Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

For The Record  

FTR #764 Bit[coin]burg, Part 2, The Snowden-Inspired, Bitcoin-operated Online Murder Incorporated

Dave Emory’s entire life­time of work is avail­able on a flash drive that can be obtained here. (The flash drive includes the anti-fascist books avail­able on this site.)

Side 1   Side 2

NB: On Side 1, Mr. Emory mispells Pierre Omidyar’s name. At the beginning of Side 2, the program is misidentified as “FTR #760, its predecessor broadcast.

This description contains supplemental information not included in the original broadcast.

INTRODUCTION:  In FTR #760, we examined the techno-libertarian, Ludwig von Mises milieu-affiliated nature of the bitcoin phenomenon. Quite possibly developed by elements of German intelligence and the Underground Reich, bitcoins are not only vulnerable to “tape-painting,” but can be stolen by hackers.

In a [perhaps] predictable extension of the Ludwig von Mises, anarcho-fascism underlying the bitcoin phenomenon, as well as the political forces behind Eddie the Friendly Spook” Snowden, someone operating under the name “Kuwabakatake Sanjuro” has begun a bitcoin-funded, online assassination consortium called “The Assassination Market.” His project was inspired by the “disclosures” of Snowden.

After discussing the bitcoin-funded assassination consortium, we will underscore the extreme vulnerability of this virtual currency to theft.

Program Highlights Include these Points of Information:

