Bitcoin Entrepreneur Linked to Silk Road Talks about his Prison Experience

Charlie Shrem, the co-founder of the now defunt bitcoin exchange, BitInstant, was released from prison a few months ago. He knowingly transmitted money used to facilitate criminal activities on Silkroad.

ANNOUNCEMENT: Silk Road 3.0 is BACK ONLINE and open for business. The team did a massive security overhaul on the site to try and make it more secure and anonymous.

>> Click here to find the Silk Road 3.0 Guide <<

Charlie Shrem, the founder of BitInstant shares his past and prison experience after being released.
Charlie Shrem, the founder of BitInstant shares his past and prison experience after being released.

Silkroad

Silkroad was a darknet marketplace where drug dealers bought and sold illicit drugs. Users of Silkroad used the cryptocurrency bitcoin to conduct transactions. The original Silkroad was shutdown in October 2013.

Charlie Shrem

All through his childhood, Shrem had a special interest in technology, computers to be precise. He was a geek.

The bitcoin entrepreneur began his entrepreneurship journey at quite an early age. At only 18 years old, he founded the Daily Checkout, an online platform where he sold refurbished goods.

It was during his college education that Shrem encountered the laissez-faire school of thought, and the possible elimination of government and third party intervention.

He then decided to put the economics theory to practice, through the cryptocurrency bitcoin.

Bitcoin is simply a digital currency that enables transactions to be carried out without government or third party intervention, exclusively used on the Silkroad website.

Shrem in an interview, revealed that he first heard about the concept of bitcoin on an online forum that he was a member of.

At that time, there wasn’t any website or anything, only a white paper referred to the research paper released under the pseudonym, Satoshi Nakimoto, which he said unveiled the concept.

Bitcoin Entrepreneur Linked to Silk Road Talks about his Prison Experience
Bitcoin Entrepreneur Linked to Silk Road Talks about his Prison Experience

Nevertheless, Shrem’s curiosity was awakened, and he, therefore, proceeded to purchase bitcoins. He bought a few thousand bitcoins that were not worth much that time.

Consequently, he brainstormed and finally found a way of making the purchasing of bitcoins much faster and accessible to consumers, that it became popular on Silkroad.

That marked the dawn of the Bitcointalk.org, through which he managed to launch BitInstant.

Charlie Shrem partnered with payment processors that had physical locations such as at Duane Reade, CVS, Walmart, Walgreens and even 7-11.

The online site enabled consumers to purchase small amounts of bitcoins, with an average ticket size costing about $300-500. They then charged a small fee for each transaction. Such transactions were of huge amounts on Silkroad.

The concept gained popularity and in a few months, BitInstant made millions of dollars also through Silkroad transactions.

People were able to purchase the bitcoins from all over the States. Tremendous growth was experienced and Shrem confessed to having transacted transactions worth a million dollars in one day, as Silkroad users grew by the day.

The lucrative growth definitely attracted investors. It caught the attention of investors like the Winklevoss twins and Roger Vere.

Shrem admitted during the interview that they experienced huge growth over a span of few months. However, he let success get to his head. He began to drink too much.

The fall of BitInstant was as rapid as its rise. In the period of March 2013, new legislation that defined and outlined what institutions were to be regarded as money transmitters.

BitInstant, with its cryptocurrency, was operating without a license hence had to shut down its dealings. Shrem said they could not risk operating illegally.

Several months later, when Shrem was traveling to Amsterdam to speak at a conference, he was intercepted at the JKF airport by dozens of law enforcement officials, among them the FBI, IRS, and DEA.

Silkroad Bitcoin Transactions

silkroad-bitcoin-transactions
Bitcoin Transactions

The police accused him to have knowingly facilitated bitcoin transactions to Robert Faiella, whose clients were using Silkroad.

Silkroad was an online website where drug dealers bought and sold illicit drugs using bitcoin.

Shrem’s undoing was that he knew of the illegal dealings, but did not file a single report with the United States Treasury Department about Faiella’s illicit activity on Silkroad.

He pleaded guilty when arraigned in court and was sentenced to serve two years in prison for indirectly helping to sell $1M in bitcoins to Silkroad users.

Shrem on podcast speaks of his prison experience. He says that it was no country club. Where he says one out of every ten inmates was a white-collar criminal; senator, judge, few law enforcement officials were among his group.

The fear Shrem says wasn’t as great as in the maximum security prisons as the inmates were non-violent.

The bitcoin entrepreneur confessed that behind bars, he found life difficult. There was no Google or internet, which the computer geek so much relied on.

The information went round by word of mouth. However, his firm belief in cryptocurrency was strengthened, even as Silkroad was no more, while in prison by one thing.

He says that prison also had its own form of currency, bartering mackerels, like bitcoins for Silkroad users then. This was because the inmates were not allowed any form of cash.

Now out of prison, bitcoin no longer has the hype as it had before. The rise of the bitcoin entrepreneur was as swift as his fall.

Read More

OpenBazaar Is Decentralized Not Like Silk Road

OpenBazaar has already begun to turn heads its way despite being only a few months old. Amidst several comparisons to the original Silk Road, it is clear that OpenBazaar is nothing like the infamous dark web market in many ways.

For one, the entire platform exists only on the Bitcoin blockchain and does not depend on any servers to run.

ANNOUNCEMENT: Silk Road 3.0 is BACK ONLINE and open for business. The team did a massive security overhaul on the site to try and make it more secure and anonymous.

>> Click here to find the Silk Road 3.0 Guide <<

openbazaar released decentralized bitcoin marketplace now live and ready for business
openbazaar released decentralized bitcoin marketplace now live and ready for business

This makes it virtually impossible to pass through both by hackers and the authorities alike. There are a number of reasons why OpenBazaar has been termed as the future of e-commerce and a hero among its peers as it seeks to revolutionize online trading for good.

