University Helped FBI Take Down Silk Road 2.0

ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.

>> Click here to find the Silk Road 3 Guide <<

Remember that ominous Operation Onymous (pun intended)? Well, apparently an academic institution was involved in bringing down a number of dark web markets in 2014. It is speculated that the academic institution in question is in fact the Carnegie Mellon University, CMU that provided the crucial information to the FBI.

Just a reminder, Operation Onymous brought down as many as 27 dark web markets at the time, including Silk Road 2.0. Silk Road 2.0 was launched just a month after the original, Ross Ulbricht’s Silk Road marketplace was seized by the FBI in 2013.

What this new information brings into question is, first of all, the nature of the role academic institutions have in fighting crime on the dark web; and secondly, the fairness of the trials that followed after the operation, since allegedly the crucial evidence in discovery hasn’t been disclosed.

It began with the arrest of certain Brian Richard Farrell from Seattle, who quickly admitted that he was behind the nickname “DoctorClu” a member of Silk Road 2.0 staff.

The search warrant presented to Farrell by Special Agent Michael Larson says that the FBI received “reliable IP addresses for TOR and hidden services, such as SR2” from a “Source of Information (SOI).” The obtained information included the main marketplace, its forum, support interface and section typically accessed by staff and dealers only.

With the help of this information, the FBI was able to obtain the location of the Silk Road 2.0 servers, and ultimately to discovering another 20+ dark web marketplaces, fake and scam websites.

But, the mysterious Source of Information also provided some 78 additional IP addresses – users’ IPs – known to access the vendor .onion address.

Farrell was arrested and is currently on trial for conspiracy to distribute heroin, methamphetamine and cocaine.

But, that’s all good news, right?

Well, perhaps.

In October this year, the government notified Mr. Farrell’s defense counsel in a letter stating that his “involvement with Silk Road 2.0 was identified based on information obtained by a ‘university-based research institute’ that operated its own computers on the anonymous network used by Silk Road 2.0.”

Silk Road 2.0
Symptomatically, the events mentioned above line up perfectly with the attack that happened in 2014 on the Tor network:

Sometime in July, 2014, Tor wrote in a blog post about certain indications that a group of relays were working to compromise the anonymity of users. Apparently, they were on to those who “operate or access Tor hidden services.” Eventually, Tor removed those relays, but the time this happened matches the time the FBI obtained the IP addresses of the dark web markets and their users from its trusted source.

Another symptomatic event was the Black Hat hacking conference where Alexander Volynkin and Michael McCord, both academics from Carnegie Mellon University. They were scheduled to present “how a $3000 kit can unmask the IP addresses of Tor hidden services” and their users. Surprisingly, the much anticipated talk was … canceled.

However, the description of the talk remarkably resembled the attack on the Tor network. Plus, the distinguished pair of academics also revealed that they “had tested attacks in the wild.”

A number of people familiar with Farrell’s case have come to believe that the mysterious source of information and the perpetrator behind the attack was in fact the CMU. However, whether these allegations are true or not has not yet been confirmed.

Is there a moral of the story?

Of course, always!

To start, let’s consider again how Tor network works. It operates through a network of trusted relays, nodes as they are called. The connection is encrypted and goes through a circle of relays to its destination.

BUT, it’s been revealed by Tor Project that it is possible to deanonymize the user. Apparently, if the entry node is aware of the IP address of the user and the last node knows his destination – the connection can be intercepted and the IP address compromised. It was this vulnerability of Tor referred to in the description for the Black Hat talk by the two academics.

So, Is there anything users CAN do to reduce the risk of being deanonymized?

Again, of course!

The risk is significantly less if using Tor in combination with a decent VPN (Virtual Private Network). When using a VPN, you don’t connect automatically to the webpage you want. You first connect to VPN server which then forwards you to your desired webpage.

So, in the very first instance of this connection your IP address is different from your real IP; so, when you connect to Tor network – there is absolutely no way for the entry node to identify your IP address or your location.

Better still, there are VPNs that don’t keep any logs of users’ activity online, so even if asked by the authorities to deliver these logs – they can’t!

Moral? Despite a widespread discussion on the internet regarding this case – it’s the government’s job to catch the criminals, so it’s hardly their fault these guys fell. The fault also doesn’t rest with the CMU or any other academic institution for that matter. Had these guys used even the worst VPN in combination with Tor, they wouldn’t have been busted!

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Four Winners In The Last Silk Road Bitcoin Auction

ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.

>> Click here to find the Silk Road 3 Guide <<

US Marshals Service just announced that its fourth auction of the Silk Road bitcoins (which was also the last) ended with four winners. This announcement verified the speculations that were surrounding the event held on 5th November. During this event, there were 11 registered bidders who were competing for blocks that were totaling to 44,000 BTC. They were valued at around $14.6M. The previous auction of 50,000 bitcoins was held in the month of March 2015. Two more auctions were held in June and December in 2014. The US Marshals Service revealed that the auction held on 5th November was the final auction.


