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There were many minds behind Silk Road.
Ross Ulbricht‘s grand ambition was to build an underground, high tech, black market for drugs like nothing the world had ever seen, the U.S. government says.
Right from the start, however, his reality was markedly different.
Ulbricht currently faces a range of charges for allegedly operating Silk Road, the first major online marketplace for illegal drugs, including narcotics trafficking, computer crimes, fraud, and more. Federal Bureau of Investigation agents arrested Ulbricht at a San Francisco library in 2013, where they seized his laptop before he could lock down its contents behind strong encryption. Wednesday’s proceedings reveal just how valuable the evidence found on the computer would be for the prosecution’s case.
Now in the second week of the Silk Road trial, prosecutor Timothy Howard showed off extensive journal entries and chat logs that he says expose how Ulbricht went from a relatively clueless dreamer to the mastermind of a cutting edge domain.
“I always thought the best policy was honesty. But now I’m telling half truths.”
To do it, the journals allegedly show, he had the help of several expert hackers who guided him toward unparalleled success and then catastrophic failure.
According to the prosecution’s version of events—the defense has not yet had a chance to respond to the allegations—Ulbricht was initially an amateur computer programmer, politically passionate but with no coding experience, little knowledge of the drug trade, and barely any idea how to protect himself effectively from the bright spotlight that would inevitably shine down on what prosecutors claim was his new project.
Originally called Underground Brokers, Ulbricht’s alleged secret project, later named Silk Road, would become the biggest online drug market in history before its downfall.
Of course, Ulbricht’s purported inexperience and mistakes are being used by the prosecution as weapons against him. Ultimately, they could put him behind bars for the rest of his life.
Silk Road took about two years to journey from idea to launch. Ulbricht began to explore the idea in 2009 as he traded emails with Arto Bendiken, a programmer and activist who Ulbricht bounced tech theories off of, according to evidence presented by the prosecution. When Ulbricht was unsure if the technology currently available—Tor and Bitcoin—were ready to support a massive free market, Bendiken said he believed they were, according to emails shown in court on Wednesday.
During 2010, Ulbricht worked a series of jobs that he apparently hated and spent his spare time with his girlfriend, Julia. All the while, he allegedly grew frustrated, chafing at working for others and worrying about delays in his project.
At the start of 2011, he began to keep a journal and promised himself that it would be “a year of prosperity.”
That turned out to be the understatement of his life.
Despite studying Tor and Bitcoin for two years, Ulbricht could not figure out how to launch his own hidden service. So, he turned to Freedom Hosting.
Freedom Hosting was a Dark Net hosting service that set up and maintained hidden services—website that are only accessible to users connected to the Tor network—for a small fee. This was a bad idea for a number of reasons, the primary one being that it left ultimate control of Silk Road in the hands of someone else.
Freedom Hosting was home to a wide range of other websites, many of which were blatantly criminal. Making Freedom Hosting your home meant putting yourself closer to the spotlight. In 2013, Freedom Hosting was hacked and shut down by American authorities in what was publicized as a broad anti-child-porn operation.
Silk Road moved off of Freedom Hosting after only about a month, according to Ulbricht’s journals. Still, even residing there for a month—the reason, remember, was that Ulbricht allegedly couldn’t figure out the relatively simple task of how to set up his own site—is indicative of the low level at which the operation began.
By late March 2011, Silk Road had ditched Freedom Hosting altogether, evidence shows.
To kickstart the site, the alleged would-be drug entrepreneur grew ten pounds of hallucinogenic mushrooms in an isolated country cabin, according to his journal.
As a result, Ulbricht came within a “hair’s breadth of being arrested,” he wrote, and “would never repeat” the experience.
Still, he came out on the other side not only with his freedom but also with ten pounds of “high quality shrooms.”
Shrooms in hand, Ulbricht allegedly began advertising on various forums around the Web. This is one of the points at which authorities were able to connect Ulbricht’s name to Silk Road. Famously, his apparent mistake included using a Gmail address with his first and last names in it, which was connected to Silk Road ads.
