Alleged Silk Road creator indicted on 'kingpin' charges in New York

Ross Ulbricht will plead not guilty at an arraignment scheduled for Friday, his lawyer said

Ross Ulbricht, alleged creator of the online black market Silk Road, was indicted in New York Tuesday on narcotics, money laundering and so-called "kingpin" charges, and faces up to life in prison.

Authorities say Ulbricht created in 2011 the Silk Road, a site that was used to sell drugs including heroin and ecstasy, as well as hacking tools and other goods. He was arrested in October when federal agents picked him up in a San Francisco public library. Prosecutors say his pseudonyms included "Dread Pirate Roberts" and "DPR."

The 29-year-old was indicted Tuesday at the U.S. District Court for the Southern District of New York. The indictment listed a new charge of engaging in a "continuing criminal enterprise," brought under a federal law sometimes called the kingpin statute. Often used against crime organizations such as drug cartels, it carries a mandatory 20-year sentence and a maximum of life.

Ulbricht had already been charged with narcotics conspiracy, which carries a minimum 10-year sentence and a maximum of life, as well as computer hacking and money laundering offenses.

Ulbricht's attorney, Joshua Dratel, said his client will plead not guilty at an arraignment to be held Friday in New York. "The indictment was expected and does not contain any new factual allegations," he said in a statement. A trial date has not been set.

Silk Road operated on the Tor network, a system of computers connected to the Internet in such a way as to conceal its users' IP addresses. The site was designed to accept payments in the Bitcoin virtual currency, also in an effort to hide the identities and locations of its users, prosecutors said.

To date, nearly 174,000 bitcoins have been seized in the course of the investigation, amounting to more than US$150 million at current exchange rates, according to the indictment.

Several thousand drug dealers and other vendors allegedly used the site between its founding in 2011 and October 2013, when it was shut down by authorities. During that time, hundreds of kilograms of illegal drugs and other illicit goods were distributed to more than 100,000 buyers worldwide, according to the indictment.

Undercover agents made more than 100 purchases through the site to buy heroin, cocaine, ecstasy and LSD, which were filled by vendors in the U.S., Germany, Canada, Spain and other countries, the indictment says.

The charges include computer hacking because the Silk Road site also provided a market for the sale of malicious software geared toward stealing passwords, keyloggers and remote access tools, the court filing said. There were hundreds of listings for such products on the site.

Last March, prosecutors say, Ulbricht hired a hitman to murder at least one other Silk Road user who was threatening to release the identities of thousands of the site's users. There is no evidence that the murder was carried out, however, the U.S. attorney said in its announcement.

Ulbricht had already been indicted once in the U.S. District Court for the District of Maryland.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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Zach Miners

IDG News Service
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