It is only one of the winners who have been unmasked so far. Most people hope that the others will be unmasked sooner rather than later. iBit, a New York based bitcoin company has confirmed that it has successfully secured 5 blocks on behalf of a group of investors and clients. However, the figures that were provided by the US Marshals Service (USMC) shows that the total amount garnered by iBit was surpassed by another entity which is yet to be unmasked. The unknown entity garnered above 24000 BTC (this is roughly equal to $8.1M). The other unknown bidders claimed smaller fractions of the total. The agency said that the bidders won approximately 4000, 6000, 10,000 and 24,341.

The participation this time was once again down compared to the first auction held in June 2014. The June 2014 event attracted 45 bidders who placed 63 bids. The third bitcoin auction held in March 2015 also attracted more bidders than the latest event. There were 14 bidders who placed 34 bids.

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itBit Wins 5 Blocks In The Latest Silk Road Bitcoin Auction

ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.

>> Click here to find the Silk Road 3 Guide <<
The auctions arising from the seizure of the Silkroad marketplace in October of 2013 have finally finished, and with it end one of the final chapters of the world’s first darknet market.

The Silkroad marketplace had started out in February 2011, as an online space hidden behind the Tor browser that offered anonymity in Internet purchases. It used Bitcoins, the world’s first cryptocurrency to trade, and pseudonyms for buyers and sellers, thus making all exchanges virtually untraceable.

Unsurprisingly, Silkroad became a hotspot for dealing in illicit substances, and was soon on law enforcement’s radar.

Silkroad unravelling began in 2012 when the Baltimore Silkroad Taskforce began undercover operations designed to unmask the person behind the infamous marketplace.

Due to the work of authorities, Mr. Ross Ulbricht aka Dread Pirate Roberts, the originator of Silkroad, was arrested in October 2013 for his handiwork in founding and overseeing the Silkroad site. Following his arrest officers confiscated 26,000 BTC from the site, and then later 144,000 BTC from the laptop belonging to Ulbricht.

Silkroad Bitcoins Are Being Auctioned?

These Silkroad bitcoins have been slowing getting sold off in auctions conducted by the U.S. Marshal’s Service.

The first lot of seized bitcoins went up for sale in June of 2014, and came to a total of 30,000 BTC overall. The currency was split up into “blocks” and attracted 45 bidders placing a total of 63 bids.

Following rounds of auctions saw an increase in the number of bitcoins available, but a decrease in the number of bidders. All bidders were expected to make a US $100,000 per block deposit before entering the bidding process.

Who Have Silkroad BTC Gone To In Previous Rounds?

The winner of the majority of the blocks in Silkroad first round of auctioning off was Tim Draper. Draper is a venture capitalist with investments in companies such as Hotmail and Tesla. He cited his reasons for bidding as “wanting to strengthen cryptocurrency markets for international countries that have weak currencies.”

A syndicate helmed by venture capitalist Barry Silbert was the major winning bidder in the second round of Silkroad auctions totaling 50,000 BTC, where 11 bidders made a total of 27 bids.

In the third round of Silk Road auctions, totaling 50,000 BTC, in March of 2015, itBit reported that they had managed to win 3,000 worth of bitcoins.

Who Are itBit?

itBit is a financial services company specializing in bitcoins that first came on to the scene in April of 2012. They are a forward-thinking institution that strives to provide an accessible, legitimate and relevant service for those wanting to trade in cryptocurrencies.

Following itBit’s win in the third round of auctions, they applied for bitcoin’s first banking license, and in May 2015 were granted it by the New York Department of Financial Services.

In the fourth and final round of the Silkroad auctions held over six hours on November 5, itBit managed to outbid its competitors in grabbing a maximum amount of five block of the 44,000 bitcoins auction, which resulted in a win of approximately 10,000 BTC.

What Does This Mean For The Bitcoin Market?

Initially, before the completion of the first auction, analysts were uncertain of the anticipated effect of the auction on the price of bitcoins. If extra currency suddenly entered the market, then this would usually signal a drop in price.

However, the bitcoins weren’t immediately used.

If we can go by the history of what has happened in the price of bitcoins before, during and after the markets, then we needn’t be too worried. Following the end of the first Silkroad auction the price of bitcoins actually rose substantially, from 585 dollars beforehand up to 600 dollars following.

Prior to the second Silkroad auction the price of bitcoin plummeted, and remained low for a short time before recovering to previous prices.

A similar effect occurred in the third Silkroad auction.

Due to the knowledge that is it unlikely any of the winning bidders bitcoins will end up flooding the market anytime soon, we can be somewhat reassured that the price of bitcoins will remain on its course at present.

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Man Sentenced To 9 Years For Silk Road Mail-Order Pot Scheme

ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.

