Tag Archives: Silk Road

Silk Road 2.0 Launches, Government Authorities and Users React

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Silk Road is Reborn With Stronger Security Measures, Senate Responds Immediately

A so-called Silk Road 2.0 has been launched, just one month after the original Silk Road was seized and its operator, Ross William Ulbricht, was arrested. Silk Road was an anonymous online marketplace that mainly enabled the buying and selling of drugs for Bitcoin. Over 2 years, the marketplace generated $1.2 billion in transaction revenue.

Read: The Fall of Silk Road

“It is with great joy that I announce the next chapter of our journey. Silk Road has risen from the ashes, and is now ready and waiting for you all to return home,” wrote a user in a launch announcement on Reddit. “Over the last 4 weeks, we have implemented a complete security overhaul. This overhaul marks the dawn of a brand new era for hidden services.”

In response to the unearthing of a new Senator Tom Carper (D-Del.), Chairman of the Senate Homeland Security and Governmental Affairs Committee, released a statement on the launch of the Silk Road 2.0:

This new website – launched barely a month after Federal agents shut down the original Silk Road — underscores the inescapable reality that technology is dynamic and ever-evolving and that government policy needs to adapt accordingly. Rather than play ‘whack-a-mole’ with the latest website,  currency, or other method criminals are using in an effort to evade the law, we need to develop thoughtful, nimble and sensible federal policies that protect the public without stifling innovation and economic growth. Our committee intends to have that conversation – among others – at our hearing this month on virtual currency.

Chairman Carper and Dr. Coburn’s committee on Homeland Security and Governmental Affairs began a formal inquiry into virtual currencies in April 2013. In August 2013 Chairman Carper and Dr. Coburn wrote to the Departments of Treasury, Homeland Security, and Justice, as well as the Securities and Exchange Commission, Commodities Futures Trading Commission, and the Federal Reserve.

Here’s a screenshot of the homepage. Note the tongue-and-cheek use of the Federal seizure notice.

Silk Road 2.0 Homepage

Silk Road 2.0 uses the Tor protocol to provide anonymous access to the site. That’s why you see the .onion at the end of the URL.

Reaction from Users: Excitement and Caution

The reaction for users of the original Silk Road is best understood by reading Reddit threads on the topic.

Immediately after the demise of the original Silk Road, users on Reddit began discussing the development of a Silk Road 2.0, one that would be more protected from the pitfalls that caused the collapse of the original marketplace. Users discussed having stricter requirements around using Tor, 2-factor authentication, and Bitcoin laundering.

With the launch of Silk Road, some users are jubilant. “DPR is dead, long live DPR!” wrote one Reddit user. DPR refers to the Dread Pirate Roberts, the alias used by Ulbricht during his reign over the original Silk Road.

Other users are cautious. “Does anyone know if it tumbles coins?” asked one user in a forum. Tumbling coins refers to the process of laundering Bitcoin. Since every Bitcoin transaction is stored in a public ledger, you have to run Bitcoin through a series of wallets before cashing them out to distance yourself from the original transaction. “This is important. Bitcoins can be tracked,” replied one user. Another added, “Bitcoinfog. Don’t trust others to tumble for you.” Bitcoinfog is a Bitcoin laundering service that takes a 1-3% fee.

Some users went right to conspiracy theory, suggesting that the new site was a honeypot, or trap set by the federal authorities. Here was one elaborate idea:

My prediction – Ulbricht was offered a deal where if he cooperated, he’d get a reduced sentence. Some # of the former admins were ID’d and flipped as well. The new PGP key addition is to be able to more closely tie a specific person to an online account making for easier convictions.

They’ll let this run for 1-2yrs, logging and tracking everything, maybe making incidental arrests where they can get away with it, without letting on that the site is compromised. At the end of the run, they’ll coordinate a massive global arrest of everyone involved to prevent tipoffs, then we’ll see a big news story after the fact bragging about the operation and how they pulled it off.

Impact to Bitcoin

There was no noticeable negative impact to Bitcoin following this announcement. In fact, the price of Bitcoin continued to soar past $300 in all-time high this week.

But longer term, if Bitcoin is part and parcel to anonymous drug marketplaces and anti-government sentiment, the digital could come under further regulatory scrutiny.

Silk Road 2.0 Launch Announcement

In an extensive post, a user on Reddit announced the launch of Silk Road 2.0 with the title “We rise again” which we have syndicated here.

Dear Community

It is with great joy that I announce the next chapter of our journey. Silk Road has risen from the ashes, and is now ready and waiting for you all to return home: http://silkroad6ownowfk.onion

Welcome back to freedom.

Over the last 4 weeks, we have implemented a complete security overhaul. This overhaul marks the dawn of a brand new era for hidden services, and it would not have been possible without the patient support of this community. So for waiting patiently; for offering encouragement; for keeping the community spirit alive in Silk Road’s temporary absence; for all of this and more, each of you has my deepest and most sincere gratitude.

