Silk Road Founder DPR's Bitcoins Would Now Be Worth Over $1 Billion

Silk Road Founder DPR’s Bitcoins Would Now Be Worth Over $1 Billion

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“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.” —home/frosty/documents/journal/2012/q1/january/week1 The postman only rang once. Curtis Green was at home, greeting the morning with 64 ounces of Coca-Cola and powdered mini doughnuts. Fingers frosted synthetic white, he was startled to hear someone at the door. It was 11 am, and surprise visits were uncommon at his modest house in Spanish Fork, Utah, a high-desert hamlet in the shadow of the Wasatch Mountains. Green ambled over, adjusting his camouflage fanny pack. At 47 his body was already failing him: He was overweight, with four herniated discs, a bum knee, and gleaming white dental implants. To get around he sometimes borrowed his wife’s pink cane. Green waddled to the door, his two Chihuahuas, Max and Sammy, following attentively.
He peeked through the front window and caught a glimpse of the postman hurrying off. The guy was wearing a US Postal Service jacket, but with sneakers and jeans. Weird , Green thought. Also odd was a van Green noticed across the street, one he’d never seen before: white, with no logos or rear windows.
Green opened the door. It was winter, a day of high clouds and low sun. A pale haze washed out the white-tipped Spanish Fork Peak rising above the valley. Green looked down. On the porch sat a Priority box—about Bible-sized. His little dogs watched him pick up the mystery package. It was heavy, had no return address, and bore a postmark from Maryland.
Green considered the package and then took it into his kitchen, where he tore it open with scissors, sending up a plume of white powder that covered his face and numbed his tongue. Just then the front door burst open, knocked off its hinges by a SWAT team wielding a battering ram. Quickly the house was flooded by cops in riot gear and black masks, weapons at the ready. There was Green, covered in cocaine and flanked by two Chihuahuas. “On the floor!” someone yelled. Green dropped the package where he stood. When he tried to comfort his pups, a dozen guns took aim: “Keep your hands where we can see them!”
Officers cuffed Green on the floor while fending off Max, the older Chihuahua, who bared his tiny fangs and bit at their shoelaces. Splayed out on the carpet, Green was eye level with dozens of boots: A large tactical team—SWAT and DEA agents—fanned out through the house. He could hear things crashing, some officers yelling, others whispering to each other. He looked at the busted door and thought, Man, that thing was unlocked . On the living room wall hung family photos—his wife, Tonya, their two daughters, and a grandson—smiling brightly above Green, lying amid $27,000 worth of premium flake. (The package was stamped with a red dragon, the symbol for high-quality Peruvian.) Over the whole scene was a needlepoint that said: if i had known you were coming, i would have cleaned up! Excited by the company, little Max stopped shaking just long enough to crap right in the living room.
The fact was, Green wasn’t just your average Mormon grandpa. Over the past few months he had been handling customer service for the massive online enterprise called Silk Road. It was like a clandestine eBay, a digital marketplace for illicit trade, mostly drugs. Green, under the handle Chronicpain, had parlayed his extensive personal narcotics knowledge—he’d been on pain meds for years—into a paying gig working for the site. Silk Road was hidden in the so-called dark web, a part of the Internet that’s invisible to search engines like Google. To access Silk Road you needed special cryptographic software. Combining an anonymous interface with traceless payments in the digital currency bitcoin, the site allowed thousands of drug dealers and nearly 1 million eager worldwide customers to find each other—and their drugs of choice—in the familiar realm of ecommerce. For a brief time, from 2011 to 2013, it was a wild success. In that relatively short span, Silk Road managed to rack up (depending on how you count) more than $1 billion in sales.
Which is why Green found himself surrounded by an interagency task force. He had been hired by Dread Pirate Roberts, the mysterious figure at the center of Silk Road. DPR, as he was often called, was the proprietor of the site and the visionary leader of its growing community. His relatively frictionless drug market was a serious challenge to law enforcement, who still had no idea who he or she was—or even if DPR was a single person at all. For over a year, agents from the DEA, the FBI, Homeland Security, the IRS, the Secret Service, and US Postal Inspection had been trying to infiltrate the organization’s inner circle. This bust of Green and his Chihuahuas in the frozen Utah desert was their first notable success.
The Feds got Green on his feet. They had a lot of questions, starting with why he had $23,000 cash in his fanny pack and who was on the other end of the encrypted chat dialogs on his computer. Green said, improbably, that the money was his tax return. He also asked for his pain medication. Instead they escorted him to the door and into a squad car, informing him that he’d be booked for possession of 1,092 grams of cocaine with intent to distribute.
