The Rise, Fall, and Aftermath of Silk Road

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  • Silk Road was the first big illicit dark web marketplace
  • It was taken down by the FBI in October 2013 and $28.5 million worth of bitcoin seized
  • Silk road has had a long-lasting negative impact on how Bitcoin is viewed worldwide

When you hear the name Silk Road what do you think of? Often talked about as the Wild West of the internet and eBay “with added Vice”, it’s safe to say that Silk Road meant different things to different people. The illicit marketplace – founded back in February 2011 – made an underground cult hero out of founder Ross Ulbricht. Going by his codename Dread Pirate Roberts, a reference to the popular character in the film The Princess Bride, Ulbricht operated a website that would be whispered about the world over.

In just two and a half years, Silk Road would turn Ulbricht from a low-level research assistant into a millionaire, before the FBI would beat him at his own game. Bringing down two federal agents in the process on corruption charges, Silk Road would certainly change the world – both for the better and for the worse.

Given how important Silk Road is in the history of Bitcoin it bears some investigation. What exactly was Silk Road? How did it come to be? What helped it make headlines? And, lastly, what brought this famous deep web exchange to its knees?

Ross Ulbricht’s Humble Beginnings

The story of Silk Road is so huge that to date there have been two movies made about it – the award-winning documentary Deep Web in 2015 and Silk Road, a fictionalized version of the site and its founder released in 2021.

The deep web (or dark web) is the underbelly of the Internet that you don’t see. Off the grid in many ways – in the sense that the deep web isn’t indexed – it allows sites to operate outside of standard boundaries. Because of this, for anyone to access the deep web, it requires a few tricks and the use of an anonymous web browser like Tor – which, oddly enough, is a US Navy creation.

The deep web is where Silk Road would find a home, with its popularity actually lending legitimacy to the deep web and its capabilities. As we mentioned, Ross Ulbricht is the name of the person behind Silk Road. A masters graduate from Pennsylvania State University, he identified himself as a fan of one-time US presidential candidate and political figure Ron Paul. Ulbricht was openly skeptical of America’s drug war, which explains a lot given what was to come.

Following his graduation from Pennsylvania State University Ulbricht would take on a research assistant position. But it wouldn’t be long before he would branch out on his own via a series of start-ups – of which most failed. All this would be forgotten however when he made his way to Silicon Valley, with his next start-up sending tremors around the world.

The Emergence of Silk Road

The name Silk Road comes from the famous trade route that interlinked East Asia and Europe. Ulbricht’s idea was that he was effectively constructing a website that carried a similar premise – he was attempting to bring the world together through an unrestricted digital marketplace. If you were to believe Ulbricht’s LinkedIn page, he wanted to “use economic theory as a means to abolish the use of coercion and aggression among mankind.”

The original intentions behind Silk Road were arguably pretty honest, as it was designed to be a modern-day interpretation of the free market that restricted product sales to supposed “victimless crimes.” Operating outside of government jurisdiction, the site was supposed to embody Ulbricht’s ideology through a similar setup to mainstream websites such as eBay. Members would be able to buy items with minimal fuss and outside of watching eyes. The idea might have seemed innocent enough, but it wouldn’t be long before it became a widespread tool of crime.

Criminals began to use Silk Road as a backdoor to distribute goods. As continued criminal activity was linked to Silk Road, it became an unstoppable beast in many ways. More and more criminals flocked to it, as it offered a much greater level of anonymity than other websites of its kind – with the use of Bitcoin only increasing this level of anonymity further.

The Digital Drug Trade

Based upon Ulbricht’s victimless crime theory, Silk Road banned listings linked to child pornography, WMDs, credit card theft, and assassinations. But this left so much unaccounted for, with reports in 2013 revealing that around 70% of products for sale on Silk Road were drugs.

It wouldn’t be long after this when Ulbricht’s standards would begin to slip. Policies regarding guns and assault weapons were loosened – claiming firmer firearm regulations as the reason why. This would set a trend, as Silk Road would eventually become open season when it came to all forms of criminal activity.

