On Friday, December 20 an indictment charging three individuals with a conspiracy involving the Silk Road website was unsealed in the Southern District of New York. The indictment charges individuals in Virginia, Australia and Ireland for their alleged involvement in the administration of the underground “black market bazaar” site.

The indictment alleges that the Silk Road website was being used to facilitate illegal drug sales and other unlawful activity. Its users were supposedly anonymous, which according to law enforcement, was a draw to site users and also hindered their investigative efforts. Specifically, the press release alleges that during its more than two-and-a-half years in operation, Silk Road was used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to well over a hundred thousand buyers, and to launder hundreds of millions of dollars derived from these transactions.

A few weeks ago, the creator of Silk Road was also indicted for the alleged Silk Road conspiracy, tampering with a witness, and strangely enough, attempted murder. The indictment of Ross William Ulbright, a/k/a “Dread Pirate Roberts,” revealed that an undercover agent was central to the investigation of Silk Road and the activity of its users and administrators.

The newest Silk Road indictment charges Andrew Michael Jones (a/k/a “Inigo”), of Charles City, Virginia, who was arrested and presented in the Eastern District of Virginia; Gary Davis (a/k/a “Libertas”), who is thought to be in Ireland; and Peter Phillip Nash (a/k/a “Samesamebutdifferent,” “Batman73,” “Symmetry,” and “Anonymousasshit”), who was arrested in Australia on December 20, 2013.

In addition to the conspiracy implications of the case, it also highlights the interest of federal law enforcement in the activity of certain websites, particularly those in which users are anonymous. For obvious reasons, there is skepticism in any website that facilitates anonymity due to the risk of illicit activity and the secrecy of the users to such sites. However, just because certain users of these sites may be involved in unlawful conduct, it certainly does not, and should not, translate to all users or administrators.

While the anonymity characteristic of the website will inevitably be an issue, the case also implicates Bitcoin. The indictment alleges that Silk Road used bitcoin currency and that Jones, Davis and Nash used it to launder money.

Bitcoin has been a target of government interest due to its innovative decentralized electronic currency network. Bitcoin transactions and its users are untraceable due to the characteristics of its network. Although the network itself was not intended for unlawful transactions, this case certainly demonstrates the interest of federal law enforcement in Bitcoin transactions. For a glimpse into the FBI’s concerns, see the unclassified report on Bitcoin here, dated April 24, 2012.

The author of this blog is Margaret S. Ververis, an attorney specializing in Federal Criminal Defense matters with the law firm of Ferrari & Associates, PC. If you have any questions please contact her at 202-440-2581 or ververis@ferrariassociatespc.com.

Bookmark and Share