Silk Road (marketplace)
Item description page
|Type of site||Online black market|
|Owner||"Dread Pirate Roberts"|
|Revenue||92,000 US dollars per month
(trade volume 1.2 million US dollars per month)
Silk Road is an online black market. It is operated as a Tor hidden service, such that online users are able to browse it anonymously and securely without potential traffic monitoring. The website launched in February 2011; development had begun six months prior. Silk Road is an underground website, sometimes called the "Amazon.com of illegal drugs" or the "eBay for drugs".
Initially, buyers could register for free, but there were a limited number of new seller accounts available; new sellers had to purchase an account via an auction. Later, a fixed fee for each new seller account was chosen to mitigate the possibility of malicious individuals' distributing tainted goods.
On October 2, 2013, the FBI shut down Silk Road. They arrested Ross William Ulbricht on charges of alleged murder for hire and narcotics trafficking violation and identified him as the founder and chief operator "Dread Pirate Roberts". On November 6, 2013 Forbes and Vice reported that Silk Road 2.0 was online and being run by former administrators of Silk Road and that a different user was now using the name Dread Pirate Roberts.
Silk Road was founded in February 2011. The name "Silk Road" comes from a historical network of trade routes, started during the Han Dynasty (206 BC – 220 AD), between Europe, India, China, and many other countries on the Afro-Eurasian landmass. Silk Road was operated by "Dread Pirate Roberts" (named after the fictional character from The Princess Bride), who was known for espousing libertarian ideals and criticizing regulation.
In June 2011, Gawker published an article about the site, which led to "Internet buzz" and an increase in website traffic. Once the site was known publicly U.S. Senator Charles Schumer asked federal law enforcement authorities such as the DEA and Department of Justice to shut down the website.
In February 2013, an Australian cocaine and MDMA dealer became the first person to be convicted of crimes directly related to Silk Road, after authorities intercepted drugs he was importing through the mail, searched his premises, and discovered his Silk Road alias in an image file on his personal computer. Australian police and the DEA have targeted Silk Road users and made arrests, albeit with limited success at reaching convictions.
In May 2013, Silk Road was taken down for a short period of time by a sustained DDoS attack. On June 23 2013, it was first reported that the United States Drug Enforcement Administration seized 11.02 bitcoins then worth $814, which the media suspected was a result of a Silk Road honeypot sting.
Seizure and arrest
On October 2, 2013, Ross William Ulbricht, alleged by the FBI to be the owner of Silk Road and the person behind the pseudonym "Dread Pirate Roberts," was arrested in San Francisco on suspicion of drug trafficking, soliciting murder, facilitating computer hacking, and money laundering. The FBI agent leading the investigation was also responsible for the 2011 arrest of the LulzSec hactivist Hector Xavier Monsegur (Sabu). On 4 October, Ulbricht appeared in federal court in San Francisco and denied all charges, whereupon the hearing was rescheduled for 9 October.
The FBI seized over 26,000 BTC from accounts on Silk Road, which were worth approximately $3.6 million at the time. An FBI spokesperson said in an interview that they would hold the bitcoins until the judicial process finished and after that, they would liquidate them. On October 25, the FBI reported that they had seized 144,000 BTC worth $28 million that they believed belonged to Ulbricht.
As of March 2013[update], the site had 10,000 products for sale by vendors, 70% were drugs that are considered contraband in most jurisdictions. 340 varieties of drugs were being sold, including heroin, LSD, and cannabis. The site's terms of service prohibit the sale of "anything who's [sic] purpose is to harm or defraud." This includes child pornography, stolen credit cards, assassinations, and weapons of mass destruction. There were also legal goods and services for sale, such as apparel, art, books, cigarettes, erotica, jewelry, and writing services. A sister site, called "The Armory", sold weapons (primarily guns) during 2012 but was shut down due to a lack of demand.
Based on data from 3 February 2012 to 24 July 2012, an estimated $15 million in transactions were made annually on Silk Road. Twelve months later, Nicolas Christin, the study's author, said in an interview that a major increase in volume to "somewhere between $30 million and $45 million" would not surprise him. Buyers and sellers conducted all transactions with bitcoins (BTC), a cryptocurrency that provides a certain degree of anonymity. Silk Road held buyers' bitcoins in escrow until the order had been received and a hedging mechanism allowed sellers to opt for the value of bitcoins held in escrow to be fixed to their value in US$ at the time of the sale to mitigate against Bitcoin's volatility. Any changes in the price of bitcoins during transit were covered by Dread Pirate Roberts.
