The FBI has moved to crack down on a shadowy back channel of the Internet — where transactions take place outside of easily accessible domains — arresting the alleged proprietor of the black-market site Silk Road, which has been called the eBay of the drug trade.
Ross William Ulbricht, 29, known by his hacker handle "Dread Pirate Roberts," was arrested Tuesday morning in San Francisco and charged with one count each of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy, according to the Federal Bureau of Investigations' court filing.
According to the criminal complaint, Ulbricht also allegedly "solicited a Silk Road user to execute a murder-for-hire of another Silk Road user, who was threatening to release the identities of thousands of users of the site."
FBI agent Christopher Tarbell says, "Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the Internet today," adding that the site was used by "several thousand drug dealers" to sell "hundreds of kilograms of illegal drugs."
The Guardian reported earlier this year that the site, founded in February 2011, hosted $1.7 million in sales a month, after only six months in existence. It described the Silk Road as "an underground eBay-like site which has become the core marketplace for buying and selling drugs online."
"[Despite] law enforcement authorities across the world being fully aware of its operation they have, so far, been powerless to stop it," the newspaper wrote.
Forbes reported last month that Bitcoin had become the preferred payment method on Silk Road and much of the online underground, which exists in a shadow Internet where encrypted "Onion routing," is processed by a piece of software known as Tor.
The Guardian, quoting information from prosecutors, says "Ulbricht was in [possession] of approximately 26,000 Bitcoins, worth around $3.6 [million] — the largest seizure of Bitcoins to date. The New York prosecutors have also seized the Silk Road website itself."
"The raid on Wednesday was not the first time the U.S. government has made arrests related to Silk Road. Earlier this year, authorities in South Carolina arrested Eric Daniel Hughes, who used Silk Road under the name Casey Jones, and charged him in state court with drug possession. The Drug Enforcement Agency seized units of ... Bitcoin, which Hughes allegedly used to purchase drugs from the online market."