“Don’t take me to jail,” Green pleaded. “He knows everything about me.”
Later, under interrogation, Green told the skeptical agents that to charge him and make his name public was a potential death sentence. Dread Pirate Roberts was dangerous, he said: “This guy’s got millions. He could have me killed.” Ross Ulbricht was deep into his regular drum circle when he spotted her. As Ross slapped the hide on his djembe, a West African drum, Julia Vie sat across the circle. She had a head full of curls, light brown skin, and dark brown eyes. The drum circle was assembled on a lawn at Penn State, where in 2008 Ross was working toward a master’s degree in materials science and engineering. Julia was 18, a free-spirited freshman, and when she noticed Ross she felt a powerful attraction. Not long after, Julia visited Ross’ campus office, where they couldn’t help but kiss and fall into a carnal heap on the floor.
Both were smitten. Ross studied crystallography, working on thin-film growth. One day he made a large, flat blue crystal, affixed it to a ring, and gave it to Julia. She had no idea how her boyfriend could make a crystal, but she knew she was in love.
Ross had grown up in Austin, Texas, and had always been smart and charming. He’d been the kind of kid who was an Eagle Scout—and let his friends give him a mohawk on a whim. He was raised in a tight family. They’d spend summers in Costa Rica; Ross’ parents had built a series of rustic, solar-powered bamboo houses there, near an isolated point break where Ross learned to surf. In high school, “Rossman,” as friends called him, drove an old Volvo, smoked plenty of pot, and still got a 1460 on his SATs. To friends, Ross was carefree but also caring.
Ross earned a scholarship to the University of Texas at Dallas and majored in physics. From there he landed a graduate scholarship at Penn State, where he excelled as usual. But he wasn’t happy with the drudgery of lab research. Since college he’d been exploring psychedelics and reading Eastern philosophy. At Penn State, Ross talked openly about switching fields. He posted online about his disenchantment with science—and his new interest in economics.
He’d come to see taxation and government as a form of coercion, enforced by the state’s monopoly on violence. His thinking was heavily influenced by Austrian economist Ludwig von Mises, a totem of the modern American libertarian orthodoxy. According to von Mises, a citizen must have economic freedom to be politically or morally free. And Ross wanted to be free.
When he finished his master’s in 2009, he moved back to Austin and bought Julia a plane ticket to join him. She left school, and they got a cheap apartment together. It was cramped, but they were young and dreamy. Both imagined they might get married.
Ross tried day trading, but it didn’t go well. He started a videogame company. That failed too. The setbacks were devastating. He didn’t want to be trying; he wanted to be doing . During this time, his downstairs neighbor, Donny Palmertree, invited Ross to work with him on Good Wagon Books, a business that collected used books and sold them in digital storefronts like Amazon and Books-A-Million. Ross built Good Wagon’s website, learned inventory management, and wrote a custom script that determined a book’s price based on its Amazon ranking.
In his spare time Ross read, hiked, improved his yoga, and, as Julia fondly recalls, had “lots and lots of great sex.” But they also argued, about politics (she was a Democrat), money (what he called “frugal,” she called “cheap”), and their social life (she partied more than he did). Their relationship turned stormy, with frequent breakups. In the summer of 2010, they split up yet again. He was heartbroken, later telling a woman he met on OkCupid how he’d recently been in love and was trying to get over it.
Ross was adrift. “I went through a lot over the year in my personal relationships,” he wrote in a journal on his computer, a kind of self-assessment of life goals. “I had left my promising career as a scientist to be an investment adviser and entrepreneur and came up empty-handed.” Ross felt ashamed, but not long afterward Palmertree got a job in Dallas, leaving Good Wagon to Ross. For years, all he’d wanted was to be in charge of something. Now he was.
In the Good Wagon warehouse, Ross oversaw five part-time college students sorting, logging, and organizing the 50,000 books on shelves he built himself. That December was Good Wagon’s best month, clearing 10 grand.
But by the end of 2010, the new CEO of Good Wagon was looking beyond the book business. During his forays into trading, Ross had discovered bitcoin, the digital cryptocurrency. The value of bitcoin—based only on market factors, unattached to any central bank—aligned with his advancing libertarian philosophy. On his LinkedIn page, Ross wrote that he wanted to “use economic theory as a means to abolish the use of coercion and aggression amongst mankind.”