  • “Sanjuro” was inspired to realize the project by the “disclosures” of Edward Snowden.
  • The largest “bitcoin bounty” is on the head of Ben Bernanke, chairman of the Federal Reserve, to whom Snowden referred as a “cockbag” in the 2009 online posting in which he advocated the elimination of social security and a return to the gold standard.
  • “Sanjuro” also has bitcoin bounties on the heads of  President Obama and General Keith Alexander, the head of the NSA.
  • “Sanjuro” sees his online assassination consortium as a realization of laissez-faire market theory to politics.
  • We note that the theories of Hans Hermann-Hoppe (disciple of Ludwig von Mises, student of Juergen Habermas, idol of bitcoin advocate R. Cody Wilson) explicitly reject democracy. So does the Ludwig von Mises Institute, the epicenter for the economic theories of Ron Paul and Edward Snowden. So does Peter Thiel, a bitcoin advocate and capitalizer of Ron Paul’s 2012 political campaign. Thiel is also the largest stockholder in Palantir, which appears to have developed the PRISM software at the center of the Snowden leaks. (Palantir CEO Alex Karp is also a student of Juergen Habermas.) “Sanjuro” takes this benighted philosophy to its [perhaps inevitable] conclusion.
  • The endgame of libertarian philosophy does indeed appear to be “anarcho-fascism.”
  • The techno-libertarians warrant serious consideration as the “neue-wandervogel.”
  • In an update, we learn that the alleged mastermind of the bitcoin-funded Silk Road–the Ludwig von Mises/Ron Paul devotee Ross Ulbricht–allegedly sought the contract murders of six people–five more than originally stated. It is interesting and relevant that both Ulbricht and “Sanjuro” proceed from an anarcho-libertarian perspective, decrying slavery AND democracy, ultimately arriving at a lethal advocacy position, allegedly so in Ulbricht’s case.
  • Interestingly, Ulbricht was apparently thinking of moving to Dominica, the island nation targeted by a Nazi/white supremacist invasion known as “The Bayou of Pigs.” Ulbricht’s 2012 Presidential selectee Ron Paul was apparently involved in that gambit, along with Paul’s long-time associates David Duke and Stormfront creator Don Black.
  • As “Pterrafractyl” informs us: “One thing is clear from this arti­cle: Ross Ulbricht had a HUGE per­cent of the total bit­coin sup­ply. At least for an indi­vid­ual. The FBI received 144,336 bit­coins off of just one of Ulbricht’s com­put­ers, and with ~12 mil­lion bit­coins already in sup­ply (a lit­tle over half of the total 21 mil­lion), that means Ulbricht had over 1% of the cur­rent bit­coin sup­ply on that sin­gle com­puter alone. Accord­ing to the researchers, 78% of Ulbrich’s bit­coins are still “buried” and beyond the FBI’s reach. So Ulbricht, alone, may have actu­ally con­trolled closer to 5% of the total bit­coin sup­ply. It’s a reminder that bit­coins have an addi­tional built-in defla­tion­ary force: Lost bit­coins that can’t be recov­ered are lost for good, per­ma­nently reduc­ing the sup­ply of trade­able bit­coins while main­tain­ing the over­all sup­ply offi­cially in exis­tence (because a lost bit­coin is indis­tin­guish­able from one that’s sim­ply being saved). The small casual users with tiny frac­tions of a bit­coin in their accounts are prob­a­bly the most likely source of bit­coin losses, but since we have no real idea who the large bit­coin own­ers are at this point, you have to won­der how many more hid­den bit­coin barons are going to end up either hand­ing siz­able per­cent­ages of the total bit­coin sup­ply over to law enforce­ment agen­cies or just los­ing them altogether.
  • In another update, we learn that the successor to Silk Road–Sheep Marketplace–has vanished taking vast amounts of its users’ bitcoins with it. The users of Sheep Marketplace, it would seem, have been fleeced!
  • “Pterrafractyl” informs us of another aspect of the vulnerability of Bitcoin: “One of the inter­est­ing aspects about the bit­coin phe­nom­ena is that the more peo­ple that start using bit­coin the greater the defla­tion­ary pres­sure on the value of the bit­coins. That’s because there’s a fixed max­i­mum of 21 mil­lion bit­coins that can ever exist, so the greater the demand for bit­coins the more each bit­coin will cost in other cur­ren­cies. With the Chi­nese mar­ket now warm­ing up to bit­coin, and all those new poten­tial users, we might see a fas­ci­nat­ing exam­ple of a hyper­de­fla­tion­ary vir­tual gold bub­ble.”
  • The perils of “Bitcoinery” were illustrated when a Hong Kong Bitcoin market vanished, taking $5 million dollars with it!
  • Further updating the discussion “Pterrafractyl” informs us: It would be pretty hilar­i­ous if Bit­coin, a cur­rency cher­ished by haunted by hyper­in­fla­tion­ary fears, becomes an object les­son in the dan­gers of defla­tion. But it’s hard to see how this les­son will be avoided if Bit­coin ever really catches on because one of the main fea­tures of the cur­rency is that it’s capped out at 21 mil­lion coins but you can divide each coin up into smaller and smaller pieces. There­fore, the rea­son­ing goes, Bit­coin has defeated the infla­tion beast while still main­tain­ing the scal­a­bil­ity required to han­dle the vol­ume of trans­ac­tions in vir­tu­ally any sized econ­omy! Rev­o­lu­tion awaits! The vic­tory over infla­tion comes at the cost of built-in defla­tion cor­re­lated to the growth of the Bit­coin econ­omy (imag­ine if dol­lars grew more expen­sive with the growth of the US econ­omy). So the more Bit­coin grows in pop­u­lar­ity the greater the defla­tion, the greater the pay­out to the ear­li­est bit­coin investors, and the greater the temp­ta­tion to keep hold­ing onto those Bit­coins.
  • Cornell University researchers have discovered a fundamental flaw in bitcoin that can permit a very small number of users to take over the market.
  • Not surprisingly, it turns out that Bitcoin is highly vulnerable to selfish “mining,” which could permit knowledgeable and enterprising malefactors to corner the market.
  • Bitcoin users have relied on the TOR network, to a considerable extent. Because TOR is not as secure as advertsed, some have avoided using it. Now the Max Planck Institute is researching the development of a more secure operation, that might permit drastic proliferation of the types of ills that appear inherent in the bitcoin concept.
  • A supplemental story, not included in the original program, concerns Ron Paul’s enthusiastic views on bitcoin.
  • In another supplemental story, not included in the original program, we learn that the European Central Bank views bitcoin as rooted fundamentally in the Ludwig von Mises/Friedrich von Hayek theoretical construct.