Part eBay, Part Silk Road

In a sense, the platform does borrow the format of eBay’s trading module in that buyers and sellers interact on a one-on-one basis without a third party getting involved in the transactions.

However, unlike eBay, there is no authoritative third party on the purported Silk Road successor and therefore, there are no listing charges or transaction charges.

The entire decentralized platform is comprised of pure P2P interactions. All the listings are hosted by the individual buyers and sellers, and all the monetary transactions take place on the Bitcoin network with no third party involved. OpenBazaar also does not store users’ transaction information.

The Silk Road bit comes when it comes to the type of listings that are predicted to show up on OpenBazaar soon enough.

Much like the heavy-hitting drug-based market Silk Road, it is only a matter of time before OpenBazaar follows in its footsteps, especially since the platform cannot be censored.

OpenBazaar has in fact been compared to major cell phone companies such as Verizon, who can do little to prevent illicit activities being aided by their users and are, thus not liable for anything.

openbazaar-turning-into-silk-road-would-be-considered-a-failure
OpenBazaar has been likened to Silk Road, despite the free market being fully decentralized, free of the sale of drugs and illicit substances.

OpenBazaar Turning into Silk Road Would Be Considered a Failure

CEO Brian Hoffman has always been clear about his stand on the illicit drug trade that was spawned by Ulbricht’s Silk Road.

He strongly wishes that the platform follows in the footsteps of Amazon and eBay despite the fact that he and his team can do little to stop the listing of illicit items on the website.

In one clear comparison, Hoffman said that the hundreds of millions, or possibly billions of dollars that were made off of the drug trade by Silk Road in all its years of operations were nothing compared to the collective amounts of money made in e-commerce every year.

His ambition is that the decentralized platform remains drug-free and oriented towards serving the greater good.

Hoffman believes that OpenBazaar is not just another market; rather it is the future of decentralized free trade.

Should it be successful and not taken down due to illicit activities like Silk Road, it has the potential to revolutionize trade forever.

Why OpenBazaar, Unlike Silk Road, Is Impenetrable

A lot has been said about OpenBazaar being virtually untouchable. Fundamentally, the platform operates on a completely different scale than Silk Road or any other darknet market, primarily because of its decentralized nature.

The open-source software market has no proprietor or authority figure, making it safer than Silk Road, which was full of scammers, and websites such as Oasis and the infamous Sheep Marketplace that performed an exit scam and went away with over $100 million of their users’ money.

The free market can be run on Tor, although it can just as easily run on the clearnet using any basic browser.

Clearly, the authorities cannot shut down the network in its entirety given that it runs on users’ machines rather than centralized servers.

As such, if a drug bust was to happen and the perpetrators’ websites gain access, this would not affect the rest of the OpenBazaar network.

Hoffman divulged that the peer-to-peer software that is in use is comparable to that of P2P file-sharing communications protocol, BitTorrent.

As such, there are no physical servers running the OpenBazaar network, making it perfectly decentralized.

On the subject of payments, the market uses Bitcoin as its primary form of transaction.

However, unlike Silk Road, users are able to choose their preferred arbitrary third party for transactions after forming unmanipulatable authenticated contracts called Ricardian Contracts.

The third party (a fellow user of the market) will then arbitrate the sale and only sign off on the funds if the buyer is completely satisfied with the product.

OpenBazaar is Here to Stay

Based on the operating protocol of the platform and the philosophy of its creators, comparing the decentralized OpenBazaar market to the highly centralized drug-based Silk Road market is nothing short of stereotyping a free market that holds so much promise for the future of e-commerce.

Whether drugs and illicit items will gradually fill the listings of the website only time will tell. For now, people are quite hopeful that the revolutionary free market has a lot to achieve.

Read More

US Federal Prosecutor Tells About Bitcoin Online Crimes

Federal prosecutor Kathryn Haun came to know about Bitcoin when she was asked whether she would want to prosecute the cryptocurrency.

Haun, who is currently serving as the assistant US attorney of San Francisco’s US Department of Justice (DOJ), took almost no time to understand that prosecuting Bitcoin will never be possible for her.

ANNOUNCEMENT: Silk Road 3.0 is BACK ONLINE and open for business. The team did a massive security overhaul on the site to try and make it more secure and anonymous.

>> Click here to find the Silk Road 3.0 Guide <<

Kathryn Haun, assistant U.S. attorney for the U.S. Department of Justice in San Francisco
Kathryn Haun, assistant U.S. attorney for the U.S. Department of Justice in San Francisco

The attorney, who is known for having her focus on murders, prison gangs, and organized crimes, found that prosecuting the cryptocurrency would be something equivalent to prosecuting cash.

However, she did not stop from gathering further knowledge about Bitcoin online crimes.

The journey has actually changed the US federal prosecutor’s life altogether.

There was a time when she did not have any idea about the cryptocurrency, but right now she is a person to talk to whenever something happens pertaining to Bitcoin.

Right now, Haun is enhancing the post of the digital currency coordinator at DOJ and teaches cyber crime and digital currency at the Stanford Law School.

In addition, she has also succeeded in sending a couple of federal agents behind the bars for committing online Bitcoin crime.

The two individuals in question are corrupt Silk Road investigators, who attempted to steal Bitcoin worth $800,000.

The majority of the cryptocurrency users are aware of the fact that the much talked about the Silk Road investigation involves a series of angles.

For instance, many are still questioning the judgment passed on to Ross Ulbricht, one of the main accused in the Silk Road case.

Ulbricht used to be a dark web market operator who got convicted of running the Silk Road and got arrested in 2013.

In addition, the case also involves law enforcement agents who are not beyond doubt; the two jailed investigators stand as the testimony of this fact.

Kathryn Haun is one person who has witnessed everything that happened during the Silk Road investigation, which helped her to gather valuable knowledge about the situation as well as the subject.

The investigation against the two corrupt federal agents connected to the dark web market, Silk Road, originally began with an unidentified tip.