The FBI wouldn’t find that connection for years, however, and within a few days of advertising the site, Ulbricht allegedly made his first shroom sale—an exhilarating experience, he wrote in his journal.
More sales came in the next week, evidence shows, and he allegedly soon had customers buying as much as a quarter-pound of shrooms in a single purchase.
The journal he began to keep in 2011 was written because “Some day I may have a story written about my life and it would be good to have a detailed account of it.” While he was teaching new customers and vendors how to stay secure on the Internet, the alleged owner of Silk Road apparently made it easy for police to eventually reconstruct his every step in the creation of the site.
He also began to weave an inconsistent web of lies to friends and family.
“I always thought the best policy was honesty,” Ulbricht wrote in his journal. “But now I’m telling half truths.”
““I revealed myself to Jessica. It was terrible.”
“I felt compelled to reveal myself to [Jessica],” he wrote in a December 2011 journal entry of a “deep” conversation he had with a girl he knew. “It was terrible. I told her I have secrets.”
Ulbricht originally told friends that he was building a Bitcoin exchange but regretted the poorly thought-out lie immensely. “I wish I had told them I was a freelance programmer,” he wrote. “It felt wrong to lie completely, but now I’m in a jam. Everyone knows too much. Damn it.”
Just as he was forced to ad lib his life, Ulbricht’s lack of programming and computer skill meant he was learning everything “on the fly.”
PHP and MySQL were the two programming languages he immersed himself in, so that he could build Silk Road, prosecutors say. But for a long time after the site went live, transactions were counted manually, as he purportedly lacked have the prowess to build an accounting system that could handle the load.
Instead of using secure operating systems, like TAILS or Whonix, evidence shows that Ulbricht most often used the Ubuntu OS. The immense amount of logs and records kept on his computer showed that, for the most part, he didn’t take security seriously enough.
Perhaps it’s impossible to run a business of this size without maintaining extensive records in order to keep track of what would quickly become a multimillion dollar enterprise.
Even so, if the prosecution’s version of events is true, he could have done it much better. Spreadsheet files such as sr_accounting.ods and net_worth.ods were kept in plaintext for anyone with access to the computer to read—for instance, FBI computer scientist Thomas Kiernan, the man who thoroughly examined Ulbricht’s laptop.
When Ulbricht did go through the trouble of encrypting sensitive files—in one example, he allegedly encrypted the driver’s licenses that prosecutors say he required his staff to send him in order to identify themselves—he did it in a fatally flawed way. The password to the encryption was kept in cleartext elsewhere on the computer, in an eye-catching folder called ‘keys,’ meaning that it was only a matter of time before Kiernan’s search revealed it.
It’s likely that these mistakes led directly to the arrest of nearly every Silk Road staffer.
Silk Road famously exploded into the mainstream consciousness in June 2011, when Gawker’s Adrian Chen wrote about the site. Sales skyrocketed, and by later that year, Ulbricht was allegedly bringing in $25,000 per month. In the next year, that number would quickly double and keep rising toward $1 million per week, according to records found on Ulbricht’s laptop.
By this time, there was no doubting the pressure he was under, prosecutors say. U.S. Senators had personally called for the end of Silk Road. Hackers were relentlessly targeting the site in an effort to make off with its riches. Security had become a major priority.
What the owner of Silk Road needed was a mentor.
He found one in an anonymous hacker who went by the name Variety Jones.
Jones allegedly contacted Ulbricht early on in Silk Road’s life to point out gaping security holes that had to be fixed immediately. As the site grew, Jones effectively became a staffer and the right-hand man behind Ulbricht, according to Ulbricht’s journal entries.
Jones’s advice allegedly led Ulbricht to not only completely rewrite the site—”the most stressful period I’ve ever experienced,” he wrote—but also to drastically change the entire way he looked at Silk Road.