To that end Ross had a flash of insight. “The idea,” he wrote in his journal, “was to create a website where people could buy anything anonymously, with no trail whatsoever that could lead back to them.” He wrote that he’d “been studying the technology for a while but needed a business model and strategy.”
Like most libertarians, Ross believed that drug use was a personal choice. And like all people paying attention, he observed that the war on drugs was a complete failure. The natural merchandise for his new enterprise would be drugs. “I was calling it Underground Brokers,” Ross wrote, “but eventually settled on Silk Road.”
Ever the capable scientist, Ross decided to cultivate his own psilocybin mushrooms as a starter product. He was spending time with Julia again, while struggling with programming his site and still running Good Wagon.
Then, one night in early 2011, Good Wagon collapsed. In the literal sense. Ross was working late, alone in the warehouse, when he heard an enormous crash—the sound of the library falling apart. He’d carefully designed the entire system but had somehow forgotten two vital screws, the ones that held it all together; the shelves came down, every single one, like dominoes.
When Ross broke the news to Palmertree, he also admitted that his heart wasn’t in Good Wagon anymore. They agreed to close the company, with no hard feelings. He told Palmertree that he already had a new business idea—“something really big.”
Silk Road went live in mid-January 2011. A few days later came the first sale. Then more. Ross eventually sold all 10 pounds of his mushrooms, but other vendors started joining. He was handling all the transactions by hand, which was time-consuming but exhilarating. It wasn’t long before enough vendors and users made it a functioning, growing marketplace.
Just before the launch, facing a new year and a blank slate, Ross had resolved to change his life. “In 2011,” he wrote to himself, “I am creating a year of prosperity and power beyond what I have ever experienced before. Silk Road is going to become a phenomenon and at least one person will tell me about it, unknowing that I was its creator.” I’m sorry; your browser does not support HTML5 video in WebM with VP8 or MP4 with H.264. Special agent Carl Mark Force IV was half-asleep when the postal inspector started talking about something weird in the parcel sorters. “Just wanna let everybody know about this,” the inspector said, delivering his brief to a conference room full of bored law enforcement personnel. “We are having problems with drugs coming through the mail.”
Force was a Baltimore-based DEA agent, and he was at a regional interagency meeting, a periodic intel show-and-tell with analysts from the FBI, the DEA, the IRS, and Homeland Security. “It’s coming from an underground drug site,” the inspector said, “called Silk Road.”
Force sat up. This was the kind of thing he was looking for. He had burned out on the grind of arresting street dealers. At 6 feet and 200 pounds, Force was an athletic guy, and coming up through the agency he’d loved the physical thrill of bursting through a door at 6 am in Doc Martens and a tactical vest, clearing some broke-down row house on some broke-down block and catching some dealer in the bathroom, cuffing the guy before he could wipe his ass. But after countless raids, the adrenaline had worn off. And in the grand scheme of things, who cared about confiscating a few grams? He was pushing 50 and still on the federal payroll in a regional office. That’s when you want to find a big case and get out. And so he went looking for leads in meetings like this, which were mostly yawners—until now.
By the time Force heard about Silk Road, it had been around nearly a year. The site was modeled, sensibly, on Amazon and eBay. And that’s what it looked like: a well-organized community marketplace, complete with profiles, listings, and transaction reviews. Everything was anonymous, and shipments often went through the regular old postal service. No need for fake names—you put your real address, and if any one asks, you just say you didn’t order all that heroin!
Silk Road’s “Seller’s Guide” had helpful instructions on how to vacuum-seal or otherwise hide drugs to evade electronic sensors or canine olfactories. Most shipments made it to happy customers. That the small percentage of intercepted Silk Road packages represented an uptick spoke to the quickly rising volume of the site’s trade, a vast pharmacopeia covering dozens of categories with 13,000 listings. It was a colorful smorgasbord for every type of connoisseur: fish­scale Colombian cocaine, Afghan No. 4 heroin, strawberry LSD, Caramello hash, Mercury’s Famous uncut cocaine flakes, Mario Invincibility Star XTC, white Mitsubishi MDMA, a black tar heroin called the Devil’s Licorice.
Then there were the prescription meds, everything from Oxycontin and Xanax to Fentanyl and Dilaudid. Silk Road’s product descriptions and user ratings amounted to an encyclopedic information source. Cantfeelmyface said one product “has a nice shine” and provides “a rush of euphoria and confidence.” Ivory’s review of some crystal MDMA observed that it had “a nice fizz and wisp of smoke =].” The reviews and community standards enforced excellent value and customer service on Silk Road, which brought more users, increasing its reputation further—until Silk Road became the premier destination for digital drug sales.