1. In FTR #’s 758, 759, we looked at the anti-democratic, pro-monarchist philsophy of Hans-Hermann Hoppe, a devotee of the Ludwig von Mises school of economic and social theory and a student of Juergen Habermas. Habermas was examned at length in FTR #757. One of the most visible supporters of bitcoin is a “techno-libertarian” named Cody R. Wilson, whom we examined in FTR #760. Wilson, not surprisingly, is a devotee of Hans Hermann-Hoppe and an active opponent of democracy.

“All Markets Become Black” by Daniel Fellenstein and Cody R. Wilson; Blink; 12/27/2012.

. . . . According to your profile on defense dist. you’re “a student of Bastiat, Hoppe, and Anthony de Jasay”. Could you go over your philosophical basics before we dive into the project? How much of a state would you accept in your life?. . .

. . . . I am but a conduit for ideology. Modern neoliberal democracy is a crumbling idol. The God has failed, to invoke Hoppe. . . .

2. “San­juro” was inspired to real­ize the project by the “dis­clo­sures” of Edward Snowden. The largest “bit­coin bounty” is on the head of Ben Bernanke, chair­man of the Fed­eral Reserve, to whom Snow­den referred as a “cock­bag” in the 2009 online post­ing in which he advo­cated the elim­i­na­tion of social secu­rity and a return to the gold standard. “San­juro” also has bit­coin boun­ties on the heads of  Pres­i­dent Obama and Gen­eral Keith Alexan­der, the head of the NSA. “San­juro” sees his online assas­si­na­tion con­sor­tium as a real­iza­tion of laissez-faire mar­ket the­ory to politics.

We note that the theories of Hans Hermann-Hoppe (disciple of Ludwig von Mises, student of Juergen Habermas, idol of bitcoin advocate R. Cody Wilson) explicitly reject democracy. So does the Ludwig von Mises Institute, the epicenter for the economic theories of Ron Paul and Edward Snowden. So does Peter Thiel, a bitcoin advocate and capitalizer of Ron Paul’s 2012 political campaign. Thiel is also the largest stockholder in Palantir, which appears to have developed the PRISM software at the center of the Snowden leaks. (Palantir CEO Alex Karp is also a student of Juergen Habermas.) “Sanjuro” takes this benighted philosophy to its [perhaps inevitable] conclusion. The endgame of libertarian philosophy does indeed appear to be “anarcho-fascism.”

“Meet The ‘Assas­si­na­tion Mar­ket’ Cre­ator Who’s Crowd­fund­ing Mur­der With Bit­coins” by Andy Green­berg; Forbes; 11/28/2013.

As Bit­coin becomes an increas­ingly pop­u­lar form of dig­i­tal cash, the cryp­tocur­rency is being accepted in exchange for every­thing from socks to sushi to heroin. If one anar­chist has his way, it’ll soon be used to buy mur­der, too.

Last month I received an encrypted email from some­one call­ing him­self by the pseu­do­nym Kuwa­batake San­juro, who pointed me towards his recent cre­ation: The web­site Assas­si­na­tion Mar­ket, a crowd­fund­ing ser­vice that lets any­one anony­mously con­tribute bit­coins towards a bounty on the head of any gov­ern­ment offi­cial–a kind of Kick­starter for polit­i­cal assas­si­na­tions. Accord­ing to Assas­si­na­tion Market’s rules, if some­one on its hit list is killed–and yes, San­juro hopes that many tar­gets will be–any hit­man who can prove he or she was respon­si­ble receives the col­lected funds.

For now, the site’s rewards are small but not insignif­i­cant. In the four months that Assas­si­na­tion Mar­ket has been online, six tar­gets have been sub­mit­ted by users, and boun­ties have been col­lected rang­ing from ten bit­coins for the mur­der of NSA direc­tor Keith Alexan­der and 40 bit­coins for the assas­si­na­tion of Pres­i­dent Barack Obama to 124.14 bitcoins–the largest cur­rent bounty on the site–targeting Ben Bernanke, chair­man of the Fed­eral Reserve and pub­lic enemy num­ber one for many of Bitcoin’s anti-banking-system users. At Bitcoin’s cur­rent rapidly ris­ing exchanges rate, that’s nearly $75,000 for Bernanke’s would-be killer.