It is surprising that no one thought that the anonymous tip would be revealing any kind of truth, it ended up unraveling the main truth.

It is often said and widely believed that greed succeeds in bringing out the worst from most humans; this incident proved that the statement stands true even for the federal law enforcement agents.

It showed that when it comes to money, even the protectors of law can become involved in unlawful activities.

Kathryn Haun, the US Federal Prosecutor, recently unveiled how she tries to bring criminal Bitcoin usage to an end. Prosecuting cryptocurrency-related crimes has been proven to be quite a challenge so far, though.
Kathryn Haun, the current digital currency coordinator at the DOJ in San Francisco, revealed a series of essential facts about Bitcoin online crimes.

When monitoring the Silk Road investigation, Kathryn Haun found that both the corrupt Silk Road investigators completed the job of stealing bitcoins in a way that made them almost “perfect criminals.”

That is because both of them knew the perfect way of covering tracks. However, there are a few behavioral patterns that cannot be denied.

It is impossible to decrease digital breadcrumbs just by using online aliases. As a result, the law enforcement officers eventually managed to get hold of the fraudulent Silk Road investigators.

What left people around the globe, particularly users of cryptocurrency, deeply surprised, is that how Haun confirmed that criminals have a habit of using mailboxes provided by different Russian providers.

On the other hand, as expected by most, Haun’s account revealed that mixers and tumblers have big roles to play in the process of laundering the steal Bitcoin funds.

The reassuring fact is that it is very much possible to unscramble those activities if enough time and effort are invested.

At the end of the day, it is absolutely heartwarming to see Haun admits that Bitcoin is not something that’s just about online crimes.

She confirmed that crime levels involving cash are still significantly higher compared to criminal activities involving Bitcoin and other cryptocurrencies.

Another great role the attorney has played is that she advocates the new technology called blockchain technology.

Experts are saying that this technology has the potential of making a major impact because most crimes are facilitated because of forged documents; that is a threat blockchain technology is capable of terminating seamlessly.

According to Haun, this holds great importance as the majority of the cases she has prosecuted so far (these include marriage fraud, impersonation of dead individuals, some murder cases, and of course this case involving cryptocurrency) have been affected severely by some form of stolen, counterfeit, or forged public document.

This indicates that the coming years might see blockchain technology gain huge popularity among cryptocurrency users.

Read More

The Day $28 Million In Bitcoins Were Seized From Silk Road

New trends in Technology industry are like daily events, because of the high number and quality of people working in this domain, innovation is almost a routine task – while doing the impossible or unthinkable is a near-future target.

Every now and then, the “regular” population adopts one of the new trends in the business, moving it from a curiosity to a world-changing idea.

In 2008, the most widely-accepted technological breakthrough was the Bitcoin. However, one of the biggest pieces of regarding the Bitcoin connected the currency to Silkroad – a famous online black market.

ANNOUNCEMENT: Silk Road 3.0 is BACK ONLINE and open for business. The team did a massive security overhaul on the site to try and make it more secure and anonymous.

>> Click here to find the Silk Road 3.0 Guide <<

bitcoins seized
$28 million in bitcoins seized from Silk Road’s Ross Ulbricht

After the appearance of the Bitcoin, people have often wondered why a cryptocurrency took so long to appear in our lives.

The idea behind the Bitcoin is simple, it is a transfer of authority and a virtual currency which you can use to pay anything and everything online.

Although the idea went exceptionally well on paper, thereality was a bit slower to react.

Even in 2015, the number of merchants accepting payments in Bitcoins just passed the 100,000 mark – not enough to be called a full-fledged “revolution.”

The U.S. Government and security agencies didn’t give the currency lots of attention at the beginning either, but that all changed in 2011 when they targeted the above-mentioned Silkroad.

Since the currency was more-or-less completely anonymous and impossible to track, it quickly became the preferred way to pay for certain goods or services which were illicit.

This paired exceptionally well with the now-defunct website, the Silkroad.

It was owned by an individual called Ross William Ulbricht, which was a standard online marketplace – except for the fact that the goods that were traded in Silkroad were highly illicit.

Silkroad made a small fortune functioning as an online black market for drugs – but Ross Ulbricht quickly caught the attention of the authorities.

The founder of Silkroad was arrested in October 2013 and was charged with several accusations – ranging from drug trafficking to money laundering conspiracies.

Basically, he was charged to have conspired with every illicit dealing that took place on the Silkroad.

bitcoin
The Bitcoin in connection with the Silkroad, a famous online black market performed a record-breaking bust of more than $28 million.

The FBI took the entire scene one step further, and at the end of that month, made its biggest Bitcoin confiscation in history, from various members of the Silkroad.

The FBI seized just over 144,000 Bitcoins, an amount equivalent to roughly $28 million.

Along with this operation, the U.S. authorities also shut down Silkroad and sentenced Ross Ulbricht to no less than life in jail.

The size of the undertaking was the impressive part of the story, along with bringing the Silkroad to nationwide public’s attention.

It’s not an everyday occurrence you see a government take hold of $30 million in Bitcoins, especially for online transactions involving websites like Silkroad.

The size of the action also showed the world the downsides of having a currency such as the Bitcoin: having it used to its fullest for wrongdoings.

Since Bitcoin transactions are hard to track, especially when using anonymity tools like Tor, they are the perfect method of committing online frauds or crimes.

While Silkroad was closed, there is no exact quantity of how many of these websites functions in the U.S. alone, not to mention worldwide, where information security isn’t treated as seriously as in the United States.

Ross Ulbricht’s trial was relatively short and easy. His only defense was that while he had indeed found Silkroad, he gave up its administration to other people – a fact which was quickly proven false by prosecutors.

He was quickly sentenced to life in prison and was turned into one of the most famous examples of 21st-century criminals.

Silkroad was quickly shut down after his conviction, proving that he was indeed one of the main players on the website.