>> Click here to find the Silk Road 3 Guide <<

Mathew Luke Gillum, resident of Meadow Vista was sentenced by US District Judge Morrison C. England Jr. earlier this month to nine years in prison for having conspired to sell marijuana. He was arrested in the year 2013. In addition to masterminding the drug trafficking operations, the charges on Gillum also included avoiding a currency transaction reporting requirement.

Mathew’s Modus Operandi

online-artcrimeOperating in the greater Sacramento area, Mathew distributed marijuana by soliciting orders through Silkroad, the sub-surface anonymous site that operated in the darkweb. Silkroad is a website that sold drugs illegally under categories such as “Stimulants” and “Psychedelics.” The 31-year-old creator of Silkroad, Ross Ulbricht, allegedly collected over $18 million in bitcoins before the Silkroad website was tracked down and closed in 2013. The Silkroad founder, Ross Ulbricht, was sentenced to life in prison.

As the leader of the drug-trafficking organization, Gillum shipped the marijuana orders through US mail to many different locations outside California. This clandestine Silkroad extended operation was routed through different individuals (about five in number) who helped to complete it. It included opening the post office boxes, collecting the proceeds, facilitating communications, shipping the parcels and manufacturing and supplying the weed.

The marijuana orders were solicited through Silkroad. The customers shipped back cash on receiving the parcels to different post offices that were under the control of Gillum and his drug-trafficking organization. On receipt of the payment, the order was then shipped to the corresponding buyer. The type and quantity of marijuana were carefully chosen before shipment to the customer.

Between the months of August 2012 and July 2013, the Silkroad mail-order pot scheme run by Gillum is estimated to have sourced and sold over 600 pounds of marijuana to individuals in 16 different states. The Silkroad drugs were received as Express Mail parcels in Sacramento. A bitcoin account held by Gillum yielded more than $700,000 during investigation.

Mathew Gillum – Cash Transaction Reporting Anomaly

CashFederal officers investigating the case brought to light anomalies in a cash transaction reporting requirement when Gillum purchased a diamond ring from Tiffany & Co. for a little over $100,000 in cash in February 2013. Any transaction above $10,000 in cash requires that an IRS 8300 form be filled out and filed in the purchaser’s name. However, though Gillum paid up the cash, he got a nominee to fill out the paperwork and submit the form as though he had purchased the ring.

The Investigation – Start and Progress

The investigation began in the month of August 2012 when postal authorities detected arrival of a large number of “express mail” packages containing large sums in US currency notes. They caused suspicion as the parcels were addressed to fictitious business addresses (American Sound Concepts, Granite Cove Property Management were some of them) in the Sacramento area.

However, in the month of December 2012, a recipient of this kind of a parcel (from New Jersey) turned out to cooperate with the investigators. He confessed of having purchased 5 pounds of marijuana from the Silkroad website under a false name. He also admitted to having sent $12000 to Mathew Gillum for the “controlled delivery” marijuana packages. The Silkroad website functioned using the anonymous Tor network which required special browsers to access it. The details and communications between the users and vendors of sites in the darkweb are encrypted to evade detection. All Silkroad transactions were carried out in bitcoins. This confession further led the investigators to the courier that Gillum was using at the Rocklin PO (located on Pacific Avenue) on March 20. With cooperation from the courier, a raid was later conducted on the same day at the courier’s premises where they caught Gillum red-handed leaving the premises with a backpack containing over $7000 in cash. Though he was released then, a search was conducted in his home, located at Penryn Road, Loomis, later in the same day. Clothed in only his wet underwear, Gillum was caught trying to do away with evidence in a creek near his home. The home of Jolene Chan, who investigators said processed and packaged marijuana for the Silkroad mail order pot scheme, was also raided on that day. Gillum and Jolene together managed to handle about 400 Silkroad transactions.

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AlphaBay Aiming To Be The Next Silk Road

ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.

>> Click here to find the Silk Road 3 Guide <<

It seems that hard work has finally paid off for AlphaBay Market. Their reputation is growing bigger on daily basis and it starting to look as if they are aiming to be the next Silk Road. Which won’t be an easy task, for sure.

Silk Road was the first and the most popular market among the Dark Web markets. They have laid the foundations for secure, anonymous trading and still no market has ever been able to gain trust and popularity that they had with their customers and vendors.

It has been two years since the Silk Road was brought down, and its founder Ross Ulbricht, also known by pseudonym Dread Pirate Roberts, was arrested. Everything has changed for the Dark Web markets since then. A number of new markets popped out like mushrooms after the rain. Some of them good, some of them bad; and some – really, really bad performing exit scams, phishing, stealing other people’s money.

Apparently, Silk Road cared about its customers and vendors. They were the first to implement escrow trade and bitcoin as valid trade currency. They were categorically against child pornography, assassination or hacking services. Ross Ulbricht explained this on his trial, “The Silk Road initially started as a libertarian economic experiment, a project motivated by idealism and a willingness to let people live as they choose.” Now, everybody is trying to adopt that philosophy and recreate what Silk Road had done before the FBI shut down the market.