Sanjuro’s grisly ambi­tions go beyond rais­ing the funds to bankroll a few polit­i­cal killings. He believes that if Assas­si­na­tion Mar­ket can per­sist and gain enough users, it will even­tu­ally enable the assas­si­na­tions of enough politi­cians that no one would dare to hold office. He says he intends Assas­si­na­tion Mar­ket to destroy “all gov­ern­ments, everywhere.”

“I believe it will change the world for the bet­ter,” writes San­juro, who shares his han­dle with the name­less samu­rai pro­tag­o­nist in the Akira Kuro­sawa film “Yojimbo.” (He tells me he chose it in homage to cre­ator of the online black mar­ket Silk Road, who called him­self the Dread Pirate Roberts, as well Bit­coin inven­tor Satoshi Nakamoto.) ”Thanks to this sys­tem, a world with­out wars, drag­net panopticon-style sur­veil­lance, nuclear weapons, armies, repres­sion, money manip­u­la­tion, and lim­its to trade is firmly within our grasp for but a few bit­coins per per­son. I also believe that as soon as a few politi­cians gets offed and they real­ize they’ve lost the war on pri­vacy, the killings can stop and we can tran­si­tion to a phase of peace, pri­vacy and laissez-faire.

Just read­ing about that coldly cal­cu­la­tive sys­tem of lethal vio­lence likely inspires queasy feel­ings or out­rage. But San­juro says that the public’s abhor­rence won’t pre­vent the sys­tem from work­ing. And as a mat­ter of ethics, he notes that he’ll accept only user-suggested tar­gets “who have ini­ti­ated force against other humans. More specif­i­cally, only peo­ple who are out­side the reach of the law because it has been sub­verted and cor­rupted, and whose vic­tims have no other way to take revenge than to do so anonymously.”

Even set­ting aside the immoral­ity of killing, doesn’t the notion of enabling small minori­ties of angry Bit­coin donors to assas­si­nate elected offi­cials sound like an attempt to crip­ple democ­racy? “Of course, lim­it­ing democ­racy is why we even have a con­sti­tu­tion,” San­juro responds. “Major­ity sup­port does not make a leader legit­i­mate any more than it made slav­ery legit­i­mate. With this mar­ket the great equal­is­ing forces of cap­i­tal­ism have the oppor­tu­nity to work in pol­i­tics too. One bit­coin paid is one vote closer to a veto of what­ever leg­is­la­tion you dislike.”

San­juro didn’t actu­ally invent the con­cept of an anony­mous crowd­funded assas­si­na­tion mar­ket. The idea dates back to the cypher­punk move­ment of the mid-1990s, whose adher­ents dreamt of using encryp­tion tools to weaken the gov­ern­ment and empower indi­vid­u­als. For­mer Intel engi­neer and Cypher­punk Mail­ing List founder Tim May argued that uncrack­able secret mes­sages and untrace­able dig­i­tal cur­rency would lead to assas­si­na­tion mar­kets in his “Cryptoanarchist’s Man­i­festo” writ­ten in 1992.

A few years later, another for­mer Intel engi­neer named Jim Bell pro­posed a sys­tem of fund­ing assas­si­na­tions through encrypted, anony­mous dona­tions in an essay he called “ Assas­si­na­tion Pol­i­tics.” The sys­tem he described closely matches Sanjuro’s scheme, though anonymity tools like Tor and Bit­coin were mostly the­o­ret­i­cal at the time. As Bell wrote then:

If only 0.1% of the pop­u­la­tion, or one per­son in a thou­sand, was will­ing to pay $1 to see some gov­ern­ment slime­ball dead, that would be, in effect, a $250,000 bounty on his head. Fur­ther, imag­ine that any­one con­sid­er­ing col­lect­ing that bounty could do so with the math­e­mat­i­cal cer­tainty that he could not be iden­ti­fied, and could col­lect the reward with­out meet­ing, or even talk­ing to, any­body who could later iden­tify him. Per­fect anonymity, per­fect secrecy, and per­fect secu­rity. And that, com­bined with the ease and secu­rity with which these con­tri­bu­tions could be col­lected, would make being an abu­sive gov­ern­ment employee an extremely risky propo­si­tion. Chances are good that nobody above the level of county com­mis­sioner would even risk stay­ing in office.

