Silk Road Opens its Door
When the heinous Silk Road website was made publicly available on the “Dark Web” in 2011, the Silk Road episode debuted in Bitcoin history.
That was the very first e-commerce platform on the contemporary dark web where prohibited goods and services could be bought and sold online anonymously through Bitcoin.
eBay for narcotics is said to be where individuals lurk in the Internet’s darkest corners and buy anything from hired murderers to discourse columnists. Several hundred million dollars worth of illicit goods, activities, and bitcoins have been sold over its nearly three-year lifespan, making it the world’s biggest market for Bitcoin misuse.
Although the silk road dark web founder was Ross Ulbricht, who had gone by the online alias “Dread Pirate Roberts,” he asserts that he was not in charge of it for the majority of its existence.
Once Ulbricht was detained by American authorities in October 2013, Silk Road was closed down. Ulbricht was sentenced to life in prison in June 2015 for a number of crimes, while he also lost US$183 million in forfeiture.
In Alex Winters’ “Deep Web” documentary, which was published soon after Ulbricht was given his punishment in New York, the emergence of the platform and its creator are both covered.
Moreover, when it comes to Silk Road’s true story dea agent, it is notable for suggesting that two federal officers who were appointed to investigate and prosecute the Silk Road case were the subject of the case themselves.
Both former United States Secret Service (USSS) Agent Shaun Bridges and former Drug Enforcement Administration (DEA) Special Agent Carl Force IV were charged with participating in a plot to make money from the investigation and their unauthorized misuse of their posts and the website.
Force served as the primary intelligence officer in connection with Ulbricht between 2012 and 2013, using online services and the Silk Road website. Bridges were the prosecution’s main computer investigations specialist at that time.
Force and Bridges were accused of creating illegal web profiles for their own financial gain throughout the Ulbricht investigation, using Bitcoin to conduct money laundering, and stealing money from the Silk Road website’s consumers. The two agents were found guilty after a case was filed against them in 2015.
Silk Road operation
The Tor network and Bitcoin were the two technologies that guaranteed pseudonymity for both customers and dealers on Silk Road. The Tor system is a service and web browser that uses a number of servers to redirect internet traffic. The IP address is then concealed by each of these servers, making it impossible to track.
A digital currency called Bitcoin was established in 2009. It enables peer-to-peer transactions without a centralized controller, like a bank or government. Rather, these transactions are recorded, protected, and authenticated by the Blockchain.
The Silk Road crypto market was used by people to buy and sell a variety of goods and services. However, by 2013, narcotics accounted for about 70 percent of the transactions.
The Silk Road’s collapse was caused by tracking narcotics sent via mail to temporary P.O. boxes. Hence, the police were able to detain Ulbricht’s freelance workers and overhaul the Silk Road scenario.
Yet, the Tor network made it difficult for government authorities to determine the precise identity of the Silk Road’s creator.
Before an FBI agent had a lucky run, he was undisturbed. A Reddit post issued an alarm that Silk Road’s IP address was now publicly available. The agent checked the case by publishing several pieces of information on the Silk Road dark web. He then used tools to examine the traffic so that he could identify the IP address.
Ulbricht, who went by the alias “Dread Pirate Roberts,” was finally discovered while using the website from a public library thanks to a series of remarkable and tireless investigations.
He was detained and accused of money laundering, cybercrime offenses, and conspiracy to trade drugs, and he threatened at least 5 people with death in order to dissuade them from revealing Silk Road’s identity.
It was a grievous error on Ulbricht’s part because he rejected a plea deal with at least 10 years imprisonment. After being found guilty, he got 5 sentences, comprising 2 life sentences even without any chance for parole, in addition to a $183 million penalty.
The mystery fraud
Besides, a hacker grabbed and secretly concealed thousands of Silk Road coins in an unbelievable turn of events straight out of a mystery thriller. It took the federal agency a decade to track down the offender. At that point, the value of Bitcoins exceeded $3.3 billion.
That was a challenging and intricate law enforcement mission. In the end, though, this odyssey helped pave the way for forthcoming efforts to combat darknet markets.