The criminal complaint published when Ulbricht was arrested included information the FBI gained from a system image of the Silk Road server collected on July 23, 2013. It noted that, "From February 6, 2011 to July 23, 2013 there were approximately 1,229,465 transactions completed on the site." The value of the transactions over this period are equivalent to "roughly $1.2 billion in revenue and $79.8 million in commissions" and involved 146,946 buyers and 3,877 vendors. Silk Road had collected 9.5 million Bitcoin in revenue out of 11.75 million Bitcoin in circulation. According to information users provided upon registering, 30 percent were from the United States, 27 percent chose to be "undeclared," and beyond that, in descending order of prevalence: the United Kingdom, Australia, Germany, Canada, Sweden, France, Russia, Italy, and the Netherlands. During the 60-day period from May 24 to July 23, there were 1,217,218 messages sent over Silk Road's private messaging system.
The Farmer's Market was a Tor site similar to Silk Road, but which did not use bitcoins. It has been considered a 'proto-Silk Road' but the use of payment services such as Paypal and Western Union allowed law enforcement to trace payments and it was subsequently shut down by the FBI in 2012. Other sites already existed when Silk Road was shut down and The Guardian predicted that these would take over the market that Silk Road previously dominated. Following the closure of the original Silk Road, two other sites closed down abruptly, taking all the users' bitcoins with them. Another closed down temporarily after the site's source code was leaked.
- Bitcoin protocol
- Operation Web Tryp
- The Hidden Wiki
- War on Drugs
- Sheep Marketplace
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- Dread Pirate Roberts (2011-06-26). "New seller accounts". Silk Road forums. Retrieved 2013-08-05. "[...] we shut down new seller accounts briefly, but have now opened them up again. This time, we are limiting the supply of new seller accounts and auctioning them off to the highest bidders. Our hope is that by doing this, only the most professional and committed sellers will have access to seller accounts. For the time being, we will be releasing one new seller account every 48 hours, though this is subject to change. If you want to become a seller on Silk Road, click "become a seller" at the bottom of the homepage, read the seller contract and the Seller's Guide, click "I agree" at the bottom, and then you'll be taken to the bidding page. Here, you should enter the maximum bid you are willing to make for your account upgrade. The system will automatically outbid the next highest bidder up to this amount. [...]"
- Dread Pirate Roberts (2011-07-01). "New seller accounts". Silk Road forums. Retrieved 2013-08-05. "[...] We received a threat from a very disturbed individual who said they would pose as a legitimate vendor, but send carcinogenic and poisonous substances instead of real products and because seller registration is open, they would just create a new account as soon as they got bad feedback. This was shocking and horrifying to us and we immediately closed new seller registration. Of course we need new sellers, though, so we figured that charging for new seller accounts would deter this kind of behavior. [...]"
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- "Bitcoin Anonymity"
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- "US busts online drugs ring Farmer's Market". BBC News. 2012-04-17. Retrieved 2013-10-18.
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- Alexis C. Madrigal, Libertarian Dream? A Site Where You Buy Drugs With Digital Dollars // The Atlantic, 1 June 2011
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- Eileen Ormsby, The drug's in the mail // The Age, Victoria, 27 April 2012
- Eileen Ormsby, «The new underbelly» // The Sydney Morning Herald, 1 June 2012
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- Brett Wolf, Senators seek crackdown on "Bitcoin" currency // Reuters, 8 June 2011
- 'Silk Road' website called the Amazon of heroin, cocaine // ABC Action News report, 10 June 2011
- "Silk Road: eBay For Drugs", Addiction
- Australian Penthouse story: "The High Road: Silk Road, an online marketplace like no other", January 2012
- SILK ROAD: A VICIOUS BLOW TO THE WAR ON DRUGS
- Shopping on The Dark Web: Pure Drugs and Plastic Explosives reportage from Sabotage Times
- "Unravelling the dark web" (GQ)
- "Silk Road: Theory & Practice"
- "Direct Criminal complaint, Southern District of New York (27 September 2013)"
- "United States of America v. Ross William Ulbricht" Grand Jury Indictment, District of Maryland (1 October 2013)