Smart, using technology to his advantage and always on top of his game, Ross Ulbricht has been a great example of what can happen when crimes update themselves to get in line with 21st-century technology.

To sum up, the 28th of October will be remembered as the day in which the largest-ever Bitcoin confiscation was made.

This confiscation marked the end of the Silkroad and a lifetime conviction of its owner, founder, and administrator, Ross Ulbricht.

Privacy and power are great additions to everyday life for normal people, but if they fall into the wrong hands, we all know what they’re capable of.

Read More

Top 5 Silk Road Alternatives

Everyone that likes the Silk Road needs a list of Silk Road alternatives, this is because our favorite darknet marketplaces never last forever.

We all know that the Silk Road has made history on the Darknet, and it is widely considered a pioneer in centralized Darknet marketplaces. The brand started its evolution with the original Silk Road, being one of the first marketplaces to employ this business model.

The brand started its evolution with the original Silk Road, being one of the first marketplaces to employ this business model.

The alleged mastermind behind it was a man called Ross Ulbricht, also known as “Dread Pirate Roberts,” He held belief that drug consumption and trafficking is something that can be done safely and peacefully, without any fear, just like any other kind of shopping.

silk-roadEven though Silk Road has been closed after a very successful business campaign, some of its admins and prominent vendors did not want to give up on it that easily.

They all together decided to revive it and go on with their philosophy of free drug consumption and standing up against the authorities.

That is how a Silk Road alternative with the same name but with a 2.0 added was created.

It wasn’t long until the Silk Road 2.0 was allegedly hacked and shut down, and it is said that around 4 thousand Bitcoin were stolen.

The main problem with the Silk Road 2.0 is that the agencies that were in a raging war against drugs held Dread Pirate Roberts captive, together with his laptop and all the market data on it.

The data included some information about people who were later arrested for the involvement with the Silk Road.

Silk Road 3.0 and Silk Road Reloaded

Silk Road Reloaded was what many considered a cheap attempt at a Silk Road alternative by a small and obviously anonymous marketplace at trying to make money off of a name.

The critics were pretty harsh on the admins; many considered them rude and weird since they acted in a very impolite way in some cases.

bitcoin-silkroadOne of its many downsides is the fact that they didn’t use Bitcoins only, coupled with the fact that they were not accessible by Tor but rather its less popular counterpart i2P.

Another marketplace which tries to revive the Silk Road legacy has stepped up to the plate. Some say that it has no connection to the original Silk Road aside of the name; others support this by claiming that it is a small marketplace called Diabolus Marketplace.

However, security on the website is worth double-checking, since many people say that the Silk Road era is over and that no one sane would put any money or conduct business on such a site.

Whether this is true or not, this is what you encounter once you go to the website: first and foremost, you have to register, and then you are free to browse the site and do your business.

What most people are interested in are the listings. You have the possibility to filter your search by vendors or by product. The Silk Road 3.0 shows listings from vendors that have been active in the last three days.

There is a huge selection of goods numbering over 25 thousand drug listings, with total listings reaching as high as 35 thousand individual products or services. Given these numbers, it is more than clear that this is a drug-oriented marketplace.

If Silk Road goes down…

If the Silk Road 3.0 goes down, here is the list of Silk Road alternatives we recommend checking out AlphaBay, Dream Market, Valhalla, Outlaw Market, and Hansa Market. Each of the markets requests registration and after that allows you to explore further what they have to offer.

1. AlphaBay

alphabay-screenshotThis is the biggest Silk Road alternative, it is a regular marketplace which is designed to suit the needs of the people who want to sell products worldwide. It is founded by alpha02, who is according to the DeepDotWeb a reputable member on most carding forums and an experienced carder.

While this may come as a deterrent to some of the Darknet community, the fact that alpha02 is a Darknet veteran and an experienced vendor cannot be denied. Once you follow the onion link and land on the first page, you will see the captcha system set in place and will be asked to write a string of numbers in digits correlating to the names of the numbers displayed to you on the page.

After the site verifies that you have entered the data correctly, you will be redirected to the home page of the market. Now, you can browse AlphaBay at your leisure. AlphaBay is known for its numerous features that help in increasing both the security of the site and the comfort of use.

That being said, it is currently one of the most well-designed Darknet markets around. It uses both multisig and normal escrow systems and as with most reputable markets, the only currency accepted is the Bitcoin.

Apart from drug listings which are by far the most common at over 19 thousand, you can encounter listings of jewelry, weapons, and most notably stolen credit cards, which seem to be AlphaBay’s secondary focus.

Click here to find out how to access AlphaBay >>

 

2. Dream Market

dream-marketDream Market is currently one of the oldest Darknet marketplaces around making it a reliable Silk Road alternative. It has been up and running since December 2013.

Dream Market’s site will let you explore the offer they have without having to sign in with an account, but, if you want to conduct business there, you will have to register. You will have to provide your username and password, along with the captcha verification. The listings include drugs and drug related item (around 2000 of them), jewelry, hardware and software, forgeries and many other items.

Payment is being done in Bitcoin, and the status of Bitcoin can be checked by looking at the top of the site. Dream Market uses a traditional escrow system, and it seems that a good portion of Darknet community praises it for being decently scammer-free.

Click here to find out how to access Dream Market >>

 

3. Valhalla

Valhalla is also known by its Finnish name, Silkkitie. The change of name is supposed to signify the marketplace’s evolution from being a Finland-only based marketplace to international business. The site of this market is easy for browsing since its organization into categories and subcategories is quite well thought out.

When it comes to listings, you can find numerous listings of drugs, digital items, mushroom growing, and much more. The total number of listings goes around 8,500 to 9,000, over 5000 of which are drug listings. However, if you want to enter the website, you must register.
Write your username, password, and instead of captcha answer a simple question like “What day comes after Tuesday?”, or “What month comes after January?” When you submit your application, you will be able to explore and see all the listings and information that interests you.