Just a couple of days after the original market fell, Silk Road 2.0 resurrected from the dead by remaining staff from the original project. It looked identically, but had some new security features.

It didn’t stay long in the business, however – they were seized in 2014 together with 26 other Dark Web markets. The ones that survived, among others were Evolution and Agora and both markets aspired to overtake the throne and become the biggest market.

One definitely more than the other – after a while Evolution performed an exit scam leaving hundreds of customers short of their bitcoins. So, Agora became the leading Dark Web market and they were doing quite well… until they decided to shut down at one point. In their official statement they explained that they’ve found certain security flaws in the Tor Network system which they are working to fix.

Again, new Dark Web markets emerged striving to become the new Silk Road. One of them even is using the very name of the legendary market – Silk Road 3.0. Very soon it was marked as fake market by the DeepDotWeb, a team of enthusiasts reporting about the current situation on the Dark Web.

However, despite this warning, it seems that Silk Road 3.0 marketplace is steadily gaining in popularity. At first users were not sure whether it was just an FBI hoax or a legitimate marketplace. But, according to Fezzik, a current employee at Silk Road 3.0, it counts up to 100,000 users at the moment.

So it is reasonable to believe that this market, a survivor of Operation Onymous, along with other contenders, is steadily building its way to the top.

Current elite markets are definitely AlphaBay and Abraxas Market, competing head to head. But according to a recent statement from AlphaBay team in which they announced that they’ve officially reached 200,000 users; it seems they have greater chance to become the #1 market:

“We reached 200,000 users on the Marketplace just now. On behalf of the entire AlphaBay Staff, we thank you for your ongoing support, faith & effort to shape AlphaBay as it is today – a top-grade black market!

With the help of our community, we will continue to do our best to run AlphaBay for many milestones ahead in a transparent way, accompanied by strong security practices & blazing-fast marketplace speed.

Sincerely Thank You,

AlphaBay Staff

This is pretty big and they are growing even bigger in numbers.
alpha-bayAlphaBay Market has a different approach – their PR campaign is professionally conducted and their main goal is to create a strong and loyal community. In an interview for the DeepDotWeb, the founder of the market said that “without a community, the marketplace would not exist, so the community holds the true power. We implemented multisig, shared account access, and many other features that users requested. We want to have every imaginable possible feature to be the #1 market.”

During the same interview, he also noted how proud they are “of the high level of security & strict security procedures we have here at AlphaBay. We would like to assure all of our users (both vendors & buyers) that their security, privacy and anonymity rank first place in our priorities list.”

So far they have been doing a pretty great job in their new role of being considered as the new Silk Road. But, let’s just wait and see how it turns out. To read more about AlphaBay, visit here

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Silk Road Creator Asked For help To Recover Lost Bitcoins

ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.

>> Click here to find the Silk Road 3 Guide <<

As you may know already, Ross Ulbricht, the creator of the largest and legendary Dark Web market, Silkroad, is starting to serve his sentence – lifetime in prison. And even though many of us are pretty familiar with all things Silkroad related, we are yet to unravel, decipher and understand certain events that took place at the time.

One such puzzle, not only for the LE necessarily, but also for those nostalgic Silkroad users, is the fact that at one point the Silkroad creator actually asked help and offered a considerable reward to recover his lost bitcoins – 40,000 of them!

As it happens and according to a pair of investigators, one known by a mysterious nickname “imposter” and the other by a slightly less dramatic name, Gwern Branwen – they may have stumbled upon a forum account that presumably belonged to Silkroad founder, Ross Ulbricht. Gwern Branwen who is a moderator of the /r/darknetmarkets subreddit claims that the account named kohlanta on Bitcoin Talk forums IS the infamous Ulbricht himself.

According to them, it was imposter who was working on researching the connection between the Silkroad creator, Mr. Ulbricht, and Mt. Gox. Apparently he found “something interesting on the 1MR6pXD address” which refers to a bitcoin address discovered by the pair. They identified a Mt. Gox account which the founder of Silkroad market used for his transactions.

Ross Ulbircht
Furthermore, imposter revealed that he came across a long forgotten forum thread from August 2012 in which certain kohlanta claimed he was the owner of the above mentioned bitcoin address. Kohlanta apparently had some issues with his bitcoins so he asked for help and offered a reward in BTC to a person that manages to recover the lost 40,000 bitcoins.

The exact post from kohlanta reads: “If you look it up in the blockchain, you can see that currently it contains 44,914.031337 BTC. As you can see, the address is present in the wallet, and the blockchain is up to date, yet the balance reads zero. 100 btc to anyone who can help me solve this problem. Thanks!”

Naturally, the solution was found in a jiffy and the helper received his 100BTC reward. Apparently, all he was supposed to do is run “bitcoind -rescan” command which would make his Bitcoin client synchronize with the blockchain and voila!

