May 8 (Bloomberg) -- A Dutch man pleaded guilty to a drugs-for-bitcoins scheme on the black market Silk Road website in which he used the moniker ‘SuperTrips’ and sold cocaine, ecstasy and LSD.
Cornelis Jan Slomp, 23, of Woerden, Netherlands, was the biggest drug dealer on Silk Road, prosecutor Andrew Boutros said at a hearing today in federal court in Chicago. Slomp admitted to one count of drug trafficking conspiracy and his lawyer said he may be asked to testify against the alleged mastermind of Silk Road, who went by the name “Dread Pirate Roberts.”
Described as a “sprawling black-market bazaar” by U.S. prosecutors in New York, who said it was used to anonymously sell illicit goods and launder money, the Silk Road site was shut last year. Slomp, a software developer, made more than $3 million from March 2012 until he was arrested in August 2013, according to a plea agreement accepted today by U.S. District Judge Matthew Kennelly.
While the maximum punishment for Slomp’s crime is 40 years in prison and a $5 million fine, prosecutors agreed to seek a term of no more than 15 years as long as Slomp cooperates with the government’s continuing investigation.
Ross William Ulbricht, who allegedly ran Silk Road as Dread Pirate Roberts, has pleaded not guilty to charges of running a narcotics-trafficking scheme, money laundering, computer hacking and operating a continuing criminal enterprise. His trial is scheduled for Nov. 3.
While Slomp never met Ulbricht, the two have communicated, defense lawyer Paul Petruzzi of Miami said after today’s hearing.
“They chatted,” Petruzzi said.
Slomp was arrested in August at the Miami International Airport on his way to a meeting with alleged co-conspirators where he planned to “spin off his entire U.S. Silk Road operations” to one of them, prosecutors said last month.
Before the U.S. seized his assets, Slomp had been a depositor in the Tokyo-based Mt. Gox Co. bitcoin exchange, Petruzzi said. The exchange filed for bankruptcy in February.
Mt. Gox creditors today won a U.S. judge’s tentative approval of a plan to settle a misappropriation lawsuit with two of the bitcoin exchange’s executives, while maintaining litigation against Mt. Gox principal Mark Karpeles and Japan’s Mizuho Bank Ltd.
Mt. Gox said when it sought bankruptcy protection that it couldn’t account for more than 850,000 bitcoins, which were then worth about $500 million. It later said 200,000 had been located.
The creditors, who sued the exchange’s U.S. affiliate, Karpeles and the executives with whom they’ve settled, propose to partner with outside investors to revive the exchange and compensate depositors. That deal also must be approved by a Japanese bankruptcy court.
One bitcoin was worth $436.99 at 2:15 p.m. New York time, according to the CoinDesk Bitcoin Price Index.
The criminal case is U.S. v. Slomp, 13-cr-689, U.S. District Court, Northern District of Illinois (Chicago).
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