The DEA and Department of Justice launched an extensive examination with U.S. Senator Charles Schumer’s request to track down the massive amount of Bitcoin lost in Silk Road before the website was taken down.
9 Silk Road profiles were pseudonymously registered in 2012 by an individual called James Zhong. The payout verification mechanism on Silk Road was subsequently deceived into depositing close to 50,000 Bitcoins into all of those accounts through a series of over 140 transactions he carried out.
He took advantage of an error in the market by first making a deposit, then quickly withdrawing a sum smaller than the deposit, and repeating this process numerous times in a single second, well before the website could notice that the account was emptied. He carried out this procedure many times, taking out 140 withdrawals altogether.
Then Zhong distributed the stolen gains among several addresses to hide the ownership and management of the Bitcoins.
Not to mention that Zhong profited from a hard fork coin split nearly 5 years following the crime when Bitcoin divided into two digital currencies: old Bitcoin and Bitcoin Cash. He turned the latter into Bitcoin once more, which equaled 3,500 Bitcoin.
The robbed bitcoins were subsequently exchanged for dollars through a platform. Because of this, detectives were able to track the transaction with ease. They kept watching for him to appear because they suspected he had no way otherwise.
When a guy in Athens, Georgia, notified the police that his home had been broken into and that the burglars had taken “a lot of Bitcoin,” the IRS, who had been looking into the case for ten years, was alerted. He was identified as James Zhong.
When police searched his residence, they discovered Bitcoin covered up in a “single-board computer” in a popcorn tin in his bathroom.
The Southern District of New York’s US Attorney revealed in November 2021 that more than 50,676 Bitcoin, worth an astounding $3.36 billion, had been recovered by law authorities in the silk road bitcoin seizure 2013.
Law authorities also found $661,900 in cash, 25 Casascius coins, which have a physical bitcoin equivalent worth of about 174 bitcoins each, 11.1160005300044 more bitcoins, 4 one-ounce silver-colored bars, 3 one-ounce gold-colored bars, 4 10-ounce silver-colored bars, as well as 1 gold-colored coin.
Zhong pled guilty to an allegation of wire fraud, which has a maximum penalty of 20 years behind bars.
ZHONG started willingly handing over extra Bitcoin that was still in his possession that had not been confiscated to the government around March 2022. He willingly gave up a sum of 1,004.14621836 more Bitcoin.
Insights gleaned from Silk Road Bitcoin
According to public documents, Zhong was the chairman and chief executive officer of JZ Capital LLC, a self-founded business that he established in Georgia in 2014. His work there was mostly centered on investments and venture funding, as per his Linkedin page.
Furthermore, according to his biography, he had competence in coding languages and was a major early investor in bitcoin with a thorough understanding of its intricate details.
Images of Zhong posing on yachts, ahead of airplanes, and during renowned football matches can be found on his social media pages.
This implies that he had expertise in the field. So combating such malicious attempts takes a great deal of knowledge and very sophisticated technologies.
Ulbricht’s dual life sentence, even without the chance of parole, was shocking and outrageous to malicious hackers as well as to those law-abiding groups who believed in his idealistic libertarian principles supporting the freedom for anyone to purchase and trade whatever they wanted.
Yet, there’s no denying that it actively discouraged involvement in dark web sites for those who were exposed to Western law enforcement. Anyone engaging in these kinds of platforms was encouraged to increase their anonymity and safety as a result.
This case demonstrated that federal agents would not stop pursuing such robberies, irrespective of how well disguised, down to a computer chip underneath a popcorn tin it might be concealed.
The bitter reality is even after the Silk Road was shut down, such kinds of hacking continued. Such cybercrime threat to cryptocurrency platforms is still present.
Be that as it may, this confiscation which was the 2nd largest in history only after the $3.6 billion recovered cryptocurrency associated with the Bitfinex hacking in 2016, prompted federal law enforcement to emphasize crypto-related crimes, boosting competence and improving techniques for tracking such transactions.
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