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.
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.
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 mtgox.com.
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.