As far as security on Valhalla goes, both multisig and traditional escrow are set in place, as well as a forced PGP encryption to make sure that no incriminating evidence passes through it unencrypted. Both buyer and vendor positions are invite-only as of recently, and one cannot open a business on Valhalla unless they have a referral link.

Click here to find out more about Valhalla >>

 

4. Outlaw Market

Outlaw Market is not well known for the beauty of the design of their website, but what it lacks in UI design it makes up in sheer security measures. For example, you will not find any direct link to profiles of the vendors, but there is a separate page reserved for them.

Upon following the onion link, you will be provided with the captcha page to prove that you’re not a DDoS bot. After that, you will register yourself by entering the username and password, and then you will be able to browse the market for what you are searching for.
Now, you may find the site slower than the others, but this is because they have several security systems in place which puts a slightly bigger load on their servers. The listing number which goes around to the number of 1,000 includes drugs, weapons, electronics, services, digital goods, and a handful of other products and services.

The number of vendors is also not overly significant. A unique vending system on Outlaw Market is their auction where buyers can compete among themselves to score better prices on some listings.

Click here to find out more about Outlaw Market>>

 

5. Hansa Market

This is a market with great precaution and safety measures make it into our top 5 Silk Road alternatives. They claim that there is no chance that someone would disappear with the customer’s Bitcoins.

The listings don’t come down to drugs only, and one can find many other interesting products, from digital goods, jewelry, services, electronics, erotica, guides and tutorials, counterfeits, fraud related tutorials, etc. However, if you want to see the listings, you will have to sign in.

The procedure is a very basic one; provide them with your username and password, and make sure that you type in the correct captcha letters. Once you are finished, you can start browsing Hansa.

Even though it is one of the newer marketplaces, it has gained popularity quite quickly as a legitimate and scam-free business.

Click here to find out more about Outlaw Market>>

 

At the end of the day, there are some markets that you can visit in case the Silk Road 3.0 goes down.

Hopefully, this article can help shine a little bit of light on the many possible Silk Road alternatives in the event of a Silk Road 3.0 outage.

Read More

Winning Bidder Claimed 2,700 Bitcoins at USMS Latest Auction

An anonymous bidder, who won the bid, bought 2,700 bitcoins at the United States Marshal Service (USMS) auction held recently. It is roughly worth 1.6 million dollars.

The government had announced an auction of the 2,719 bitcoins that were seized during many raids and cases like those of the Silk Road, the online black marketplace.

ANNOUNCEMENT: Silk Road 3.0 is BACK ONLINE and open for business. The team did a massive security overhaul on the site to try and make it more secure and anonymous.

>> Click here to find the Silk Road 3.0 Guide <<

bitcoin bidding
USMS, US Marshals. A winning bidder claimed 2,700.

The auction was announced at the beginning of the month, and the USMS confirmed that four bids were received for the same. The auction took place on August 22 between 13.00 and 19.00 UTC.

This auction was the smallest event held by the USMS. There were only five registered bidders for the auction of the 2,700 bitcoins.

Those who wished to take part in the auction were required to register before August 18. They were also required to deposit a fee of $100,000.

The USMS auction that took place in November last witnessed a higher turnout when 44,000 bitcoins were auctioned off.

The bitcoins auctioned off were worth $14.6 million and there were 11 bidders. Like in previous auctions, USMS also announced that the winning bidder could choose to reveal their identity if they wished to do so.

Previous bidders for the 44,000 bitcoin auction include investor Tim Draper, OTC trading firm Cumberland Mining, and the Bitcoin exchange itBit among the 11 bidders.

The USMS auction process is conducted in such a way that the winning bid is not made visible to anybody that makes a bid in the auction.

Earlier in June, Ernst & Young in Australia auctioned off 24,500 bitcoins that were confiscated from a Silk Road user.

The Source of the Bitcoins

bitcoin
An anonymous bidder purchased 2700 bitcoins worth about $2 million in an anonymous auction held by US Marshals Service

Silk Road was an online darknet marketplace that used bitcoins for its transactions.

Users traded and bought products on the site using bitcoins. A number of bitcoins were confiscated from the site creator, Ross Ulbricht.

He was sentenced to life in prison last year in May. Out of the 2,719 bitcoins that were auctioned off, a majority of them came from investigations related to the Silk Road.

About 1,300 of the auctioned bitcoins were related to Mathew Gillum, a Silk Road drug dealer.

This individual was sentenced to nine years in prison in the year 2015.

The bitcoins were seized in a civil case. 2.8 bitcoins only belonged to Ross Ulbricht, the founder of Silk Road.

Ross was convicted in May 2015 and sentenced to life in prison for running the website.

65 bitcoins came from a former DEA agent Carl Force IV, who was part of the Silk Road investigations.

He stole many bitcoins during the investigation and was sentenced to 6.5 years in prison. About 665 bitcoins were related to the Sean Roberson case.

This man from Florida allegedly traded stolen credit and debit card details through an online shop that he had set up.

Read More

How Silk Road’s Rogue Agents Got Caught

Carl M. Force and Shaun W. Bridges, former federal agents, were charged with money laundering, fraud and related offenses for stealing bitcoins during their investigations into the underground black market Silkroad.

Forty-six-year-old Force, who hails from Baltimore, was working with the DEA as a Special Agent and thirty-two-year-old Bridges from Laurel, Maryland, was working with the Secret Service as a Special Agent when they were both included in the Baltimore Silkroad Task Force for investigating the illegal activities being carried out by the darknet marketplace.

While the charges leveled against Force include stealing of government property, fraud, conflict of interest and money laundering, charges leveled against Bridges are money laundering and wire fraud.

ANNOUNCEMENT: Silk Road 3.0 is BACK ONLINE and open for business. The team did a massive security overhaul on the site to try and make it more secure and anonymous.

>> Click here to find the Silk Road 3.0 Guide <<

Carl M Force
Carl M Force, aka Nob, aka French Maid, aka Death from Above, aka the DEA agent busted for a host of felonies during his investigation of the Silk Road.

