The dark side of Silicon Valley
Photograph of siblings Cally and Ross Ulbricht in Sydney in late 2011. Picture: Facebook.
“BALLS to the wall and all in my friend.”
That simple message, typed by a man in his late twenties trying to come to terms with the immense power he had secretly amassed for himself, was a turning point from which there was no return.
Communicating on a clandestine online chat room under the now infamous pseudonym Dread Pirate Roberts, the bright young kid who grew up in Texas was committing to paying for a murder — or so he thought.
He is of course, Ross Ulbricht. The founder of notorious online drug market place Silk Road which rapidly grew to become the internet’s hidden one-stop-shop for all things illegal and nefarious.
He was chatting to the person he was paying to effectively act as a CEO consultant, to help him navigate his new-found illegal empire.
“Not to be a downer or anything,” the person operating under the alias Variety Jones wrote. “But understand that what we are doing falls under US Drug Kingpin laws, which provides a maximum penalty of death upon conviction … The mandatory minimum is life.”
Like so many other Silicon Valley CEOs who disrupted the status quo, Ulbricht fell deeply for the seduction of creating something that became so hugely popular across the world and as such, he was undeterred. Balls to the wall.
And for a website that according to the FBI produced $US1.2 billion in sales and roughly $US80 million in commission for its creator, it’s easy to see why.
Fast forward to the present day, and Ross Ulbricht, now 33, occupies the same maximum-security New York prison as the world’s most famous druglord, El Chapo.
This may be what Pablo Escobar looks like in the Internet Age, as Vanity Fair writer and New York Times best-selling author Nick Bilton puts it.
At the height of Silk Road’s popularity, he lived in Glen Park, San Francisco and would routinely pass by the Glen Park Library where the FBI would eventually swoop on Ross Ulbricht.
“I was kind of mesmerised by the fact that he was running this website out of these little coffee shops that I would go to … and this library I would pass by every day,” Mr Bilton told news.com.au.
Drawing on exclusive access to key players involved in the saga, as well as two billion digital words and images left behind by the Silk Road founder, he has written a forthcoming book called American Kingpin chronicling the shady rise of Dread Pirate Roberts and the frantic manhunt to uncover him.
UNINTENDED CONSEQUENCES
In 2011, Ross Ulbricht, the 26-year-old programmer launched the website hosted on the dark web to provide people with a safe way to buy drugs such as marijuana and magic mushrooms. But it quickly became something he didn’t initially intend, and in the end to protect it and the wealth it generated, so did he.
“When you look at his arguments for the beginning of when he was working on the site and the concept behind it, they were very salient points,” Mr Bilton said.
He wanted to fix what he saw as a kind of hypocrisy and inconsistency in the system.
He thought “that legalising drugs was the best way to stop violence and oppression in the world,” he writes in the book.
American Kingpin by Nick BiltonSource:Supplied
The obvious difference between Ross Ulbricht and your typical Silicon Valley CEO, as the author sees it, is that instead of flouting regulations around who could offer a taxi ride or what constitutes a hotel room (like Uber or AirBnB) his business involved facilitating the trafficking of illegal drugs and services.
“The more people I spoke to, the more I read of Ulbricht’s diaries — and chat logs and site comments, among other things — the more I realised that he had devolved in the exact same way as other tech entrepreneurs.”
Uber co-founder and CEO Travis Kalanick is notorious for breaking the rules and exploiting legal grey areas. He can pretty much look the other way when he ignores regulations and is happy to battle countless lawsuits thrown at the company, but Ross Ulbricht had to destroy other people’s lives in order to protect his business.
Even for staunch supporters or Mr Ulbricht, and there are many, it is tough to defend how quickly he turned to murder to protect his enterprise.
“When I started reporting Ulbricht’s story, I couldn’t understand how someone had morphed so quickly and so much — and, frankly, in such an evil manner,” he wrote in an excerpt from the book published in Vanity Fair this week.
As the website took off, Ulbricht became increasingly paranoid and in 2013 he paid a hitman to kill former Silk Road employee Curtis Green who was arrested in a botched cocaine deal, and who Ulbricht believed had stolen from him.