Suddenly, the prosecution says, Ulbricht gave greater thought to cover stories, he drafted a will, he went through a name change, and he began penning the political essays that would become his signature.
As a result of Jones’s influence, Ulbricht, now allegedly operating under the moniker Dread Pirate Roberts, began to appreciate just how big the Silk Road brand could be.
“He has helped me to see a larger vision,” Ulbricht wrote.
“Silk Road exchange. Silk Road chat. Silk Road credit union. Silk Road everything.”
Jones helped Roberts navigate uncharted waters, evidence shows. In one May 2012 exchange found logged on Ulbricht’s laptop, Jones discussed a recent Silk Road 4/20 lottery with Roberts.
“I’m worried about the winner,” Jones wrote. “He’s trying to dry out. Heroin.”
The winner of the lottery took home $4,000. All of a sudden, an addict struggling to survive was flush with cash and a big source of drugs.
“Oh geez,” Roberts responded. “Fuck, what are we doing?”
“He tried to quit,” Jones wrote, “but Silk Road made it tough.”
Jones offered an ear to the addict in order to help him get through the tough time.
“Shoulda thought more about dropping 4k on an addict,” Roberts wrote. “Maybe next prize will be three months in rehab.”
Before the federal investigations into Silk Road began, Jones was shaping Silk Road into a stronger and more secure entity that would survive years of intense scrutiny. There are over 1,400 pages of chat logs between Dread Pirate Roberts and Variety Jones, who would later change his name to Cimon. That number is more than four times the amount found with Roberts’ other staffers.
The breadth of their conversations was due in large part to the fact that Cimon was around for most, if not all, of Silk Road’s lifespan. He helped out from early 2011 to late 2013, chat logs show. There was barely ever a period where Silk Road’s fate wasn’t shaped in some way by Jones.
As a result, what had began as a fleeting techno-political dream quickly grew into the world’s most famous drug bazaar.
Ulbricht, apparently self-aware and willing to ask for help, began to bring on advisors like Jones and staffers who would add their own touch to the emerging market.
The highest paid staffer that Silk Road ever saw was Smedley, who brought in $2,500 per week, according to a document titled “to do weekly” that was dated Oct. 1, 2013 and found on Ulbricht’s laptop. It’s not clear at all how Jones was paid based on the evidence presented thus far. Consider how much time we know he spent working on Silk Road, however, it’s safe to assume that he made a tidy sum off of the site.
Starting in 2012, Smedley was brought on as Roberts’ personal hacking utility. “My job is to make sure when attackers get in, you can get back up and running with minimal damage,” Smedley wrote.
“Prevent, detect, redeploy,” Roberts responded.
Smedley was allegedly in charge of rebuilding the foundation of the site. He developed a new search function, a new escrow system, new vendor management, and myriad new security solutions to keep everything safe. Before Smedley’s work was deemed finished, the final test was Variety Jones. He’d attack Smedley’s newest inventions and if they withstood, it’d go live.
The weak link in all of this, the thing that would ultimately render this high-quality help useless, was Ulbricht’s laptop, which has been a goldmine for investigators.
The journal entries presented by the prosecution paint a picture of a man who grew tired of the incredible pressure his work put him under.
Ulbricht wrote that he was considering moving somewhere “cheap and off the beaten path” as a way to both cope and protect himself.
One day before he was arrested, Ulbricht allegedly wrote a last journal entry. The final sentence is focused on his well-being, a topic he returned to constantly throughout the entries, according to the prosecution.
“Had revelation about need to eat well and meditate in order to stay positive and productive.”
Within hours, he was in FBI custody.
Photo via DIM_YUS/Flickr (CC BY SA 2.0) | Remix by Fernando Alfonso III
Patrick Howell O'Neill is a notable cybersecurity reporter whose work has focused on the dark net, national security, and law enforcement. A former senior writer at the Daily Dot, O'Neill joined CyberScoop in October 2016. I am a cybersecurity journalist at CyberScoop. I cover the security industry, national security and law enforcement.