‘Dread Pirate’ Jury Hears of Silk Road Blackmailer Murder Plot

Jurors in the trial of Ross Ulbricht, charged with running the Silk Road online drug marketplace, heard the start of an exchange of online messages in which he allegedly hired a drug dealer to murder a supplier who was trying to extort money from him.

Prosecutors claim Ulbricht, 30, who they say ran the site under the name “Dread Pirate Roberts,” tried in March and April 2013 to arrange the murder of “FriendlyChemist,” a Silk Road vendor who threatened to disclose the identities of customers and vendors on the site.

“In my eyes, FriendlyChemist is a liability and I wouldn’t mind if he was executed,” Dread Pirate Roberts wrote to a Silk Road user called “redandwhite” in a March 25, 2013, message that was read aloud by a prosecutor in Manhattan federal court Thursday. “Redandwhite” claimed he was a drug supplier who was owed money by FriendlyChemist, according to the government.

The trial day ended on Thursday before jurors could hear the rest of the exchange. The government is set to finish reading the messages and rest its case on Monday. Ulbricht must then tell prosecutors whether he plans to testify in his own defense.

Prosecutors claimed Ulbricht tried to arrange as many as six killings, including the murder of a former Silk Road employee. No murders were actually carried out, and he isn’t charged in the plots in the New York case. He’s charged with one of the alleged murder-for-hire plots in Baltimore.

$13 Million

Earlier in the day, a U.S. agent testified that he traced bitcoins worth more than $13 million on Ulbricht’s laptop to Silk Road, as the government sought to undercut his defense that the money came from trading the digital currency.

Ilhwan Yum, a former special agent with the Federal Bureau of Investigation, told jurors he was able to trace the bitcoins from Silk Road’s computer servers to the Samsung 700Z laptop that agents grabbed when Ulbricht was arrested in a San Francisco public library in October 2013.

Yum, who is now a senior director with FTI Consulting Inc., testified that he used Blockchain, a website where bitcoin transactions are recorded. More than 700,000 bitcoins on Ulbricht’s computer were traced to Silk Road, where customers used the currency to buy heroin, LSD, Ecstasy, computer hacking tools and phony identification, Yum said. About 90,000 bitcoins weren’t matched to Silk Road transactions, Yum told jurors.

Ulbricht faces as long as life in prison if convicted.

U.S. District Judge Katherine Forrest, who’s overseeing the trial, denied a request from Ulbricht’s lawyer, Joshua Dratel, for a delay until Monday to prepare to question Yum. Forrest ruled that Dratel was responsible for raising the issue in his opening statement Jan. 13 and should be prepared to counter the government’s evidence.

Bitcoin Trading

“Bitcoin was worth almost nothing in 2010 when an investor in bitcoin could buy them for pennies,” Dratel told jurors in his opening statement. By the end of 2013, “it’s worth hundreds and hundreds dollars. Think about what kind of profit you can make just trading bitcoin.”

Dratel said in his opening statement that his client had conceived the idea for Silk Road as an “economic experiment.”

Ulbricht passed the site to others within a few months of starting it in 2011, Dratel said. Later in the trial, Dratel claimed Ulbricht was set up as a “fall guy” by Mark Karpeles, the former head of the bankrupt Mt. Gox Co. bitcoin exchange. Dratel claimed Karpeles was the true mastermind behind Silk Road.

Karpeles, who lives in Japan, has denied involvement with Silk Road. He hasn’t been charged.

After the opening statement, Yum and a colleague prepared the analysis in less than two weeks, at a cost of $468 per hour to the government, Dratel said.

The case is U.S. v. Ulbricht, 14-cr-00068, U.S. District Court, Southern District of New York (Manhattan).

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