Silk Road Served as EBay for Heroin ‘Dread Pirate’ Jury Told

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Silk Road, the online marketplace where prosecutors claim more than 1 million drug deals were done from 2011 to 2013, resembled a normal consumer site like EBay or, only with listings for cocaine, LSD and black tar heroin.

Ross William Ulbricht, 30, who prosecutors say went by the name of “Dread Pirate Roberts,” is on trial for creating Silk Road and running it until his arrest in October 2013. A federal agent who said he made more than 50 drug buys from Silk Road and went undercover as a site administrator, walked jurors through the process of anonymously trading money for bitcoins and then using the digital currency to buy drugs with a few clicks of a computer mouse.

Jared Der-Yeghiayan, a Department of Homeland Security special agent, told jurors in Ulbricht’s conspiracy and drug-trafficking trial in Manhattan today that Silk Road had 13,810 listings of drugs for sale around the time it was shut down. He said its product categories included cannabis, dissociatives, Ecstasy, opioids, psychedelics, prescription drugs and stimulants.

Buyers could click on a listing for “1 gram of Blue Magic Black Tar Heroin (85% pure)” or “0,5 Gr Uncut Crack Cocaine!!” add the purchase to a virtual shopping cart, pay with bitcoins, then wait for the drugs in the mail.

Drug Sales

Prosecutors said about 95 percent of Silk Road’s business came from drug sales. Ulbricht is also charged in connection with the site’s sale of fake identification documents and computer hacking assistance. He got his online identity “Dread Pirate Roberts” from a character in the film “The Princess Bride,” according to prosecutors.

Prosecutors claim Ulbricht also tried to arrange the murders of at least six people who threatened his multimillion-dollar business. The government doesn’t believe any murders were carried out. Ulbricht is charged separately in federal court in Baltimore for one of those alleged murder-for-hire plots.

Ulbricht, who pleaded not guilty, faces as long as life in prison if convicted of the trial’s most serious charge, Internet drug trafficking. In his opening statement yesterday, Ulbricht’s lawyer said his client started Silk Road in 2011 as an “economic experiment” and left after a few months. He said Ulbricht was set up as a “fall guy” for the site’s operators.

Ecstasy Buy

Der-Yeghiayan said he began the Silk Road investigation as part of his work tracking drug shipments through Chicago’s O’Hare International Airport. He told the jury of six men and six women about an online undercover buy of 1,000 Ecstasy tablets using Silk Road.

On April 5, 2013, agents wired $7,000 to the bitcoin exchange Mt. Gox Co. in exchange for 27.27 bitcoins. Silk Road required that all transactions be made in bitcoins to keep the buyers’ and sellers’ identities secret, Der-Yeghiayan testified. Mt. Gox, formerly the world’s biggest bitcoin exchange, filed for bankruptcy protection last year after losing $473 million in bitcoins.

The agents, using the name “dripsofacid,” then ordered 1,000 200-milligram tablets of Ecstasy on the Silk Road site from a vendor named “SuperTrips” that offered free shipping, worldwide, from Germany. They transferred the money, the equivalent of the $5,499.99 sale price, to Silk Road and had the drugs sent to a Chicago post-office box under a fake name.

Customer Assistance

Der-Yeghiayan said Silk Road held bitcoin payments in escrow until the buyer received the order and completed the transaction. He said the site had customer-assistance employees who helped moderate disputes between buyers and sellers.

Once a transaction was complete, the sellers could go to a bitcoin exchange and trade the virtual currency, anonymously, for gold, dollars or another currency, the agent said.

Der-Yeghiayan said the price of bitcoins ranged during the investigation from about $2 to $250.

Der-Yeghiayan said he was an undercover Silk Road site administrator for several months, working 10 to 12 hours a day on an Apple MacBook in exchange for about $1,000 a week in bitcoins. He said he had frequent online chats, using the name “cirrus,” with Dread Pirate Roberts and other Silk Road employees, including two who used the names “libertas” and “samesamebutdifferent.”

Silk Road was operated on the Tor network, which routes communications through a series of computers to allow users to be anonymous.

The agent told jurors that Ulbricht was online as Dread Pirate Roberts on his laptop in San Francisco’s Glen Park Library on Oct. 1, 2013, corresponding with Der-Yeghiayan as cirrus, who was in a nearby café. Der-Yeghiayan signaled other agents who arrested Ulbricht, taking care to seize his computer before he could log out, he said.

Der-Yeghiayan is expected to conclude his testimony tomorrow.

The case is U.S. v. Ulbricht, 14-cr-00068, U.S. District Court, Southern District of New York (Manhattan). The murder-for-hire case is U.S. v. Ulbricht, 13-cr-00222, U.S. District Court, District of Maryland (Baltimore).