Silk Road owner Dread Pirate Roberts nabbed after investigators identify the owner of alias “altoid.” Charges include conspiracy to murder. Mixed reaction from Bitcoiners.

Despite great efforts to remain anonymous, the owner of the controversial Tor-enabled drug marketplace: Silk Road has been identified, according to the FBI.

29-year old Ross Ulbricht, living in San Francisco, is the alleged owner of Silk Road, operating under the pseudonym Dread Pirate Roberts (DPR). Since his apparent arrest, the Silk Road website has been shut down, showing instead a short paragraph to that effect and listing five US government agencies. According to the FBI, the world finally gets a look at the Silk Road books. The result: Over US $1.2B worth of turnover at a profit of almost US $80M.

The lynch-pin of the investigation turns out to be an oversight by Ulbricht, who posted thinly-veiled Silk Road marketing messages on two separate forums, but then later solicited unrelated IT help on another forum whilst listing his real email address as a contact point, using the same username “altoid.” Once Ulbricht appeared on investigators’ radar, it was only a matter of due diligence to make multiple connections between him and Silk Road.

The arrest brings with it both practical and philosophical implications. To his detractors, Dread Pirate Roberts was known as a modern-day cyber hooligan, overseeing his drug empire under the cowardly cloak of anonymity. But he had his fans too. Stating explicitly at one point that he was striving to accomplish two goals: 1) To remove the violence from drug purchases, and 2) To reduce the risk of purchasing drugs of questionable quality, DPR may have in fact made inroads towards his ideals. By anonymizing buyers and sellers, it is conceivable that drug-related violence was reduced among Silk Road users. In addition, by using an Amazon-like vendor rating system, buyers were able to purchase illicit drugs with high confidence that they were of high purity.

DPR was as well known for his roll as the leader of Silk Road as he was for his idealistic prose. In his lengthy posts, he extolled the moral virtues of a free society, often lauding his customers as brothers in arms. He was known as a pacifist and a dreamer.

But the recent FBI warrant paints a far darker picture of Ulbricht, after allegedly accessing a series of private messages in which he solicits the murder of a Silk Road user who was blackmailing DPR. According to the documents retrieved, an assassination was carried out in Canada for US $150,000 equivalent – a premium over the last “hit” that DPR ordered which was for only $80,000. However, this accusation has not been fully corroborated, as there were no reported murders at the time and place mentioned. If these allegations are true, it will assuredly change the opinions of DPR’s followers. In the meantime, we have only the warrant document as evidence and will have to wait to see if the charges are corroborated or refuted.

A commonly debated topic among Bitcoiners is how their favorite crypto-currency is related to Silk Road. How much of the daily Bitcoin transaction volume is drug purchases? Without Silk Road, would the Bitcoin value be much lower? Maybe without the stigma of Silk Road the value would actually be much higher? Bitcoiners posting to the Bitcoin sub-reddit forum differ on their reactions. Some feel that DPR’s arrest is a good thing for Bitcoin, while others believe that he was doing the world a valuable service. Will the shuttering of Silk Road have a positive, negative, or even neutral effect on the price of Bitcoin? At least in the short-term, the price has plummeted over 30% in the last hour (the BitStamp price went from ~$125 to ~$90). Are Silk Road users dumping their Bitcoin as fast as they can? Or is this just speculative selling? Only time will tell just how important, or insignificant, that Silk Road was to the value of Bitcoin.

A great implication to consider: If the US government successfully seized the Silk Road Bitcoin stash, then it may now be one of the largest holders of Bitcoin in the world.

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One comment on “Silk Road owner Dread Pirate Roberts nabbed after investigators identify the owner of alias “altoid.” Charges include conspiracy to murder. Mixed reaction from Bitcoiners.

  1. The news say they have 30K BTC seized. Not this large sum. And if they dump it all together people will know. They would be forced to use MtGox or Bitstamp to dump and people would trace back the BTC to SilkRoad and them.

    Interesting SilkRoad earned around 600K BTC in fees (I suppose mainly in 2012), so DPR must have 80 or less M of USD saved. And probably he was one of the best client for a few server farms around the world.

    In my opinion there is a queue of people willing to take the mantle of DPR given the payoff. How many have the skills to do so is to be seen. But DPR apparently did a few things wrong that lead to him: he left around his mail address, he ordered fake ID and so on.

    The next SIlk Road will be operated by less idealistic and more savvy people. Probably outside the US, somewhere the US can not or want not to go. It is just natural selection.

    There will be a new market or two before the end of the year and business will continue as usual.

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