How Was Carl Force Caught

By October 2013, Force had been with the task force team, investigating the Silkroad, for a couple of years. During the time he carefully involved in a number of lucrative bitcoin side projects.

One of his projects was ripping off the Silkroad founder, who operated under the pseudonym “Dread Pirate Roberts,” of bitcoins.

Force had by then extorted as much as 1,200 bitcoins from the Silkroad founder and opened an account with the Slovenia-based bitcoin exchange Bitstamp to turn the digital currency into cash. This action seems to have sealed his fate.

Force used his undercover name, Eladio Guzman Fuentes, he commonly assumed during investigations as a DEA agent and produced a driver’s license, Social Security card and proof of residence, all connected to the name to open the account.

His documents were passed on to George Frost, Bitstamp’s general counsel, who found out that they were all forged documents.

When Frost confronted Force, he showed his real ID, his badge, and a Baltimore water bill. Though Frost allowed Force to set up an account, he did not feel comfortable with it.

In November, Force made two large withdrawals from Bitstamp, worth $34,000 and $96,000 in bitcoins into his bank account. Suspicious Frost contacted FinCEN.

The officer he talked to at FinCEN was Shaun Bridges, who told him that the case would be referred to the Public Integrity Section of the Department of Justice.

However, nothing happened. Force kept on transferring his bitcoin assets and even cleared his mortgage payment in full in December 2013.

Six months after the Silkroad founder was arrested, Force withdrew a large sum of $80,000 from Bitstamp in April 2014. Bitstamp employees observed that the IP addresses of Force were connected to Tor.

When asked about this, Force said that he used Tor for the purpose of privacy. In the last week of April 2014, when Force tried to withdraw $200,000 in bitcoins, Frost decided to freeze his account.

Frost then scheduled a meeting with Kathryn Haun, as assistant US attorney in San Francisco. She was the first cryptocurrency coordinator of the Department of Justice.

The meeting was also attended by Tigran Gambaryan, a special agent with IRS. Frost then told them about Force.

Gambaryan, who was aware of the tension between Silkroad investigation teams in New York and Baltimore, sensed that there was something more to the story than just rivalry between the agencies.

However, Haun and Gambaryan were not sure as to whether they should investigate Force’s behavior at all. But then, what made an investigation inevitable was Force’s subsequent action.

He contacted Bitstamp customer service and requested that all his transaction history be deleted.

While Gambaryan wanted to pull out Force’s financial records as well as the latter’s bitcoin activity and match them with transaction records that were already there in the Silkroad database under the government’s custody, Haun started her investigations from Shaun Bridges.

They had a conversation with Bridges through phone on May 6, 2014. His behavior set off alarm bells, and they decided to take Force’s case forward without Bridges’ help.

Gambaryan found out that Force used his undercover account Nob to get Ulbricht’s attention. He told the founder of Silkroad that he was interested in purchasing the website.

Ulbricht quoted $1 billion for the Silkroad site. After a few months, Force informed him that it was not cost-effective for him to do business in quantities below ten kilos.

The Silkroad founder wrote back to him saying that one of his staff would get back to him with the details of a buyer who can deal in large quantities. The buyer was Curtis Green, a Silkroad staffer.

He operated under the name “Flush” and was in charge of Silkroad Forums.

Green signed for a package containing 1 kg of cocaine that Force had arranged to be sent to him. When Green delivered the package to Force, he was arrested by a dozen of agents.

Green did a short stint in jail for cocaine possession, but he was brought out on bail and was questioned by the agents Force and Bridges for about 12 hours.

They asked him to spill out everything he knew about Silkroad, which he did. He even told them the password to his Silkroad account.

Later in the day, huge amounts of bitcoins were transferred to a Number13 account. Sellers on Silkroad also started losing bitcoins from their Silkroad accounts.

By the time the Silkroad founder realized this, as much as 20,000 bitcoins had disappeared.

Ulbricht thought Green was behind this and wanted to teach him a lesson. He turned to “Nob” for help, who was only too keen to oblige.

Initially, the Silkroad founder wanted Green to be beaten up but later on said that he should be executed. Nob demanded $80,000 for the job.

Green staged his own death and Nob got the payment. Force promptly handed over the money to the government.

However, Force had other ideas for getting money from the creator of Silkroad. He sent a message from his new account “Death From Above” to Ulbricht, saying that he was aware of the latter’s involvement in Green’s death. His aim was to get $250,000 from the creator of Silkroad.

Gambaryan found out that “Death From Above” is Force’s another account only because he had left a video footage of himself typing from the same account. Force’s extortion attempt failed as the Silkroad founder refused to pay him. Force then, acting as Nob, got Ross Ulbricht to pay him 400 bitcoins for counterintelligence information from a Justice Department employee Kevin.

Two months later, the Silkroad creator spent another 525 bitcoins. Force mentioned about the first payment in his report to superiors, but not about the second payment. However, a mistake committed by Ross helped Gambaryan to find out that the second payment went to Force’s another bitcoin wallet.

Force created another Silkroad account in the name of “French Maid,” offering information on the government’s investigation into Silkroad for $100,000 in bitcoins. The creator of Silkroad paid once again, and the money went into a personal account of Force.

Haun held a “proffer” session for Force along with Gambaryan. Force admitted to working as “Nob” and taking off bitcoins of the government. However, he acted as though he did it out of a big misunderstanding.

During the session, he also informed that he did not know anything about the accounts “French Maid” and “Death From Above.”

Gambaryan went through the vast Silkroad database once again and confirmed that Force was both “Death from Above” and “French Maid” from the particular version of PGP that he had in his e-mail signatures. Finally, Force was boxed in.

How Was Shaun Bridges Booked

Shaun Bridges
Shaun Bridges stole $820,000 worth of bitcoin and was sentenced to nearly six years in prison.