“I’m pissed I had to kill him … I just wish more people had some integrity,” Ulbricht wrote to the online hitman he paid to carry out the job.
He even kept a picture on his computer of the supposedly murdered Curtis Green with his jowl hanging to the side. Proof of the murder.
But it turned out the hitman was actually a DEA agent and a can of Campbell’s soup was nearly all that was needed to stage the hit.
Ross Ulbricht may have professed to feeling unsettled by the experience of sanctioning a killing, but it was something he would attempt multiple times before he was caught.
Ross William Ulbricht, “the internet’s Pablo Escobar”.Source:Supplied
Ross Ulbricht spend about 6 months living in Sydney in 2011.Source:Supplied
This frame grab from the Silk Road website shows thumbnails for products allegedly available through the site.Source:AP
THE BOY SCOUT TURNED KILLER
The book largely alternates between Ulbricht’s efforts to stabilise the website while covering his tracks as a fugitive and the increasingly frantic investigation to find him which involved competing teams from different US law enforcement agencies.
And it describes the often lonely life of the internet’s first drug kingpin as he was forced to become increasingly anonymous and withdrawn from society.
Some of his early time while developing the site in 2011 he spent in Sydney, living around Bondi Beach for roughly six months before travelling through Asia and then eventually landing in San Francisco.
“The longer it took for the US government to catch him or any government to catch him, the more brazen he, and the more brazen the people who used the site became,” Mr Bilton said.
But all the while he was creating fake identities for himself and eventually working on an escape plan to Dominica.
Like most of us, Ulbricht was a person who harboured deeply conflicting qualities.
“The more people I spoke to the more I was told time and again that Ross was a very gentle and kind person. That was a through-line from his childhood to the time when he was arrested,” Mr Bilton said.
“He still stopped to help old ladies across the street, surprised friends with thoughtful gifts, and always used the word “fudge” instead of “f**k” in e-mails and in conversations, even while he was running the site,” he wrote.
In the end, the same way his website was corrupted by the seedy underbelly it ultimately catered to, he was corrupted by his desire to protect his creation and himself.
And he wasn’t the only one. The DEA agent who staged the fake hit on Green and another US secret service agent assigned to investigate Silk Road became so familiar with its inner workings that together they stole $US1.5 million in Bitcoin — the digital currency used on the site, and which Ulbricht used to stash most of his wealth.
Ross Ulbricht on the stand during the high profile case.Source:Supplied
After following clues buried deep in Ulbricht’s coding, in 2013 agents swooped on him in a San Francisco public library and later charged him with several felonies including narcotics trafficking, computer hacking and money laundering.
US District Judge Katherine Forrest chose to impose two life sentences plus forty years for various other charges, all to be served concurrently without the chance of parole.
In handing down her verdict, she essentially equated him with a mafia boss in hopes of sending a message to other would-be cyber criminals.
The family of Ross Ulbricht wouldn’t talk to Mr Bilton for his book but his parents have previously spoken out against his severe indictment.
“It’s very clear that drugs are not the reason Ross is in there,” his mother Lynn Ulbricht told the Daily Dot last year.
“He’s there because he was a political threat, because of the political philosophy of the site, of Bitcoin, of Tor, all of that.”
A federal jury found Ross Ulbricht guilty of seven felony charges in connection with running Silk Road, an online bazaar described by prosecutors as the most sophisticated criminal marketplace on the Internet. Image: AP/Elizabeth Williams.
It’s clear the US wanted to make an example out of Ulbricht. His sentence — considered unduly harsh by some — highlights the shifting nature of organised crime in the internet age. Following the sentence, Manhattan US Attorney Preet Bharara called him “the face of cybercrime”.
He may have been a pioneer, but there has been no shortage of others to follow in his wake.
“I think these market places are now a standard part of society,” Mr Bilton said.
There have been plenty of Silk Road predecessors since Ulbricht’s arrest, some even bearing the same infamous name.
“While they were able to take down some of these sites, there are now other ones that operate out of Russia and China and so on and they’ll never be able to take down those sites. I think ultimately this is now a new part of the world that we live in.”
Ross Ulbricht has appealed his conviction of life in prison without parole.
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