emailed Karpeles again, saying “told you should have partnered with me!”

And that doesn’t even get into the fact that the whole “murder plot” that was such a headline grabber in the original criminal complaint only happened after Bridges apparently took the money and Ulbricht reached out to Force to get him to put out a hit on the guy he thought had stolen the money (who had actually been cooperating with the government, which allowed Bridges to get the info to steal the money in the first place).

As we noted in our earlier piece, the criminal complaint shows that Force himself abused his power as a DEA agent to fake a subpoena against Venmo trying to get his own account unfrozen — and it appears that when that didn’t work, Force tried to further abuse his power to seize Venmo’s bank account in response. A snippet from an email he sent to a colleague:

Venmo has since registered with FinCEN, but I want to know if they have state money license remitting licenses in California and New York. Can you check? If not, I want to seize their bank accounts (need to identify them) a la BRIDGES and [M.M.?s] seizure warrants for Mt. Gox.

And here’s the big question: were Bridges and Force really just two “bad apples” in the investigation? Or could it have gone much deeper? As Jeong notes in her report:

During the trial, the defense kept trying to introduce the character of ?mr. wonderful,? a Baltimore DHS agent who coerced a Silk Road moderator into giving her account over to law enforcement. Although many of Force?s aliases are listed in the criminal complaint against him, none of them are ?mr. wonderful.? (In any case, Force is a DEA agent, and ?mr. wonderful? is DHS). Who is mr. wonderful? What exactly did he do?

In other words, whether or not you believe that Ulbricht was DPR, the investigation and trial against him was a complete and utter mess, and these new charges raise an awful lot of questions about the fairness of that trial.

Filed Under: bitcoin, carl force, dea, doj, joshua dratel, mark karpeles, ross ulbricht, secret service, shaun bridges, silk road
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