In the case against Ross Ulbricht, one man’s personal freedom is at stake and maybe even Internet freedom as we know it.
Ross Ulbricht, the 30-year-old American who allegedly created the online black marketplace Silk Road, was unsuccessful last week in convincing a federal judge that he is not the notorious hacker Dread Pirate Roberts and did not conspire to deal illegal narcotics and launder money, sparking concern among privacy advocates that Internet freedoms may be nearing an end.
Digital rights advocates argue that Ulbricht failing to fight charges such as narcotics trafficking, computer hacking, money laundering, and criminal enterprise engagement for his alleged role in setting up Silk Road, will be used by lawmakers and intelligence officials as evidence that there is a need to create legislation to eliminate the “dark side” of the Internet, which has become a breeding ground for illegal activity.
Digital rights activists have been closely monitoring the case for almost a year, but their concerns intensified last week, when Ulbricht and his attorney, Joshua Dratel, were unsuccessful in their attempt to convince U.S. District Judge Katherine Forrest that Ulbricht was not acting as an “intermediary” that connected buyers with people selling a variety of products and services.
Judge: Bitcoin is money
In a 51-page decision, Judge Forrest explained that based on the evidence presented to her by the U.S. government, there is no question of whether Ulbricht acted as a “godfather” for the Silk Road website. Forrest wrote that it’s clear Ulbricht determined the territories where items could be sold and the amount of commission he would retain from each sale, disciplined others, and cast himself as the website’s leader.
Though Dratel argued that bitcoin could not be included under the federal money laundering statute, as the federal government doesn’t recognize the digital currency as legal tender, Forrest rejected that argument, saying, “One can money launder using Bitcoin.”
“Sellers using Silk Road are not alleged to have given their narcotics and malicious software away for free — they are alleged to have sold them,” she wrote. “The money laundering statute is broad enough to encompass use of Bitcoins in financial transactions. Any other reading would — in light of Bitcoins’ sole raison d’etre — be nonsensical.”
Citing forfeiture laws, federal officials seized 144,336 bitcoins from Ulbricht’s personal computers. Today, those bitcoins are worth about $89,658,983. Ulbricht has sued the federal government to get his money back, arguing that he legitimately collected the digital currency by trading or bitcoin mining.
Forrest also noted that Silk Road appears to have been “specifically and intentionally designed” to create an “expansive black market” for drugs, malicious software and money laundering activities. She noted that this is what makes the Silk Road different from other websites, like Amazon.com Inc. and eBay Inc., where buyers and sellers follow the law in their transactions.
According to court records, a trial has been scheduled for Nov. 3. If he is found guilty, Ulbricht could spend 30 years in prison. Until his trial begins, he will remain in federal custody at the Metropolitan Detention Center in Brooklyn, New York.
Since he was arrested on Oct. 1, 2013 at the Glen Park Branch of the San Francisco Public Library, Ulbricht has been held in federal custody in Oakland, California, and Brooklyn, New York, including 1.5 months in solitary confinement.
Release on bail has not been an option for Ulbricht, as prosecutors argued that he hired hitmen to kill six people who threatened to publicly release information about him and his Silk Road customers.
None of the six individuals Ulbricht allegedly hired a hitman to kill were killed, and no murder-related charges have been brought against Ulbricht, but prosecutors argued Ulbricht needs to be locked up because his intent to kill these individuals shows that Ulbricht “will not hesitate to use violence in order to silence witnesses, safeguard his criminal proceeds, and otherwise protect his self-interest.”
The prosecutor, Assistant U.S. Attorney Serrin Turner, added that Ulbricht should remain behind bars because he is a flight risk. Turner said law enforcement found a file on Ulbricht’s computer labeled “emergency,” which contained a to-do list in the event that law enforcement were onto him.
Matter of freedom
In the last few weeks several groups supporting Ulbricht have started crowdfunding campaigns to help fund Ulbricht’s legal defense against the U.S. government. For example, in return for a donation, an Indiegogo campaign offers donors gifts such as T-shirts, a “solidarity fist bump” and even a 3D printer
According to the website, the campaign is run by “a coalition of individuals, organizations and businesses that believe the outcome of Ross Ulbricht’s case is tremendously important for the future of Internet freedom, user privacy and cryptocurrency regulation.”
The website goes on to say that because Ulbricht “has been unfairly portrayed as a man who planned murder,” the public hasn’t united in support for Ulbricht, which is why a crowdfunding campaign is necessary for a legal defense fund.
Groups like the Free Ross Ulbricht legal defense fund, which was started by his mother, Lyn Ulbricht, argue that this case needs so much attention and financial support from the public because it “will set precedent for the 21st century and pave the way for new law and interpretations that could impact the future and freedom of the Internet.”
