Prosecution traces $13 million of Silk Road bitcoins to seized laptop of Ross Ulbricht Reuters

At the close of its ninth day, the Silk Road Trial began to expose its alleged owner's links to millions of dollars of bitcoins earned through the drug-dealing website - and five mysterious murder-for-hires.

Taking the stand, FBI agent Ilhwan Yum told the court how he had traced 3,760 transactions over a 12 month period ending in August 2013 between the servers of Silk Road and the laptop of its alleged mastermind Ross Ulbricht.

The 30-year-old Texan says, although he created the Silk Road website, he soon handed over the reins to an unknown person, and that a huge stash of bitcoins found on his laptop by FBI agents were the proceeds of smart trading of the cryptocurrency.

But Yum's evidence paints a different picture. He claims to have followed more than 700,000 bitcoins along the blockchain, a public ledger detailing all bitcoin transactions ever made. These bitcoins were transferred between Silk Road - where they were used by merchants to deal illegal drugs, fake ID and hacking software - and Ulbricht's digital wallets, in which bitcoins are stored.

Direct transfers

Although the currency's price has fluctuated wildly in recent years, Yum estimates the coins to be worth $13.4m, and confirmed to prosecutor Timothy Howard, that "yes, [they were] direct, one-to-one transfers [from Silk Road to Ulbricht's wallets]".

With access to Ulbricht's seized laptop, grabbed from him while switched on and claimed to be logged into the Silk Road's 'Mastermind' administration pages, it is claimed, prosecutors have unearthed records of 700,252 bitcoins transferred between Silk Road and Ulbricht. Nearly half a million of these transactions were moved between September and November 2012, before the currency's value rocketed to over $1,000 (£600) per coin.

Before it was shut down by the FBI in October 2013, coinciding with Ulbricht's arrest, Silk Road assured users that a process known as "tumbling" - mixing coins between users before sending them on - would prevent the money from being traced to individual buyers and sellers. This may be true, but when the site owner's cut was withdrawn from the site it was done so directly, the prosecution claims.

Based on earlier testimonies by FBI agents, Ulbricht thought he would be protected by his laptop's own encryption, preventing his wallets from being linked to his real identity. When arrested in a San Francisco library, the laptop was found by agents in an unencrypted state.

Economic experiment

Accused of running Silk Road as the pseudonymous Dread Pirate Roberts, Ulbricht is charged with narcotics trafficking, computer hacking, money laundering, conspiracy to traffic fraudulent IDs and engaging in continuing criminal enterprise. Ulbricht says he is innocent, but if found guilty, he faces between 30 years and life in prison.

His defence, led by Joshua Dratel, says Ulbricht created Silk Road as an "economic experiment" in 2011, but gave it away soon after, only to be duped back into running the site by its new owners shortly before his arrest in 2013. It is claimed Ulbricht is the "fall guy" for the real owners of the site.


Although not formally charged, Ulbricht is claimed by the prosecution to have asked a user of Silk Road to kill five others. As the trial's third week drew to a close, this topic was finally touched on by the prosecution, despite there being no evidence of the murders actually taking place.

According to webchats seized by the FBI, Dread Pirate Roberts said he "wouldn't mind" if a user of Silk Road was "executed" after he threatened DPR with blackmail.

Owing money to his suppliers, fearful for his family's safety and waiting to be paid $500,000 by a customer, the user called FriendlyChemist contacted DPR to explain his predicament, adding that he had the real identities of nine "top vendors", 15 smaller vendors and thousands of Silk Road users.

Speaking via webchat to redandwhite, who claimed to be the person FriendlyChemist owed money to, DPR said: "In my eyes, Friendly Chemist is a liability and I wouldn't mind if he was executed."

It is known from details in the FBI's indictment against Ulbricht that the story goes much further, but for now the prosecution's testimony was halted by the judge at 5pm sharp, to be continued next week.