On a side note, at the time this conversation took place, one bitcoin was worth about 10 bucks, which brought the helper about a thousand dollar prize.

Apparently, the thread continued with someone noticing the irony that someone can actually own such a huge amount of bitcoins, and not be able to manage their Bitcoin software.

This, however, was not an isolated case – kohlanta offered a bitcoin reward for technical issues he had again on at least two occasions – once in January 2013 when he needed help with Bitcoin software again and the second time in March when he had some PHP issues.

To support their case that kohlanta is actually Silkroad founder Ross Ulbricht’s account, the pair of investigators also pointed out that Ko Lanta is actually a huge tourist attraction in Thailand, and Ulbricht’s visit to Thailand was well documented in his journal.

In the light of this revelation, it sounds quite viable that kohlanta was actually the Silkroad creator, Ross Ulbricht, himself. After all, he did mention on multiple occasions in his journal how he learned and mastered coding along the way, while working and maintaining the Silkroad. This goes to show that perhaps there were people who helped developing the Silkroad marketplace without being aware of it!

Just a reminder, Ross Ulbricht was arrested in a public library in San Francisco, on 1st October 2013. He had his laptop with him and the agents immediately took incriminating snapshots of his screen. Agent Chris Tarbell showed him the warrant for his arrest.

He was accused of money laundering, conspiracy to traffic illicit drugs, computer hacking, even ordering murders. His trial was extremely well publicized, but eventually he was sentenced to a lifetime in prison without parole on May 29, 2015.

Prior to his arrest, Silkroad had become a recognizable brand on the Dark Web. It was the first, the largest and definitely the most popular market at the time. However, following his arrest and shutting down the Silkroad marketplace, many other markets started a race to for the lead place on the Dark Web. Many have even named their market based on Silkroad brand. According to the most recent accounts, AlphaBay marketplace is currently considered the largest community on the Dark Web.

As for Mr. Ulbricht, only 6 months into his sentence, Silkroad brand is still strong and inspires nostalgia among its former users; many of them are still looking for more digital traces of Silkroad creator, Ross Ulbricht.

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Silk Road Vendor Gets 2 Years In Jail

ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.

>> Click here to find the Silk Road 3 Guide <<

Federal investigation on the Silk Road website led to the arrests of many dealers and distributors, among them Sheldon Kennedy who operated a huge drug network via the Silk Road site. Kennedy, a 25-year old resident of Lincoln, Nebraska, sold drugs on the Silk Road, an international underground marketplace for illegal trade involving drugs, false identification, weapons and other contraband, with buyers and sellers doing brisk business online 24/7 from all corners of the globe.

Investigation into Silk Road and Drug Sellers

Investigations into the illegal transactions being made in the Silk Road website started in September 2011, led by HSI Baltimore Special Agents and composed of agents from the Drug Enforcement Administration, the US Postal Inspection Service, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the US Secret Service and the District Office. The website was the brainchild of Ross Ulbricht who owned and served as its administrator during the two years that the site was in operation. According to authorities, the site has nearly 1 million users by the time it was shut down, and was generating more than 1 billion in business from January to September 2011. Members paid in bitcoin currency which is very hard to track. Ulbricht collected a fee for every transaction on the website. Ulbricht, who operated under the pseudonym Dread Pirate Roberts or DPR was convicted in New York on charges relating to his operation of the Silk Road website and sentenced to life in prison.

The Silk Road
Agents started to take an interest in Kennedy in 2012, when an express mail package from China was intercepted in San Francisco in January. The package was addressed to Kennedy and was found to contain 55 grams of a substance that chemically resembled ecstasy. Task force undercover agents set up a sting operation where undercover agents brought contraband from Kennedy through the Silk Road. Kennedy, who did not have any license to sell firearms, sold them drugs and a pistol under an online alias.

Further investigations revealed that Kennedy sold fake currency to a buyer from Maryland on the Silk Road. In May 2012, agents again intercepted a package that Kennedy mailed to someone in England. The package was revealed to contain 110 grams of DMT. Agents looking at his social networks found that he had been posting photos of firearms, accessories and fake currency on sites like Facebook and Google+, advertising these items as for sale.

In June 2013, a search warrant was served to search Kennedy’s home. Agents recovered 10 firearms along with ammunition and drugs. Kennedy, who was at home at the time of the search, spoke to investigators and admitted that he used an online name to sell guns, drugs and fake currency. Kennedy signed a written Miranda form and gave a statement to authorities. According to his own admission, he sold the undercover agents a Glock 26 pistol which he disassembled and shipped to the buyer in two separate shipments to an undercover mailing box in Maryland. He admitted to selling drugs on the website since September 2011 and that he sourced his drugs from China, India and Serbia. Among the drugs he sold included LSD and prescription drugs. He also had drug manufacturing paraphernalia in his home which according to him were for making the controlled substance phenazepam. Among the drugs recovered during the search were Xanax, Valium, heroin, ketamine and barbital powder. He also admitted to selling cocaine. After the search was conducted, Kennedy allegedly provided the agents with the control of his Silk Road accounts, email and electronic records showing the name and shipping information of his sources and buyers. He also provided access to his financial accounts that he used to facilitate the trades, including his account in a Bitcoin exchange called