The big advantage that Silk Road had over its competition, which was starting to emerge based on its success, was that it was considered trustworthy. It’s pretty laughable when you think that measures such as quality, price, and reliability are used on a site that’s based around products and proceeds of crime.

Another reason for Silk Road’s near runaway success was the fact that Ulbricht remained committed to the platform he created – routinely becoming part of the forum chat as a result. Believing in the community concept, users believed that being part of Silk Road was akin to being part of something much bigger. However, Ulbricht’s seemingly kind nature could largely be explained through the sheer degree of profit he was making – $28 million to be precise, before federal agents caught up with him.

Public Knowledge

During its lifespan, more than $1 billion would exchange hands on Silk Road, which shows the sheer scale of the operation. Given that’s the case, authorities were bound to come calling – especially after a 2011 Wired article that brought Silk Road into the public domain for the first time. Interestingly, US police officials have since admitted that they had been aware of Silk Road for months post-launch. It had even been publicly discussed by multiple US senators, although there were issues in mounting a legal case against the site.

The problems regarding mounting a case against Silk Road came about through a lack of knowledge on Ulbricht’s identity. There was a clear struggle for the DEA to not only shut the domain down, to the point where they actually went down the route of breaching the network in an attempt to track down its administrators and suppliers. While none of these individuals would know Ulbricht’s real name directly – he kept it miraculously well hidden – through years of work the FBI was able to piece together the puzzle to figure out exactly who he was.

Ulbricht Caught Red-handed

Ulbricht’s ability to escape the FBI has become the stuff of legend, but he clearly couldn’t run forever. After the DEA and F BI managed to infiltrate Silk Road’s inner circle, Ulbricht was effectively sold out by those around him. The FBI would make the final link through a basic Google search – a prior alias of Ulbricht was discovered which linked him to the Silk Road forums, and then onto a popular Bitcoin forum, where his personal email address was uncovered.

With enough evidence now collected to charge Ulbricht, it was a case of game over for the temporary millionaire. He was eventually caught in the act at his local library and was arrested while logged into the Silk Road back end and didn’t have time to log out. At the same time his home address was raided, with some startling discoveries. Across several USB drives Ulbricht had collected bitcoin that equaled almost thirty million dollars, as well as keeping a journal of his Silk Road activity which incriminated him further. It wouldn’t be long after Ulbricht’s arrest – minutes in fact – that Silk Road was shut down, as the domain was seized.
An Ever-growing Rap Sheet

When Ulbricht’s day in court came, his rap sheet was something that painted him as a career criminal. On top of various drugs charges, six counts of murder were also listed, with the suggesions being that Ulbricht had tried to hire hit men to take out some individuals from the site. Ulbricht might have started as a man with good intentions, but eventually he was reduced to at least threatening violence and other drug-trade clichés to maintain his position.

After a lengthy case, the decision was made to drop the attempted murder charges against Ulbricht. This was only temporary relief for the Silk Road operator however, as his convictions in the form of drug trafficking, computer hacking, and money laundering were considered of such severity that he was given two life sentences plus 40 years. His sentence was roundly criticized by Ulbricht’s supporters and, later, an appeal judge, which speaks volumes about how his crimes were viewed.

Ulbricht naturally appealed the sentence on the grounds that the FBI searches of Silk Road were “unconstitutional”, but all his challenges failed and in March 2019 he faced up to the prospect of life in prison. Supporters continue to fight for Ulbricht’s freedom under the virtual #freeross banner. Amazingly, two of the officers assigned to the Silk Road case themselves embezzled bitcoin from the Silk Road wallets and received prison sentences themselves.

The Legacy of Silk Road

We’ve said it before and we’ll say it again – Silk Road changed the world. Since the authorities shut it down in 2013 several imitators have cropped up, all trying to relaunch Silk Road whether under the same name or another name. For a brief period, there was even a site called Silk Road 2.0, but given FBI attention and impending threats it didn’t survive any longer than a year.

Ulbricht’s life is now set to be spent behind bars – in spite of his family’s efforts to free him. But, while Ulbricht might not ever see the light of day again, the legacy of Silk Road lives on, for good and ill, and some will always associate Bitcoin with illegal activity because of it.