The investigation of Carl Force led to the apprehension of Shaun Bridges. In early December 2014, when Haun was getting ready to charge Carl Force, Gambaryan came up with a startling discovery.

He found out through Wallet Explorer, a smart Bitcoin block explorer that offers wallet labeling and address grouping service, that the second payment of 525 bitcoins was directly sent by the Silkroad founder (by manually cross-referencing his and Force’s bitcoin transactions) to another account.

This indicated the involvement of yet another person. Gambaryan investigated the matter further and started doubting whether Bridges and Number13 accounts were the same.

Haun and Gambaryan also found out that the stolen bitcoins have been sent to Mt. Gox exchange from the Number13 account. Gambaryan used a mutual legal assistance treaty procedure for accessing the financial records of the Japanese bankruptcy trustee.

The records showed money had been moved to a Fidelity account registered as “Quantum Investments” from the Mt. Gox exchange. Quantum Investments was found to be a company registered by Bridges in his name and home address.

Bridges resigned from his position in the Secret Service on March 15, 2015, and this suggested strongly that the other person involved in stealing the Silkroad founder’s and government’s money was none other than himself.

A proffer session was offered to Bridges also. However, he was unrepentant and arrogant during the session.

Charges were filed against both the Silkroad agents on March 30, 2015. Within one month, Bridges, and a few weeks later, Force, pleaded guilty.

Bridges and Force were sentenced to 71 months and 78 months, respectively, in prison.

While Force is serving his term in a federal prison located near Louisville, Kentucky, Bridges is in the Terre Haute Federal Correctional Institution in Indiana.

Read More

Ex-Silk Road Secret Service Agent Alleged Of Additional Thefts

Shaun Bridges, one of two ex-US feds accused of going rogue during the Silkroad investigation, the other being former DEA agent Carl Force. Both were members of Baltimore Silkroad Task Force who abused their roles and former Silkroad Secret Service agent Shaun Bridges dauntlessly pursued even more alleged corrupt acts linked to the Bitcoin cryptocurrency.

ANNOUNCEMENT: Silk Road 3.0 is BACK ONLINE and open for business. The team did a massive security overhaul on the site to try and make it more secure and anonymous.

>> Click here to find the Silk Road 3.0 Guide <<

Silkroad Theft

Silkroad TheftFormer Secret Service agent Bridges pleaded guilty in August last year to money laundering and obstruction of justice, in connection with Bitcoin theft during the investigation of the most sought after online black market at the time, the Silkroad.

Upon admitting that he stole approximately 20,000 Silkroad Bitcoins amounting to about $350,000 back then, he was sentenced in the month of December to nearly 6 years in prison. It was between March and May 2013 that he liquidated the digital currency into $820,000 and transferred funds to his personal investment accounts.

Bridges confessed that he stole money from Silkroad underground drug bazaar accounts, and framed someone else for it. The witty frame-up act had led to Silkroad creator and operator, Ross William Ulbricht, to contract a murder for the thief. Ulbricht, aka “Dread Pirate Roberts,” ended up guilty of charges and is currently serving life in prison sentence.

Two-fold Stolen Bitcoin Cases

4Bitcoins have been allegedly stolen by Shaun Bridges in two other different instances. How he managed to do so after having been initially arrested and the fact that he already pled guilty to online dark market Silkroad related charges is an interesting controversy.

Apart from stealing the Silkroad money seized by the government, Bridges is alleged man behind the theft of an estimated $700,000 worth of Bitcoins sourced from a Secret Service account. This occurrence is noted three months after his access was supposed to be blocked.

Unsealed court filings indicated that the Justice Department unraveled last April the possibility of Bridges holding a private cryptographic key. If he had, it would have granted him easy access to a Bitcoin wallet wherein the $700,000 worth of Bitcoins seized by the Silkroad task force was stored.

The department states that they have urged to block his access, but unfortunately was not done by the U.S. Secret Service. Thus, the funds were stolen and something that would have been overlooked if not with the court order to pay a portion of Bitcoin seized back to its claimants.

According to federal prosecutors, the government is running an ongoing investigation of determining if Bridges executed theft of approximately $700,000 on July 28th, only to be followed by more stealing of $20,000 Bitcoins on September 10th of 2015.

It can be noted how the document does not definitively state that the suspected former Silkroad Secret Service agent indeed took the money; however, prosecutors tell of the only individual conclusively known to have access, is no other than Shaun Bridges.

In February, right on the day before he was up to start serving his prison sentence, Bridges’ second arrest was accomplished at his Laurel, Maryland home. Officers found luggage containing a notarized copy of his passport, records for three offshore account, bulletproof vests that were issued by the Secret Service and probably stolen, which altogether appearing to be items for use in an attempt flee the country.

Currently, Bridges is in detention at the Terre Haute, Indiana prison. The Secret Service and his lawyer Steven Levin chose not to comment.

Read More

Silk-Road-Related Auction Partly Accountable For Drop In Bitcoin Price

Bitcoin recently took a huge hit across exchanges, falling below $700 in a significant 10% dip in recent price advances. The crash culprit? Bitfinex timeout and an auction that’s linked to the Silk Road, amounting to about $19 million.

ANNOUNCEMENT: Silk Road 3.0 is BACK ONLINE and open for business. The team did a massive security overhaul on the site to try and make it more secure and anonymous.

>> Click here to find the Silk Road 3.0 Guide <<

From as high as $760 over the weekend last week, the Bitcoin price tumbled down to a lowly $698 come Monday, June 20th. This drastic occurrence of the BTC/USD price plunge is thought to be due to the Bitfinex trading outage and auctioning off massive Silk Road-related Bitcoins in Australia.

Bitfinex Unscheduled Downtime

Bitfinex Unscheduled DowntimeBitfinex is a fast-growing worldwide exchange, achieving its position among the highest ranks regarding of raw trading volume. The Bitcoin exchange holds the biggest USD trading volume at 37% of all their trades in USD.