As Lyn Ulbricht explained to Julia Tourianski, who covers civil liberty-related issues on her Brave the World blog, the outcome of her son’s case affects all Americans, and it is the biggest threat to Internet freedom since the controversial Stop Online Piracy Act and PROTECT IP Act legislation were introduced in 2012.
“This case will pave the way for new laws and new interpretations of law,” said Lyn Ulbricht, adding that her son’s attorney, Dratel, has also argued that the U.S. government will likely point to this case, as they have with other high-profile cases, as a reason why Congress needs to pass “draconian legislation.”
“Laws will be made based on the Silk Road case” that will likely impede Internet autonomy and privacy, Lyn Ulbricht said, adding that the addition of virtual currencies like bitcoin to the list of currencies that must follow rules and regulations designed for legal currencies defeats the entire purpose of bitcoin operating as an anonymous cryptocurrency.
On the Free Ross Ulbricht website and in speeches given around the country, Ulbricht’s mother argues that if her son loses his case, lawmakers will be encouraged by intelligence officials to pass legislation that would essentially hold Internet providers responsible for their customers’ Internet activity.
Since no company wants to be held responsible for their customers’ illegal activity, Lyn Ulbricht believes that Internet providers will put mandatory filters on their customers’ computers, allowing the companies to monitor users’ web traffic and essentially spy on and censor them.
Further, Lyn Ulbricht argues that just as eBay or Amazon might unknowingly host illegal content from time to time, there was illegal activity that occurred on the Silk Road website, but one person should not be held responsible for that.
Other privacy and digital rights advocates agree. They point out that under such a law, news organizations would be held responsible for hate speech made in the comments sections of their websites — something that would likely lead to even news outlets having no choice but to censor the conversations that occur in that space.
But the U.S. government appears to disagree, allegedly claiming that “Federal criminal laws are expansive and adaptable (especially the Internet),” and “a website host is liable for the criminal activity of users.”
One big secret
While not all Americans have heard of Silk Road, the underground website had about 1 million customers who purchased $1.2 billion in illegal goods and services before it was ultimately shut down by the FBI in 2013.
The FBI has yet to share how exactly the bureau discovered Silk Road’s servers in Latvia, Sweden and Romania, or how they were able to determine that Ross Ulbricht was the operator of the website, but Nicholas Weaver, a researcher at the International Computer Science Institute in Berkeley, California, who specializes in network security and underground economics, says he believes agents likely found weak spots in the computer code and exploited those in order to hack into the system.
Silk Road was set up and run on The Onion Router, or Tor, a network originally created by the U.S. Naval Research Lab. This is why Weaver believes the FBI was able to hack into the servers and determine the Internet Protocol addresses for users and sellers who visited the website.
Tor and other highly encrypted networks are often used by some government agencies for communication and research purposes, but James Clapper, director of National Intelligence, has expressed concern about the use of anonymous Internet communications, especially in the wake of whistleblower Edward Snowden’s revelations of the National Security Agency’s spying and data collection activities.
Clapper said last October, “The Intelligence Community’s interest in online anonymity services and other online communication and networking tools is based on the undeniable fact that these are tools our adversaries use to communicate and coordinate attacks against the United States and our allies.”
Clapper’s concerns align with those voiced by federal agents from other U.S agencies such as the DEA, IRS, Customs and Border Protection, as well as the U.S. Postal Inspectors, who said the Ulbricht-Silk Road investigation involved a lot of “uncharted territory.” Specifically, the federal agents said that because they didn’t know the identity of the person behind the website before the investigation began, they had to collect evidence from the website first, then identify individuals involved with the website later, essentially reversing their usual investigative methods.
Ulbricht has not said whether or not he was the founder of Silk Road, but pointing to the “Crack House Statute” from 1986, Ulbricht’s lawyer Dratel has argued that just as landlords cannot be held legally responsible for illegal activity that occurs at a home simply because they own it, Ulbricht shouldn’t be held responsible for illegal activity that occurred on the website.
Supporters of Ulbricht agree, saying that the ruling in this case will likely lead to the creation and implementation of a law that would erode and censor the Internet, and Americans’ Fifth and Sixth Amendment rights would be violated, since the U.S. government would investigate any person seeking privacy for criminal activity.
But Forrest may not necessarily agree. In a previous ruling, she wrote that “Ulbricht’s alleged conduct is more akin to a builder who designs a house complete with secret entrances and exits and specially designed traps to stash drugs and money.”
“This is not an ordinary dwelling, but a drug dealer’s ‘dream house.’”