Accused Silk Road operator convicted on U.S. drug charges

NEW YORK (Reuters) - The suspected mastermind behind the underground website Silk Road was convicted on narcotics and other charges on Wednesday for his role in orchestrating a scheme that enabled around $200 million of anonymous online drug sales using bitcoins.

Ross Ulbricht, 30, was found guilty by a Manhattan federal jury on all seven counts he faced after a closely watched four-week trial spilling out of U.S. investigations of the use of the bitcoin digital currency for drug trafficking and other crimes.

The jury of six men and six women needed a little over three hours to deliberate before finding Ulbricht guilty of charges that included conspiracies to commit money laundering, computer hacking and drug trafficking.

Ulbricht, who prosecutors say went by the alias Dread Pirate Roberts in a reference to the 1987 movie “The Princess Bride,” faces up to life in prison and a mandatory minimum term of 20 years. His sentencing was scheduled for May 15.

Ulbricht has attracted many supporters to his cause, including some who say the government’s case is an attack on Internet freedom.

After the verdict was read, Ulbricht turned toward his supporters and raised his hand as he was led from the court. “Ross is a hero,” shouted one supporter wearing dreadlocks.

Joshua Dratel, Ulbricht’s lawyer, said he would appeal. He said he was too limited in presenting evidence and that Ulbricht had been convicted based on statements not attributed by name to his client.

“It’s very disappointing,” he said.

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Manhattan U.S. Attorney Preet Bharara said Ulbricht’s conviction should send a message to anyone attempting to operate an online criminal enterprise.

“The supposed anonymity of the dark web is not a protective shield from arrest and prosecution,” he said.

Silk Road operated from at least January 2011 until October 2013, when authorities seized the website and arrested Ulbricht at a public library in San Francisco.

The website relied on the so-called Tor network, which lets users communicate anonymously, and accepted payment through bitcoins, which according to prosecutors allowed users to conceal their identities and locations.

By the time it was shut down, Silk Road had generated nearly $213.9 million in sales and $13.2 million in commissions, prosecutors said.

They said Ulbricht took extreme steps to protect Silk Road, soliciting the murders of several people who posed a threat. No evidence exists that the murders were carried out.


Ulbricht conceded that he created Silk Road, and his lawyer Dratel said it was intended as a “freewheeling, free market site” where all but a few harmful items could be sold.

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But Dratel said Ulbricht’s “economic experiment” eventually became too stressful for him, so he handed it off to others. He was lured back toward its end, he said, becoming the “fall guy” for its true operators.

At trial, Dratel sought to raise questions in jurors’ minds about whether someone else, such as Mark Karpeles, the former chief of the failed Mt. Gox bitcoin exchange, was operating Silk Road for much of its existence.

Karpeles was never charged and has denied involvement with Silk Road. Although a federal agent told jurors he had been investigating Karpeles, U.S. District Judge Katherine Forrest later struck much of that testimony as improper.

Prosecutors said the Dread Pirate Roberts alias itself was a cover story intended to suggest the name could be passed to others, as happened in “The Princess Bride.”

They also said Ulbricht was arrested in October 2013 while logged into Silk Road on his laptop as Dread Pirate Roberts, chatting with an undercover federal investigator posing as a member of the website’s staff.

The case is U.S. v. Ulbricht, U.S. District Court, Southern District of New York, No. 13-06919.