Bell would later serve years in prison for tax eva­sion and stalk­ing a fed­eral agent, and was only released in March of 2012. When I con­tacted him by email, he denied any involve­ment in Sanjuro’s Assas­si­na­tion Mar­ket and declined to com­ment on it.

San­juro tells me he’s long been aware of Bell’s idea. But he only decided to enact it after the past summer’s rev­e­la­tions of mass sur­veil­lance by the NSA exposed in a series of leaks by agency con­trac­tor Edward Snow­den. “Being forced to alter my every happy mem­ory dur­ing inter­net activ­ity, every inti­mate moment over the phone with my loved ones, to also include some of the peo­ple I hate the most lis­ten­ing in, analysing the con­ver­sa­tion, was the inspi­ra­tion I needed to embark on this task,” he writes. “After about a week of mut­ter­ing ‘they must all die’ under my breath every time I opened a news­pa­per or turned on the tele­vi­sion, I decided some­thing had to be done. This is my con­tri­bu­tion to the cause.”

Assas­si­na­tion Mar­ket isn’t the first web­site to sug­gest fund­ing mur­der with bit­coins. Oth­ers Tor-hidden web­sites with names like Quick Kill, Con­tract Killer and C’thulhu have all claimed to offer mur­ders in exchange for bit­coin pay­ments. But none of them responded to my attempts to con­tact their admin­is­tra­tors, and all required advanced pay­ments for their ser­vices, so they may be scams.

If the sys­tem does prove to work, the launch of Assas­si­na­tion Mar­ket may be ill-timed for San­juro, given law enforcement’s recent crack­down on the dark web. In August, the FBI used an exploit in Tor to take down the web host­ing firm Free­dom Host­ing and arrest its founder Eric Eoin Mar­ques, who is accused of offer­ing his ser­vices to child pornog­ra­phy sites. And just last month, the FBI also seized the pop­u­lar Bit­coin– and Tor-based black mar­ket for drugs known as Silk Road and arrested its alleged cre­ator, Ross Ulbricht.

San­juro coun­ters that in addi­tion to Tor, Bit­coin, and the usual encryp­tion tools, he has “mea­sures in place to pre­vent the effec­tive­ness of such an arrest. Nat­u­rally these will have to be kept secret.”

He adds that, like an ear­lier gen­er­a­tion of cypher­punks, he puts his faith in the math­e­mat­i­cal promise of cryp­tog­ra­phy to trump the government’s power to stop him. “With cryp­tog­ra­phy, the state, or any pro­tec­tion firm, is largely obsolete…all activ­ity that can be reduced to infor­ma­tion trans­fer will be com­pletely out of the government’s, or anyone’s, hands, other than the par­ties involved,” he says.

“I am a crypto-anarchist,” San­juro con­cludes. “We have a bright future ahead of us.”

3. In an update, we learn that the alleged mastermind of the bitcoin-funded Silk Road–the Ludwig von Mises/Ron Paul devotee Ross Ulbricht–allegedly sought the contract murders of six people–five more than originally stated. It is interesting and relevant that both Ulbricht and “Sanjuro” proceed from an anarcho-libertarian perspective, decrying slavery AND democracy, ultimately arriving at a lethal advocacy position, allegedly so in Ulbricht’s case. Again, these people are indeed the “neue-wandervogel.”

