The Last Twist on the Silk Road - the Fall of Ross Ulbricht

With a solid foundation of how the website worked, last month's arrest gave us the opportunity know the operator and his motivations. Since then we have been pouring over the government's indictment which is a shocking view into this dark world. In between the lines of the indictment there appears to be story, which tells us about Ulbricht's mindset and how it may have been used against him.

A Fallen Idealist

Ulbricht may have started out with real or perceived virtues, but that quickly fell apart once he got into bed with criminals. In the credo of his public personae (on his LinkedIn profile), he explains the motivation for creating Silk Road:

"I believe violence, coercion and all forms of force by one person over another can come to an end. The most widespread and systemic use of force is amongst institutions and governments"

Moreover, his Libertarian message of individual freedom was the driving force of The Silk Road as a "movement" and he writes in the black market's charter:

"Silk Road is a global enterprise whose purpose is to empower people to live as free individuals. We provide systems and platforms that allow our customers to defend their basic human rights and pursue their own ends, provided those ends do not infringe on the rights of others."

Sounds wonderful, but what did he do when he had the power himself? He immediately resorted to violence to enforce his policies. His professed libertarianism came crashing down as he sanctioned murder to defend the institution he created. Within his own "government" he used systemic force and coercion to maintain the Silk Road rule of law. Everyone who knows Ulbricht talks about how smart he is, but inviting cannibals to your dinner table with the expectation of grace seems quite naive.

Was The Dread Pirate Roberts Targeted by Con-Artists?

In the government complaint, we see in vivid color the dirty background dealings of Silk Road and the lengths Ulbricht went to protect his empire. Roughly, the story goes something like this (all details are extracted from the criminal complaint: UNITED STATES OF AMERICA V. ROSS WILLIAM ULBRICHT 13 MAG 2328): A Silk Road user called "FriendlyChemist" claimed to have hacked another Silk Road vendor and threatens to reveal the identities of Silk Road customers. "FriendlyChemist" shows DPR some of the hacked data and demands $500,000. In turn, "FriendlyChemist" said he needed the money badly to pay off drug-dealers he owed money to. DPR asks to speak to the "FriendlyChemist" suppliers and is contacted by "redandwhite." DPR and "redandwhite" work out a deal to assassinate "FriendlyChemist" and then bring "redandwhite" directly onto Silk Road to sell his drugs. Meanwhile, an unidentified fourth person is supplying DPR with the identity and location of "FriendlyChemist." DPR pays "redandwhite" $150k in Bitcoin to murder "FriendlyChemist". "redandwhite" executes "FriendlyChemist," who was apparently a married father of three, and then sends a picture of his corpse to DPR as proof. Nasty and brutal. But none of it happened.

Following up on all of this information the government investigators were unable to find a murder victim or any person even remotely like "FriendlyChemist." Because there is no body, no missing person fitting the description we have to assume that the photograph sent by "redandwhite" was faked. Keep in mind that the assassin was introduced to DPR by "FriendlyChemist". Because there is no identifiable victim, we have to assume that the unidentified party giving DPR the name of "FriendlyChemist" must also be lying and must be working with "redandwhite." At this point it's even logical to assume the original vendor hacked by "FriendlyChemist" may have also been faked.

If this was not a ruse employed by law enforcement to flush DPR out, then it was a very elaborate sting suitable for a Hollywood movie plot. A classic con job: starting with a mysterious problem immediately solved by a magical solution, for a small fee. If this was a plan executed by grifters, it brilliantly used DPR's strength as his vulnerability. Silk Road's anonymity prevented DPR from validating any source of information. DPR was shown "proof" of hacked data and then "proof" of a murder, all in the conman's toolbox. In security we say "Trust but Verify." Here, it was all trust and he was trusting crooks.

Maybe Ulbricht Was Just Too... CHEAP

When we imagine a secret criminal mastermind with $80 million, it is usually sitting poolside with a cocktail. The agent of SPECTRE usually is not sharing a small apartment with two people to save a few bucks. A big break came for law enforcement when they intercepted a stack of fake IDs Ulbricht had shipped to his own house. Shipped to HIS OWN house. Silk Road, among other things, sold access to anonymous mail drop boxes anywhere in the world. If Ulbricht did not want to pay for a dropbox, he could have at least talked one of his vendors into letting him use a drop box for free. Instead, he had information linking him to Silk Road delivered right to the cops. Haggling with a hit man also seems dangerous, but Ulbricht appeared more concerned about the money. In his day-to-day dealings he also appeared miserly, paying his staff peanuts compared to the millions he pulled down. Is it possible his own employees pulled off the con-job when they realized the meager percentage they earned to keep his secret empire up and running? Ultimately, this possibly lonely guy may have been undone because most of his "friends" were people he knew nothing and cared little about.

Garth Bruen is a Fellow for the Digital Citizens Alliance, a consumer safety group focusing on online crime. He is a trusted Internet policy researcher and consumer advocate. For over 10 years Garth has been exposing procedural failures in the Internet architecture, which allow spam, malware and illicit traffic to flourish. Beyond simply documenting abuses, Garth has authored real policy solutions to reduce fraud. In 2012 Garth was elected as the North American At-Large Chair to the Internet Corporation of Assigned Names and Numbers, meaning he represents digital consumers from the U.S. and Canada in all Internet policy matters. As the principal investigator for Garth has been processing spam complaints from the public for free and returning real results. Garth has consulted for a number of public and private entities on the problems facing the Domain Name System. For several months leading up to the arrest of Ulbricht, Garth and Digital Citizens investigators had been researching The Silk Road. The investigation leading up to his arrest included the creation of a Silk Road profile, procurement of several BitCoin, and one small purchase on the site.