2018 Social Studies | Silk Road 1.0-3.1 - The Game-Changing Black Market for Drugs
What is Silk Road 1.0-3.1? Is it a road made out of silk? (no) Is it the network of trade routes that connects Asia and Europe? (no, not in this case) Learn more about the Silk Road 1.0-3.1 in our latest Deep Dive!
Silk Road 1.0
First modern darknet market (any overlay network that can only be accessed with specific software, codes or authorization- typically Tor) launched in February 2011.
Operated as a ‘Tor Hidden Service’, meaning users supposedly had complete anonymity with no tracking.
Founded by Ross Ulbricht who was known under the pseudonym ‘Dread Pirate Roberts’.
Named after the Silk Road trading route across Asia (but apart from that, no connection whatsoever).
Arrest and Trial of ‘Dread Pirate Roberts’:
Arrested in 2013 and trialed in January 2015, sentenced in February 2015.
Ulbricht admitted to setting up the website but (according to someone with a life sentence) soon after it had gotten up and running he had handed it over to someone else.
The defence stated that Dread Pirate Roberts ‘was actually Mark Kapeles’, and Ulbricht was just set up to take the blame.
Convicted of 7 charges (all related to Silk Road), some of which were: engaging in criminal enterprise, narcotics trafficking, money laundering.
Originally sentenced to 30 years.
Also accused by government of paying for the murder of 5 people, but this had little evidence and wasn’t brought to trial.
During the trial, the judge was receiving death threats and her social security number and details were placed online but Ulbricht’s lawyers stated it was ‘obviously’ nothing to do with him.
Just before his sentencing, Ulbricht wrote a letter to Judge Forrest saying: ‘Silk Road was supposed to be about giving people the freedom to make their own choice’. He also said that it was originally intended to be simply a decentralized online market due to his libertarian and laissez-faire beliefs.
In the end, he was sentenced to two lives in prison (which obviously only means a life sentence) without possibility of parole.
He was also fined $183 million.
Products and Income:
By 2013 the website had overall er 10,000 products for sale.
70% of that was drugs.
In 2015 there were 13756 listings for drugs on the website which were all either: stimulants, psychedelics, opioids, ecstacy, steroids.
However some prescription drugs were sold too.
The sale of anything with the aim of ‘harming or defrauding’ were prohibited (originally), which includes: child pornography, stolen credit cards, weapons of any type or assassinations.
Other darknet markets got ahead because they weren’t as restrictive.
In 2012, it was estimated that $15 million was exchanged on the website annually.
Total commision from all the sales was 614,305 in Bitcoin.
Silk Road 2.0 - 3.1:
Site relaunched in 2013 with promised ‘better security with original site setup’ with new DPR.
New DPR took precaution of distributing encrypted copies of the site’s source code to allow site to be recreated quickly incase it was shut down again.
It was however shut down quickly and the new DPR’s ( under the names ‘Inigo’ and ‘Libertas’) were arrested in Operation Onymous (an international law enforcement operation which targeted darknet markets and other things which used the Tor Network).
After they were arrested a new DPR restarted the site but later surrendered control of the site and froze all activity.
A refund system was set up for anyone who lost bitcoins after 3.0 was shut down.
Negatives of Silk Road:
DPR accused of money laundering and child trafficking.
Quite restrictive (no child pornography, fake credit cards, weapons, or assassinations) so other online black markets got ahead.
Because of complete anonymity there were money laundering issues.
Positives of Silk Road:
Complete user anonymity.
Only used cryptocurrencies for anonymity and security.
Nothing that harmed or defrauded people (child pornography, weapons) could be sold, originally.
Made with good intentions (‘Silk Road was supposed to be about given people the freedom to make their own choices’- DPR, due to Ulbricht’s libertarian views)
According to Meghan Ralston (a former manager in the Drug Policy Alliance), Silk Road was ‘a peaceable alternative to the often deadly violence so commonly associated with the global drug war, and street drug transactions, in particular’. (Buying drugs is better in the safety of your home than from the street.)
Anyone who lost bitcoins after 3.0 was shut down would get a refund.
Social: You could buy things without leaving the safety of your home with complete anonymity.
Economical: You could make money. However, lots of money laundering did happen.
Ethical: You could go online in a black market and (originally) search for things and find no child porn or weapons. On the other hand, it isn’t very ethical as it became overrun with drug dealers and it became like a typical black market.
In a Nutshell:
Set up by Ulbricht a.k.a Dread Pirate Roberts who was laissez-faire and wanted a decentralised market.
Drugs sold so DEA looking for him.
Nothing sold to harm anyone like child porn or weapons.
Arrested, tried to blame someone else, said that he only had good libertarian intentions, and site shut down.
Site up and running, then shut down again.
Someone tried to start up the site again but failed and froze all activity and got arrested.
Questions for further discussion:
Do you agree with what Meghan Ralston said? Is it really better to deal drugs online anonymously than on the streets with gang wars?
Does Ulbricht’s good intentions make the fact that it was a criminal enterprise okay?
Should we have actually arrested Ulbricht just because drug dealers overran the website?
Are decentralised markets good?
Is it better to encourage buying drugs online (to avoid drug related violence like gang wars), even though this means drug trafficking will become harder to track?
Is it ever a good idea to minimise government control on businesses (and basically making black markets OK)?
When a free market turns into a crime zone, who should be responsible? The market owner or the ones making shady deals?