by Business Insider | October 3, 2013 2:18 pm
Ross William Ulbricht is extremely smart — let’s get that out of the way first.
It’s not simply that he allegedly built and maintained Silk Road — a secret Internet site on which criminals traded drugs and assassinations — for years.
And it’s not just that he built a fortune in Bitcoins for doing so. The FBI alleges he earned $20,000 in Bitcoin commissions from sales on Silk Road per day, and made $3.4 million in total. “By far the largest balance held by any Silk Road user at the time,” as the FBI wrote in its indictment.
Before he allegedly built Silk Road, Ulbricht was an engineer, studying solar cells as a grad student at Pennsylvania State University.
He’s actually the author of a number of academic papers, including “Polymeric solar cells with oriented and strong transparent carbon nanotube anode.” He described his interests on LinkedIn:
I love learning and using theoretical constructs to better understand the world around me. Naturally therefore, I studied physics in college and worked as a research scientist for five years. I published my findings in peer reviewed journals five times over that period, first on organic solar cells and then on EuO thin-film crystals. My goal during this period of my life was simply to expand the frontier of human knowledge.
A fan of the “Austrian School”
But he lost his interest in physics and chemicals, sometime after he graduated from Penn State in 2008, in favor of a new passion — libertarianism. He wrote on his LinkedIn profile:
Now, my goals have shifted. I want to use economic theory as a means to abolish the use of coercion and aggression amongst mankind. Just as slavery has been abolished most everywhere, I believe violence, coercion and all forms of force by one person over another can come to an end. The most widespread and systemic use of force is amongst institutions and governments, so this is my current point of effort. The best way to change a government is to change the minds of the governed, however. To that end, I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force.
He became a fan of the Austrian School of Economics, a conservative take on the free market. The indictment against him says he became a devotee of the Mises Institute, and that the writing of Ludwig von Mises and Murray Rothbard “provid[ed] the philosophical underpinnings for Silk Road.”
Silk Road was, in many ways, the apotheosis of free market economics. Because it was completely encrypted and completely anonymous, using Bitcoin — an uncrackable “cryptocurrency” — it stood outside any government regulation at all, including the criminal law.
Ulbricht’s first love — and drugs
Ulbricht was born 28 years ago to Lyn and Kirk Ulbricht, who now live in Costa Rica. They occasionally rent out beach houses at Casa Bambu, a complex there. “All the houses are solar-powered with artesian wells, beautiful tropical yards and on a pristine beach,” their web site says.
Ulbricht grew up and went to high school and middle school in the Austin, Texas, area. In a long, rambling but deeply personal video, Ulbricht describes his first few relationships with girls.
Ulbricht’s first love was from Dallas, Texas. The first time they really hung out, Ulbricht said, they experimented with some sort of psychedelic drug.
He also talks about how he became more guarded in love after his first intense relationship, and how he now avoids “giving myself over completely.”
The real life of an alleged mastermind
Although online he allegedly was a criminal mastermind who ran the Internet’s largest drug empire, in real life he had all the usual mundane stuff going on. Last year, he tried to sell a 2006 Ford F-150 pickup.
He attended a gig at the Flipnotics coffee house in Austin.
He wrote a recommendation for his real estate broker, Akemi Benton, (“She did a fantastic job … In the end I learned a ton about how to buy real estate and got a great deal on my first house. Thanks Akemi!”)
And he was the CEO of Good Wagon Books, a non-profit that picks up used books and other junk from your house and donates it to prison libraries and such.
The usual stuff.
But after grad school, his interests became darker. In his only Google+ post, on April 9, 2012, he asked:
anybody know someone that works for UPS, FedEX, or DHL?
That question takes on a whole new apparent meaning once you know that he has been accused of facilitating the mass dealing of drugs, forged IDs and murder-for-hire contracts worldwide.
The post is now attracting messages from sympathizers, people who appreciated his contribution to online privacy and security through cryptology (see image at right).
His profile describes him as “spunky, funky, not so chunky,” and features a dramatic, glowing sunset.
He also listed new interests on LinkedIn: “trading,” “economics,” “physics,” “virtual worlds,” “liberty.” All of those — bar physics — are at the core of Silk Road.
Enter “the Dread Pirate Roberts”
Ulbricht clearly had a goofy sense of humor. His alleged nom de guerre on Silk Road was “Dread Pirate Roberts,” a reference to the character in the move “Princess Bride.” The joke — from an online privacy point of view — is that the Roberts character in the movie isn’t real. He was once a feared pirate, but retired, and passed on the “feared” title to an underling, who passed it on again and again, so that it’s real origin is completely obscured.
That is a little bit how communications on Tor, the secure network on which Silk Road sat, work — messages are routed through multiple destinations making it nigh impossible to know where they originate from.
Ulbricht under surveillance
Doing that isn’t simple, of course. And like a lot of coders, Ulbricht once asked for help from the coding community. He turned to Stack Overflow, the Q&A site for software developers. Here’s one of his questions, according to the indictment against him:
How can I connect to a Tor hidden service using curl in php?
What Ulbricht didn’t know is that by this time the FBI was watching his every move, online and off, according to the indictment. He also made the mistake of using his real name when making the post, before changing it to “frosty.”
The FBI began its probe of Silk Road around January 2011. By the summer of 2013 they were conducting surveillance on Ulbricht directly.
They located the Silk Road server, even though it was supposedly secure, and copied it in its entirety — including all its user accounts and millions in Bitcoin wallets.
The feds wanted to prove that Ulbricht was the operator of Silk Road, no easy task given the encryption on Tor.
In June 2013, Ulbricht allegedly logged into Silk Road from an Internet cafe in San Francisco. From there the feds traced his Gmail logs and located his apartment 500 feet away, on Hickory Street in San Francisco.
They monitored his mail. He allegedly received fake IDS there, with different names on several forms of ID all bearing his photo.
The contract killer
They also discovered that he was being blackmailed. A Silk Road user named “FriendlyChemist” had hacked into the computer of another Silk Road user and obtained what he alleged was a long list of names and identities of Silk Road customers. If Ulbricht didn’t pay FriendlyChemist $500,000 the Silk Road customer list would be exposed.
So Ulbricht turned to a hitman on Silk Road, and asked if FriendlyChemist could be “executed”:
The hitman, “redandwhite,” offered a price, which Ulbricht allegedly accepted:
FBI agents visited him at the Hickory Road building on July 26, 2013, and discovered his roommates knew him not as “Ross” but “Josh.”
He declined to talk to them.
By then, it was too late. Authorities conducted a series of raids on Tor users, including an alleged seller of child porn, in early August. A huge portion of the Tor network was “compromised” by the feds — even though it was supposed to be uncrackable.
Today, the FBI unveiled its indictment and shut down Silk Road. Ulbricht was arrested in San Francisco. He is being held in custody pending a bail hearing. The indictment was filed in New York, suggesting he will eventually be tried in Manhattan federal district court.
Source URL: http://investorplace.com/2013/10/meet-ross-ulbricht-the-brilliant-alleged-mastermind-of-silk-road/
Short URL: http://invstplc.com/1fDSHp6
Copyright ©2017 InvestorPlace Media, LLC. All rights reserved. 700 Indian Springs Drive, Lancaster, PA 17601.