Gravel Hammer

Charges and Arrest in Miami

After the search in his Nebraska home, authorities estimated that Kennedy faced a maximum sentence of 20 years in prison for conspiracy to traffic on controlled substance. He faced five years for each charge of firearm possession in furtherance of drug trafficking and interstate sale of firearms without a license. He also faced charges of conspiracy to pass counterfeit money. In February 2014, authorities announced in the US Immigration and Customs Enforcement website that charges had been filed against Kennedy for selling guns and drugs on Silk Road. In the news release, they stated that Kennedy was arrested in Miami for selling drugs, false ID, fake currency, lethal weapons and other contraband in the site.


In November 2015, US District Judge Catherine Blake sentenced Kennedy to two years in prison to be followed by three years of supervised release for conspiracy to traffic in controlled substances. Kennedy’s sentence was announced by US Attorney for Maryland R.J. Rosenstein. According to Kennedy’s plea agreement, he admitted to contacting buyers in the Silk Road website, accepting payments through the same sites and shipping his items using the US Postal Service to clients living abroad. He paid the Silk Road website owner Ross Ulbricht a fee for each transaction he conducted on the site. Cooperation with the Feds, including allowing them to take over his Silk Road and Bitcoin accounts, are speculated to have helped Kennedy get a much lighter sentence than was expected for someone facing similar criminal charges.

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Silk Road Meth Dealer Gets Lighter Sentence

ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.

>> Click here to find the Silk Road 3 Guide <<

Canada’s biggest online meth dealer Jason Weld Hagen probably just got the biggest break of his life. Hagen, known to online drug community as the biggest meth dealer operated under the handle “Hammertime” on Silkroad, the darknet site that once ruled the online black market for drugs, was given a lighter sentence in the light of revelations of corruption perpetrated by the very law enforcement agents investigating Silkroad.

Federal Investigation Into Silkroad and Hagen’s Arrest

The official investigation on the drug dealings of Hagen and his associates started in the later part of 2011 after Homeland Security Investigation special agents received information about Silkroad, an underground online marketplace for buying and selling drugs, other illegal substances and illegal services. The Baltimore Silkroad Task Force was subsequently created, and was composed of agents from the US Secret Service, the Drug Enforcement Administration (DEA), the US Postal Inspection Services and the Internal Revenue Services.


Task force investigations revealed that Silkroad has been operating since 2011 and has close to a million users who have conducted at least 1.2 billion in transactions. Silkroad offered a safe online place for drug dealers and suppliers to sell to buyers from all over the world, undetected by law enforcement authorities, since transactions where conducted through The Onion Router. Because users were able to mask their IP addresses when they logged into the Silkroad network, the transactions done through Silkroad were completely anonymous. The task force shut down the website in October 2013 and arrested Silkroad administrator and owner Ross William Ulbricht in October 1. The Silkroad creator was convicted in February for drug trafficking, money laundering, computer hacking and operation of a criminal enterprise. His arrest led to the seizures of servers that offered investigators information about the biggest players on Silkroad, Hagen and his team included. Arrests of illegal sellers, including those of Hagen and his group, were conducted after Silkroad was shut down.


Hagen and four others, namely Chelsea Leah Reder, Richard Egan Webster and Donald Bechen, all Portland residents, were indicted according to an official announcement made by US Attorney for Oregon, Amanda Marshall. The charges involved conspiracy to distribute meth over the internet through Silkroad, the conspiracy to export meth to other countries and international and domestic money laundering. The indictment contains allegations that the group used anonymizing software such as Pretty Good Privacy and TOR to sell meth on Silkroad for bitcoin payments. Transactions on Silkroad reached as far as Australia, Canada, the Czech Republic, the UK and Italy. They allegedly converted the bitcoin payments to US currency by using electronic money transfer systems like PayPal and Western Union. The group allegedly sold the drug in small increments, usually a half gram at a time. These were shipped inside DVD cases labeled “South Beach Workout.”

Allegations of Corruption

Gavel Hammer
Allegations of corruption and finally admission by members of the task force that investigated Hagen and other Silkroad distributors resulted to a lesser sentence for Hagen and his co-accused. Former US Secret Service agent Shaun Bridges pleaded guilty to charges that include money laundering and obstruction, along with DEA agent Carl Mark Force IV, who is charged with extortion, theft of government property, money laundering, conflict of interest and wire fraud. Bridges apparently stole more than $800,000 in bitcoins during the Silkroad investigation and diverted these to his own accounts. He has since resigned his post in March and according to his lawyer, accepts complete responsibility for his actions. Force IV was an undercover agent in the investigation who used the handles “Nob,” “French Maid,” and “Death from Above.” He sold information to Ulbricht about the investigation and stored the payments in his personal accounts, accumulating enough money to pay off his mortgage, a government loan and stash up to $235, 000 to an offshore account. Both agents also allowed Ulbricht to believe that Curtis Green, a Silkroad employee was behind the stolen bitcoins. Force IV was hired by the latter to kill Green, and both agents staged Green’s murder, sending Ulbricht death-proof photos which were later used in his prosecution.