It took the FBI two and a half years to do what they did. Divide, conquer and eliminate was their strategy… but four weeks of temporary silence is all they got. And as our resilient community bounces back even stronger than ever before, never forget that they can only ever seize assets – they can never arrest our spirit, our ideas or our passion, unless we let them.

We will not let them.

Please enjoy the marketplace, but be aware – although the site is both functional and stable, we are still in the early phases of development. Despite us having worked through any major bugs that might prevent full-functionality or compromise security, you may notice minor bugs. Please bring these to our attention. More so, even though security has been our top priority over the last few weeks, we encourage you to continue reporting both theoretical and even proven exploits. You will be rewarded for doing so.

Please also be aware, that because we expect a large surge in Bitcoin deposits when we open up our transaction system, there may be delays with account withdrawals and deposits initially. These delays should become less as the marketplace settles, but at least for the earlier stages, please do not report coins as missing unless 12 hours or more have elapsed.

You might also notice that the re-launched marketplace lacks a number of features from the original marketplace – we will be working hard over the next few weeks to implement improvements, and we continue to study each and every post made in the Feature Requests forum. Your opinions matter to us, and we will not neglect the thoughts of the community.

We are proud to announce though, that our new security measures include emergency strategies to ensure that, in the event of Silk Road’s demise once more, no member will lose their coins. We have learned hard lessons from the unfortunate events of recent weeks, and the man hours that have gone into this new release are phenomenal. We look forward to helping Silk Road grow on the back of these lessons, and look forward to helping this community flourish even more beautifully than before.

We have already committed a large percentage of our revenues to good causes, charities, and organizations who support our cause or have similar interests. We are also contributing back to the Tor network with our relay fund.

But without a doubt, the re-launch of our beloved marketplace will create a ripple throughout the world’s various media channels, and not all of these channels will see our cause as positive. You don’t need telling that there are very powerful media outlets controlled by various world governments, who will seek to muddy our name and reputation. But it is up to us to embrace this newfound exposure in mainstream media, rather than hide from it – and for this reason, I have chosen to speak briefly with a number of journalists who I am confident will report this memorable day without the pull of governmental strings. I have also conducted an exclusive interview with Mashable. In light of the FBI’s recent ‘victory’, it would be impossible for Silk Road to stay off the radar – it is therefore our responsibility to make sure that our mark on the radar is the right one. So I would advise you all to prepare yourself for a spike in media attention, and to review your personal security measures to ensure your anonymity is protected.

We will be hiring staff to handle Silk Road’s marketing shortly – formal offers may be made to members who have already demonstrated their marketing prowess.

And it goes without saying that if you are in touch with anybody who may not be aware that Silk Road has risen once more, now is the time to spread the word. Open communication with your old suppliers and customers; let this wonderful news be taken to all corners of the Tor network and beyond.

Let us never forget this recent hurdle in our battle for freedom. But let us not allow it to stop our fight, either – it is now time to simply pick ourselves back up, dust ourselves off, and continue fighting this revolution like we’ve never fought it before.

I’m proud to have you all at my side.

Yours Loyally

Dread Pirate Roberts

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Bitcoin Coming to the Big Screen in Silk Road the Movie

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Dennis Lehane to pen tell-all about Bitcoin drug marketplace Silk Road

Hollywood loves the technology world, especially when there is a well-known personality to put on the big screen.

In the last few years, we saw Facebook founder Mark Zuckerberg portrayed as a punk genius in The Social Network, and we saw Ashton Kutcher grow a beard to portray the legendary Apple founder in Jobs.

Well, the next tech mogul to be profiled may be the Dread Pirate Roberts, or Ross William Ulbricht, the recently arrested founder of Bitcoin drug marketplace Silk Road.

Silk Road the Movie

Deadline reports that “20th Century Fox and Chernin Entertainment have set best-selling author Dennis Lehane to script Silk Road.” Lehane has an impressive body of work, including Mystic River, Gone Baby Gone, and Live By Night.

The story of Silk Road is indeed thrilling, and has been unfolding over the last few weeks. Ross William Ulbricht is a 29-year-old man from Texas who created an online marketplace where users could semi-anonymously transact in Bitcoin. Silk Road quickly became a place to buy and sell drugs, but there were also software and services sold online. In the federal complaint against Ulbricht, it is alleged that he paid a hitman to kill a user who was blackmailing him.

Perhaps putting Bitcoin on the big screen could help propel the further digital currency and drive awareness.



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Bitcoin Price Starts Soaring Again Thanks to Chinese Activity

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Today, the price of Bitcoin is around $165 per BTC, up from $125 per BTC a week ago. What’s causing this dramatic price increase? There are a number of factors at work which we highlight in this article.

The dust settles on Silk Road

Just a few weeks ago, the major news running through the Bitcoin community was the seizure by federal authorities of Bitcoin drug marketplace Silk Road. Silk Road’s operator, Ross William Ulbricht, was arrested for drug trafficking, attempted murder, and other felonies.

Read our full coverage of the Silk Road seizure and Ulbricht’s arrest

Ross William Ulbricht Silk Road

Immediately after this news broke the price of Bitcoin dropped nearly 15%, but recovered quickly as people realized that the largest bad actor int he Bitcoin ecosystem was taken out of play.

