This day in history: October 28, 2013 – US government seizes $28 million from Ross Ulbricht as Silk Road comes to an end
Bitcoin has gone full circle in just a matter of a few years, evolving from a semi-anarchistic attempt by mavericks to circumvent the institutions and established business methodology in which transactions are recorded and identifiable, to a phenomenon that has been widely embraced by the very institutions that it was designed to go against. On this day in 2013, the end of the Silk Road was reached.
Just three years ago to this day, which is not a long time at all in the development cycle of most new technologies that revolutionize the way that something has been done for many years before, Bitcoin and other lesser known virtual currencies were in their sensationalist period, the internet being awash with reports about the latest evolution in what was intended to circumvent the traditional banking and currency issuing system.
The period between three years ago and today has been a transitional period for virtual currency, in that it has gone from being a peer-to-peer digital payment unit which was the darling of mavericks and anarchists who were the antithesis of anything whatsoever to do with the institutional banking technology sector that has now embraced the very technology which underpins Bitcoin, making for an ironic turn of events in that the invention by anti-institutional self-empowered revolutionaries has now been completely absorbed by the giants of Wall Street and Canary Wharf which are investing tens of millions into the development of the blockchain database technology that is intrinsic to Bitcoin to, of all things, automate banking techniques such as payment settlement and ledger operations.
Memories, therefore, in the digital, modern economy which is populated by individuals programming from their garages rather than employees of large R&D departments in financial institutions, are very short indeed.
To put a very fine point on it, in the automotive industry, the Tesla Model S is without question the single most significant leap forward in the last fifty years, however it has been on the market for three years now, and is still considered a revolution, whereas Bitcoin in the same time frame has not only been revered as a revolution but has gone full circle and morphed into something completely different for a completely different – and much more viable and profitable – than when it was first coined (pardon the pun!).
Whilst JPMorgan, Goldman Sachs and management consultancies including PriceWaterhouseCoopers plow tens of millions into blockchain R&D for institutional purposes, appointing the proponents of the Bitcoin technological development circles to the advisory boards of their specialist blockchain related projects, on this day, October 28 in 2013, things were indeed somewhat different.
A litany of failed Bitcoin venues and stolen capital from e-wallets adorned the news, and several miscreants ran from border to border in attempts to evade the long arm of the law.
October 28, 2013 was the day that the United States government seized $28 million from Ross Ulbricht, one of the most infamous mavericks of all, whose online alias was “Dreat Pirate Roberts”, that in itself embellishing the anonymous nature of Bitcoin, himself, and the vaporware market place that he ran, Silk Road.
Bitcoin itself was created with anonymity as a key facet – its developer was known as Satoshi Nakamoto, which was a mystery until very recently, when it was discovered that Satoshi Nakamoto was indeed Australian academic Craig Steven Wright. Until his cover was blown in December 2015, Satoshi Nakamoto had managed to remain a decoy for some 8 years.
Austin, Texas resident Ross Ulbricht, who is now 32 years old, began contemplating the idea of an anonymous ‘dark web’ market place in 2009 with the idea of building a type of online black market, for which he intended to use Tor or Bitcoin in order to evade law enforcement.
Tor is a protocol which routes internet traffic through intermediary servers which anonymize IP addresses before reaching a final destination. By hosting his market as a Tor site, Ulbricht could conceal its IP address.
On the other hand, Bitcoin, being a cryptocurrency allows all bitcoin transactions are recorded in a log, which is the now highly valued blockchain, thus users can avoid linking their identities to their online “wallets” they can conduct transactions with considerable anonymity.
Both of these suited Mr. Ulbricht’s plan and he began work on developing his online marketplace in 2010 as a side project to Good Wagon Books. He also sporadically kept a diary during the operating history of Silk Road; in his first entry he outlined his situation prior to launch, and predicted he would make 2011 “a year of prosperity” through his ventures.
Following a police investigation in which two police officers delved deep into the nature of the market place and the type of goods and services that were being sold, Mr. Ulbricht was charged with money laundering, computer hacking, conspiracy to traffic narcotics, and procuring murder.
The charge of procuring murder was removed from the indictment although the evidence was factored into Mr. Ulbricht’s sentence. Mr. Ulbricht was convicted of all the remaining charges after a jury trial that concluded in February 2015 and he was sentenced to life imprisonment without the possibility of parole on 29 May 2015.His lawyers submitted an appeal on 12 January 2016, centered on claims that the prosecution illegally withheld evidence of DEA agents’ malfeasance in the investigation of Silk Road, for which they were convicted. The oral hearing for the appeal was 6 October 2016.
The prosecutor believed that none of the six contracted murders-for-hire occurred despite Mr Ulbricht having paid $730,000 to have them done.
A charge of procuring murder is to be dealt with in a separate pending trial in Maryland and Mr. Ulbricht is currently serving his life sentence at the Metropolitan Correctional Center, New York.
At the time of the government’s seizure of the Silk Road website, US authorities confiscated $3.6 million worth of Bitcoins, at the time equating to the amount of 144,336 BTC, which was discovered at Mr. Ulbricht’s home stored on computers and various hard drives. Court documents at the time demonstrated that an amount close to $1.2 billion worth of Bitcoin had been committed to transactions on Silk Road since the firm began its operations in 2011.