Hagen Gets Lighter Sentence

Hagen pleaded guilty to running the drug and money laundering conspiracy in February. Due to the taint corruption and illegal activities perpetrated by no less than members of the task force, US Attorneys Martin and Haub recommended reduced punishment for Hagen and the other members of his group. They recommended that Hagen be given three years and a month in prison instead of the six years mandated by federal sentencing guidelines. Judge Jones expressed his dismay by saying that Hagen did not deserve the penalty reduction because he distributed the drug to people all over the world. However, he agreed with the recommendation and sentenced Hagen to the recommended 37 months plus five years of court supervision. Because Hagen had already spent 16 months in jail pending resolution of his case, he is expected to be out by mid-2017. Noel Grefenson, his lawyer told the court that to his credit, Hagen had come clean to his family and had taken a hard look at his actions and the double life that caused trouble for him and his family. Hagen, for his part, apologized to his family, telling them that he has become a better man after being caught, and concluded by thanking the government. Judge Jones, however, maintained that the crimes Hagen committed were egregious and that it was hard to give him credit because the government made mistakes.

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Fourth And Final Silk Road Bitcoin Auction

ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.

>> Click here to find the Silk Road 3 Guide <<

The US government on Thursday, 5th November 2015 held its final auction of bitcoins which were confiscated during the prosecution of Ross William Ulbricht, a Penn State graduate who authorities say created and run Silk Road. Before it was shut down in October 2013, Silk Road operated for over 2 years, generating more than $214 million in sales of drugs and other illegal goods using bitcoins.

Bitcoin Auction
The United States Marshals Service (USMS) said the 6 hour online auction it held on Thursday from 8am to 2pm EST for approximately 44,341 bitcoins worth over $17.2 million, drew eleven registered bidders who submitted a total of thirty bids on twenty two blocks of the bitcoins during the auction. Twenty one of the blocks were for 2,000 bitcoins, while the final block included 2,341 bitcoins. Participation was once again down sharply from the 1st auction of approximately 30,000 bitcoins, where forty five registered bidders placed sixty three bids.

The billionaire venture capitalist and founder of Draper University, Tim Draper, who was successful in 2 prior bitcoin sales, indicated that he wasn’t participating in the fourth auction. It was earlier speculated that Genesis Trading, a subsidiary of the Digital Currency Group, which is run by Barry Silbert and another bitcoin hedge fund known as Binary Financial will participate in this auction. According to Lynzey Donahue, a US Marshals Service spokeswoman, no further details will be released until all the bitcoins have been transferred to the winners.

Although the Silk Road crackdown was part of a joint-operation between the US Secret Service and the United States FBI, it was the USMS which was given the charge of handling the confiscated goods from Silk Road that was mostly bitcoins. Approximately 174,000 bitcoins were seized from the Silk Road. The US Marshals Service had previously held a total of 3 auctions where most of the Silk Road bitcoins were sold to qualified members of the US public.

The first auction which was held in June 2014 had 30,000 bitcoins on sale and attracted forty five bidders who made sixty three bids. The first portion of the bitcoins was won by Tim Draper.

The second auction which was held in December 2014 had 50,000 bitcoins on sale but it recorded a lower-turnout when compared to the 1st auction. It had only eleven bidders who made twenty seven bids. Most of the second auction’s bitcoins were purchased by the Bitcoin Investment -Trust bidding syndicate, leaving Tim Draper with the only remaining 2,000 bitcoins.

The third auction which was held in March 2015 2014 had another 50,000 bitcoins that were sold to the highest bidder. In spite of the fact that there were fourteen bidders who competed for the Silk Road bitcoins in the third auction, almost 47,000 or 94 percent of the bitcoins were purchased by Cumberland Mining. ItBit exchange was able to secure 1 block of 3,000 bitcoins.

The fourth auction came amid a surge in the price of the virtual currency, with the price of one bitcoin hitting $500 on Wednesday 4th November 2015 for the first time since August 2014. The price later fell, and by late Thursday, 5th November 2015, one bitcoin was worth $388, according to the Bitstamp exchange.