Despite the leading Bitcoin trading platform’s scheduled maintenance done on the 17thof the month, which lasted for approximately an hour, trading was paused starting around 5PM Eastern Time. Bitfinex cited “server migration issues” as the main source of the maintenance delay, compromising their projected re-launch a couple of times. This allowed bursts of cancellation requests while they were attempting to fix the issue.

The initial update stated that they were recovering from the internal network issue, followed by an identified status revealing an ongoing investigation of a trading-impactful infrastructure issue and likewise clarifying that it did not involve funds or system security. Another update showed an investigating status as they are experiencing platform problems, altogether coming with the assurance of resuming operations in the soonest possible time.

The downtime continued to the night causing a lot of panic and several Bitcoin traders’ dismay, with some having lost their investments since deals could not be closed, and considering the millions involved in Silk Road-related auction. It went up again by 9:50, but had to be taken down again on June 21stdue to instability in the network within their data center, letting traders know that they are working with their hosting provider during this second halt on Bitfinex services.

Australian Auction

australia-bitcoin-auction-dinbits-2016June 20th marks the same day of the flooding of $19 million Bitcoins in an Australian auction associated with the Silk Road. These are proceeds of the crime connected to the closure of the Silk Road drug marketplace and Ross Ulbricht’s conviction in 2015, forming part of the civil forfeiture of Silk Road Bitcoins. Bidders of the 48-hour sealed auction include digital asset managers, digital currency exchanges, mostly American and European investment banks as well as hedge funds.

A Reminder

The outage that could have been triggered by the vastness of Silk Road Bitcoins in an Australian auction was only temporary but served as a reminder of Bitcoin’s volatility amidst its growth. Bitfinex has since reemerged online and trading exchanges are resumed.

Prices and volume are expected to increase once again to their pre-outage levels and continuously recovering from the uncertainty. Bitcoin price showed signs of immediate recovery with a strong sell-off, albeit would go a long way for several more weeks especially with traders exhibiting cautiousness and giving more attention to detail and potential risks.

Read More

Bitcoin, A Tool For Prosecuting Crimes

Bitcoin is an online digital currency that has for long been used by libertarians, computer scientists and even criminals as was the case in Silkroad. Just 3 yrs. ago, it seemed like anyone could use this cryptocurrency to make purchases without being tracked down by law enforcers. At that time people thought the digital currency was totally anonymous and FBI didn’t have a chance of finding out who was transacting it.

Bitcoin, A Tool For Prosecuting Crimes

However, Federal Bureau of Investigation agents and other law enforcement bodies had a rather different opinion. They found ingenious ways of seizing Bitcoin and even making arrests where possible. Ross Ulbricht, a 31-yr.-old Texan responsible for creating Silkroad was captured by cops. His Silkroad marketplace was estimated to have facilitated sale of narcotics worth $1 billion. The Silkroad creator was given a life sentence in 2015. Others criminals from various places around the world were also incarcerated for similar charges.

Though most people who use Bitcoin currency are law-abiding citizens motivated solely by privacy concerns, the anonymity it provides can also be a powerful tool for facilitating crime as was witnessed in Silkroad. Academic researchers helped create the data encryption and software systems which make Bitcoin possible, they are now helping authorities nab criminals such as those behind Silkroad.

Sarah Meiklejohn, a computer scientist at University College London, says that these experts operate in a new field incorporating aspects of economics, forensics and computer science. There aren’t many of such experts and they all know each other. She mentions when Bitcoin first emerged, law enforcers were “panicking,” with most officers thinking the technology was dangerous and making it difficult for them to perform their task.

But as arrests and convictions were slowly being made, with one example being the Silkroad case, there emerged a steady shift towards viewing cryptocurrency more as a tool for nabbing cybercrimes. FBI Assistant General Counsel, Brett Nigh, earlier said in an interview that even though Bitcoin operated in a new strange world, investigators could still follow the money without much ado.

This was evident in how the Silkroad investigations were carried out and Bitcoins seized. Investigators had collected every piece of data from Silkroad – from images and text describing Silkroad products to Bitcoin transactions on the blockchain.

Unlike standard money issued by Federal Reserve banks, cryptocurrency like Bitcoin doesn’t have any physical form or gold backing hence making it rather untraceable. This is why Silkroad managed to survive for many years before it was finally shut down. Created back in 2008 by a mysterious man named Satoshi Nakamoto, it has been labeled an “intellectual artifact” and modern frontier of economics.

Bitcoins are amounts associated with certain addresses, unique strings of letters and numbers. For instance, “1Ez69SnzzmePmZX3WpEzMKTrcBF2gpNQ55” represents almost 30,000 BTC seized from the Silkroad site. They were estimated to be worth nearly $20 million at the time. The U.S government auctioned off these Silkroad Bitcoins after seizing it.

Those Bitcoins have since been split up and changed hands several times, but there’s a consistent recording showing their every movement. Both past and present ownership is documented in a “blockchain,” this being a popular public ledger available across the internet.

The task of keeping this cryptocurrency running smoothly and preventing cheating is left to a volunteer workforce, known as Bitcoin miners. They crunch the numbers required to verify the transactions, and also apply a math calculation formula known as “proof of work” to ensure individual miners are honest.

The calculations needed to pass a Bitcoin transaction are so thorough that only specialized computers are used. However, all this effort doesn’t go unrewarded as the act of authenticating a 10-minute transaction chain earns the volunteer miner 25 new Bitcoins. This is how the cryptocurrency Bitcoin is minted.

cryptocurrency Bitcoin

Just like any other currency, the digital currency Bitcoin’s real-world value comes as people who use it to trade for products and services as was the case when Silkroad was still in operation. If you’re not already a miner, the only other way of acquiring Bitcoins is from somebody who owns them. Several companies have come up that sell Bitcoin at a fee, and also provide ATM machines where users can convert them into cash.

Read More