Law enforcement was caught with its tactical pants down. Various agencies had sniffed around Silk Road in the summer of 2011 but gotten nowhere. Force saw potential but didn’t even know where to begin.
Months later, in January 2012, he got some good news from his supervisor. Homeland Security was assembling a task force for a full-on Silk Road case. “You want in?” his boss asked.
Before he knew it, Force was at a Silk Road summit, where he and 40 other agents picked through doughnut boxes and watched PowerPoint presentations filled with technical information about nodes and TCP/IP layers. Most of the agents’ eyes glazed over, but, yes, Force wanted in.
The task force that formed to take on Silk Road—Operation Marco Polo—was based out of the Baltimore Homeland Security Investigations office. Another agent showed Force how to navigate Silk Road. He quickly saw that it had a vocal mastermind, the revered figure known as Dread Pirate Roberts. It was a clever touch, borrowing the name from The Princess Bride , in which the pirate was a mythical character, inhabited by the wearer of the mask. The idea of a malleable but enduring identity only added to Silk Road’s enigmatic appeal. Force was intrigued. Whoever wore this digital mask sat atop a burgeoning empire. Force told his boss that Silk Road was a “target of opportunity.” But he was unskilled at computers, and he didn’t know anything about bitcoin. So he decided to learn. Hector Xavier Monsegur was an unusual visitor to the New York FBI office. Then again, Monsegur was not really a visitor. It was past 1 am one night in the spring of 2011, and he was being led to the back of the empty bullpen by Chris Tarbell, a young agent who had arrested Monsegur earlier that night in the Jacob Riis Houses on the Lower East Side. Monsegur was an enormous Puerto Rican, ears studded with diamonds, who grew up in the projects. He was also Sabu, a cofounder of LulzSec, the elite group of hackers responsible for electronically attacking dozens of corporate and government targets like News Corp. and the CIA. Sabu was the most high-profile member of Anonymous, the “hacktivist” political collective. Tarbell had managed to follow a blind lead from the FBI’s public hotline to Sabu and reel him into the FBI as an informant. It was a remarkable score for Tarbell, especially since he was still a rookie.
Tarbell had always had the cop in him, even when his parents thought he was going to be a doctor. In college he was a powerlifter, an unusual sight at James Madison University, a preppy school in the Shenandoah Valley. He already looked like a cop: big, with a short coif on top of that baby face. By the time Tarbell finished college, he sensed where policing was headed and got a master’s in computer science. He didn’t understand programming at first. But he did understand that this was the future, so he paced himself, stuck with it, and came out the other side as a computer forensics expert, working as a civilian for the FBI.
Tarbell spent four years traveling the world with global forensics, tracking down terrorists, child pornographers, and botnets. He showed a talent for uncovering digital trails. He thought about how the virtual realm seemed like magic, a secret world, poorly understood; and like all magical realms, it was full of charlatans and practitioners of dark arts. Few could decipher those secrets, and Tarbell liked being one of them.
After a few years in forensics, Tarbell told his wife, Sabrina, he wanted to officially join the Bureau. Sabrina, eight months pregnant, approved, even though it meant uprooting their lives. After Quantico, Tarbell was assigned to the New York office, home to the FBI’s nascent cybercrime division. By this time he was 31, a little old to be the new guy.
But catching the elusive Sabu made Tarbell’s name at the Bureau. Online, Sabu’s credibility among hackers was unassailable. The FBI set him up with a new laptop in their office, where he gathered evidence against his LulzSec friends. Nine months later dozens of arrests were made, severely disabling two of the world’s biggest hacker groups.
After LulzSec, Tarbell looked for a new big case. He took an interest in Tor, the encryption software that allowed users to visit sites such as Silk Road. Tor’s protocol is a kind of digital invisibility cloak, hiding users and the sites they visit. Tor stands for “the Onion Router” and was launched by the Navy in 2002. It has since become a tool for all manner of clandestine communications, licit and illicit, from circumventing censorship in countries like China to powering contraband sites like Silk Road. Tor’s encryption is so layered, agents thought it was unbreakable. When cybercrime investigations hit a Tor IP, they would give up. The supposed impossibility only attracted Tarbell. I’m gonna take on Tor , he thought. Related Stories

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