The bitcoins that were sold in the fourth auction were the last remaining in custody in connection with the federal prosecution of Ross William Ulbricht alleged by the FBI to be the owner and founder of Silk Road and the person behind the pseudonym “Dread Pirate Roberts.” In October 2013, Ross Ulbricht was arrested by the United States authorities. In total, 144,000 bitcoins were seized from Ulbricht’s laptop. Additionally, 29,655 bitcoins were held in wallets on the Silk Road at the time it was shut down. Hence, the total amount of bitcoins that were seized during the Silk Road crackdown is around 174,000 bitcoins. On 27th January, 2015, Ross William Ulbricht and the US government agreed to the sale of the seized bitcoins during his trial. According to the agreement, Ross allowed the US to sell all or any portion of the seized bitcoins. Additionally, the manner of the sale of the bitcoins was left to be determined by the US government. Ross was sentenced to life-imprisonment of twenty years without the possibility of parole on 29th May 2015. He’s jailed in the Metropolitan Detention Center, Brooklyn. Ross Ulbricht has also been ordered to a civil-asset forfeiture of over $183 million.

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Mother Of Silk Road Creator Has Suffered A Heart Attack

ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.

>> Click here to find the Silk Road 3 Guide <<
The mother to Silkroad founder Ross Ulbricht recently got a heart-attack, which could have been caused by shock and concern over her son’s arrest. Ever since Ross known as “Dread Pirate Roberts” was given a life sentence, Mrs. Lyn Ulbricht has been on the frontline in championing for his release from prison following the Silkroad ruling. News about her condition was first broke out by the “Free Ross” official Twitter account, where they wrote that she had suffered a heart failure but is currently in hospital recuperating and making great improvements with each passing day.

The family has gone through a lot of stressful times in their campaigns and that’s probably why these health issues are emerging. Though Ross’ reaction after hearing the sad news has not yet been revealed, it probably made him feel helpless given that his mom has been doing all this just to get him released from jail.

Some online users have already pointed fingers on the convicted Silkroad man for his mother’s woes; they claim that he underestimated the risks involved in trading drugs online by refusing to encrypt Silkroad transactions. Something that ultimately gave cops an upper hand in finding enough evidence to place him behind bars. Maybe if he had taken better security measures on his Silkroad site then the arrest would not have been made, and the mom might not have passed through such painful conditions that led to her heart attack.

Lyn Ulbricht
Given that Mrs. Lyn had been healthy prior to the current heart condition, it’s very unlikely that it could have been caused by another underlying disease other than the stresses of his son’s Silkroad conviction. Nevertheless, some people are putting blame on the jury for giving Ross a rather harsh Silkroad penalty, and not considering the evidence which her mom brought forth to court showing how officers tampered with investigations. Based on these allegations, it could be that Mrs. Ulbricht felt like her evidence towards freeing the Silkroad founder were not being given proper consideration. And this might have triggered a sudden realization that her efforts would ultimately not bear fruits, despite all the hard work that has been put towards the case. Such overwhelming feelings may also be responsible for the heart attack.

Those who are routing for Ross’ release argue that the sentence was not necessary, given that he was not an immediate threat to society. The jury didn’t consider his family’s plea despite them having enough evidence of Silkroad case tampering by police officers. Lyn has been caught on several occasions saying that everybody deserves the right to proper hearing when accused of a crime, but for his son it has all been a one-sided affair where court proceedings relied solely on prosecution evidence while mulling what the accused had to say about the Silkroad case.

Based on Dread Pirate Roberts’ past clean criminal history, seeing that he’s a first time offender in drug related activities, the mom still believes that his Silkroad case was hurried and not handled professionally by concerned judges. Though details have not yet emerged as to what she was actually doing at the time the heart attack happened, it’s believed that Lyn was in her new home in New York after temporarily relocating from Austin, Texas, to be closer to her son who is currently being held at the Manhattan Metropolitan Correctional Center after being found guilty of playing a part in Silkroad.

Heart Pulse
Mandatory life sentence is quite long and the fact that she wouldn’t be seeing Ross for many decades can be quite overwhelming. The judges gave their Silkroad injunction without considering the effects it would have on immediate family members, Mrs. Lyn’s sudden heart attack goes to show how Ulbricht’s family has been in deep turmoil since the man was incarcerated for his Silkroad involvement.

During the Silkroad trial, it emerged that DPR once said that he “made drugs safer” and this might have been interpreted by judges as a sign of arrogance, hence, the heavy sentencing. However, others believe that she only wanted to make an example out of him for anyone else who may be tempted to join the drug trade. The mother believes justice isn’t supposed to be blind and emotive but all-inclusive by considering emerging evidence, even if the case is already ongoing as was with Silkroad.

She maintains that Silkroad was not created to sell drugs but as a free-market libertarian site, where people had the right to do whatever they want without scrutiny from government agencies. Ross himself was a well-meaning person despite other individuals using the Silkroad platform he created to trade narcotics. In a recent interview, Lyn admits that they regularly discussed these issues before his son’s arrest. While still a free man, he used to give lectures at the University of Texas concerning free market courses, and was also considering a YouTube course on the same. The mother definitely doesn’t support the sale of narcotics on Silkroad but is for freedom of Internet use. Lyn Ulbricht is currently receiving treatment at the hospital and is yet to give a statement regarding her heart attack.

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