Baidu, the “Google of China” starts accepting Bitcoin

This week, Baidu, the #1 website in China, started accepting Bitcoin for some of its services. This is a great move in broader acceptance of the digital currency Bitcoin, especially considering China’s previous stances on virtual currencies.

Baidu Accepts Bitcoin

Increased volume on BTCChina

Trading activity dramatically increased on BTCChina, China’s first Bitcoin exchange. See the chart below for evidence of that.

btcchina activity increases bitcoin price


All in all, these factors, especially the activity in China, have made Bitcoin feel like a more secure and intriguing investment, therefore increasing the price in the short term.


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Payment Network Dwolla Cuts Off Bitcoin Users

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Payment network Dwolla prepares to block Bitcoin and virtual currency exchanges

Dwolla is a payment network that allows any business or person to send, request and accept money. Their pitch is low flat fees, or in some cases no fees at all, to send money.

With the recent Silk Road bust that is still making heads spin at the magnitude of the illicit business operated on the Bitcoin marketplace, it seems that some companies are getting nervous about being too close to Bitcoin.

Dwolla is officially cutting off Bitcoin users from its network.

Dwolla Bitcoin

Here is an email Dwolla sent to its users.

Dear Dwolla Account Holder,

As you know, Dwolla does not sell, accept, mine, value, take possession of, or hold Bitcoin or any other virtual currency product, and none of Dwolla’s users transact business with Dwolla using Bitcoin or any other virtual currency product. However, recent interest involving virtual currency and its exchanges has created uncertainty and confusion around virtual currency, and Dwolla’s relationship with a small number of its exchanges. This has forced Dwolla to reassign resources, funds, and services.

As Dwolla gears up for a new stage of growth, we recognize that we can no longer sustain this merchant base (.1 percent of Dwolla merchants) and its unique needs, and that attempting to do so jeopardizes both of our communities’ starkly different, but similarly ambitious, vision for improving payments.

Effective October 28, 2013 at 4pm CT, Dwolla will be withdrawing its service offerings to virtual currency exchanges and virtual currency related services.

What does this mean? Your account, and its functionality, will remain unaffected. However, you can deactivate your account from within your Dwolla dashboard, if you so choose. Dwolla aims to provide its users and the few affected merchants with the guidance necessary to ensure a smooth transition. To do that, we encourage users to over-communicate with our support team, report any suspicious activity, and revisit our terms of service to ensure uninterrupted services.

What is the timeline of events?

  • October 10: Only existing users with a 30-day history with Dwolla will be able to send funds to merchants affected by this change.
  • October 15: Affected merchants will be limited to sending money only, and will no longer be able to receive funds from customers. They will be able to issue refunds to customers at this time.
  • October 28: Affected merchants’ accounts will be suspended. No further activity will be provided. October 29: Provided no security or fraud concerns, Dwolla will transfer any of the remaining funds inside the affected merchant’s Dwolla account to its linked bank account.

The decision to remove anyone from the network — no matter the circumstances — is not something Dwolla takes lightly. We are grateful for the opportunity to service and learn from these users. We wish the community and its pioneers the best.

Sincerely, Dwolla Support

Is this a good move for Dwolla?

On the upside, it gives them a clean separation from the legal and regulatory risks associated with virtual currency exchanges and marketplaces.

On the downside, they may lose customers. One user commented in a forum about the policy, “I’ve just deactivated my account. There is really no reason to use Dwolla other than to buy Bitcoins.”

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Former Roommates of Silk Road Owner: “Think of us like Walter, Jr.”

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In a reference to hit show Breaking Bad, a former roommate of Silk Road’s owner Ross William Ulbricht compared himself to Walter, Jr., the son of main character Walter White who was oblivious to his father’s drug empire.

Ulbricht, or the Dread Pirate Roberts, as he was known to the Silk Road community, was arrested in San Francisco last week by federal authorities. Silk Road was a Bitcoin marketplace used primarily for buying and selling drugs and had generated more than $1.2 billion in transaction revenue over the last two years.

Read: The Party is Over. Silk Road Bitcoin Drug Marketplace Seized, Owner Arrested

Ross William Ulbricht Silk Road

It turns out that Ulbricht had spent the last few months before his arrest subletting an apartment from two other men in the Sunset District. He used a fake name, Josh, described himself as a currency trader, paid his rent in cash, and kept to himself on his computer most days.

Forbes published a detailed article about how Ulbricht met his former housemates and the surprise that ensued when they saw Ulbricht’s face on the front page of the newspaper the day he was arrested.

“He seemed like a normal guy,” said one roommate in an interview with Forbes. “Obviously he had a dark side, but he never showed any of that.”

“I don’t entirely understand what his motivation was,” said the other roommate. “He’s got all this money and he just sits in a not-particularly nice rental house in the Sunset [District] and just f***s around on the computer all day until he gets sent to prison.”

Read more about Ulbricht’s former housemates at Forbes.

Ulbricht is now being ordered to New York to face charges.


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