“One thing is clear from this arti­cle: Ross Ulbricht had a HUGE per­cent of the total bit­coin sup­ply. At least for an indi­vid­ual. The FBI received 144,336 bit­coins off of just one of Ulbricht’s com­put­ers, and with ~12 mil­lion bit­coins already in sup­ply (a lit­tle over half of the total 21 mil­lion), that means Ulbricht had over 1% of the cur­rent bit­coin sup­ply on that sin­gle com­puter alone. Accord­ing to the researchers, 78% of Ulbrich’s bit­coins are still “buried” and beyond the FBI’s reach. So Ulbricht, alone, may have actu­ally con­trolled closer to 5% of the total bit­coin sup­ply. It’s a reminder that bit­coins have an addi­tional built-in defla­tion­ary force: Lost bit­coins that can’t be recov­ered are lost for good, per­ma­nently reduc­ing the sup­ply of trade­able bit­coins while main­tain­ing the over­all sup­ply offi­cially in exis­tence (because a lost bit­coin is indis­tin­guish­able from one that’s sim­ply being saved). The small casual users with tiny frac­tions of a bit­coin in their accounts are prob­a­bly the most likely source of bit­coin losses, but since we have no real idea who the large bit­coin own­ers are at this point you have to won­der how many more hid­den bit­coin barons are going to end up either hand­ing siz­able per­cent­ages of the total bit­coin sup­ply over to law enforce­ment agen­cies or just los­ing them altogether.”

“Alleged Silk Road Boss Ross Ulbricht Now Accused of Six Murders-for-Hire, Denied Bail” by Andy Greenberg; Forbes; 11/21/2013.

A New York judge denied bail to alleged Silk Road cre­ator Ross Ulbricht Thurs­day, based in part on fresh accu­sa­tions of vio­lence: That the 29-year-old allegedly com­mis­sioned the mur­ders of a total of six peo­ple through would-be hit­men he con­tacted online, four more than the two attempted killings described in pros­e­cu­tors’ orig­i­nal crim­i­nal complaint.

Judge Nathaniel Fox said that the risk that Ulbricht might flee or present a dan­ger to the com­mu­nity over­whelmed argu­ments that he be released on bail, cit­ing “pow­er­ful evi­dence pre­sented to us that the defen­dant has attempted to secure the mur­ders of a num­ber of people.”

Pros­e­cu­tor Ser­rin Turner laid out that evi­dence in a state­ment to the court, say­ing that much of it was gath­ered from a Silk Road server located by the FBI as well as Ulbricht’s seized com­puter after he was arrested in Octo­ber and accused of run­ning the Silk Road’s mas­sive anony­mous online drug sales oper­a­tion under the pseu­do­nym the Dread Pirate Roberts. Ser­rin said that Ulbricht had not only sent mes­sages to two would-be hitmen–an under­cover agent on one of those two occa­sions–ask­ing to have a wit­ness and a black­mailer killedbut had fol­lowed up by order­ing the killing of the blackmailer’s asso­ciate and three peo­ple who lived with him.

Mys­te­ri­ously, Turner said that in none of the cases were actual vic­tims found; In the first, FBI agents say they faked the death of alleged for­mer Silk Road employee Cur­tis Greento con­vince Ulbricht the mur­der had taken place. But the out­come of the other five mur­ders remains unex­plained. Nonethe­less, Turner argued, “the evi­dence is crys­tal clear that the defen­dant intended these mur­ders to happen.”

Crim­i­nal com­plaints against Ulbricht pre­vi­ously accused him of order­ing the killing of for­mer Silk Road employee Cur­tis Green in Jan­u­ary of 2013 for $80,000 and then pay­ing a user known as “redand­white” $150,000 in the cryp­tocur­rency Bit­coin to kill a Silk Road user iden­ti­fied as “Friend­ly­Chemist,” who claimed to have hacked another Silk Road ven­dor and threat­ened to release Silk Road cus­tomers’ iden­ti­fy­ing infor­ma­tion if he wasn’t paid $500,000.

In court Thurs­day, Turner added four more attempted mur­ders, say­ing that Friend­ly­Chemist had impli­cated another Silk Road user known as “tony76.” And when redand­white had told Ulbricht that tony76 lived with three other peo­ple who would have to be killed if they were to obtain the money and pos­ses­sions in his home, Ulbricht allegedly agreed to have all four killed for $500,000 in bit­coins. “Based on the say-so of [an online assas­sin,] he was will­ing to kill three oth­ers just liv­ing with him,” said Turner.

Turner also described evi­dence on Ulbricht’s com­puter that included a log he kept of his activ­i­ties that he said included the line “com­mis­sioned hit on black­mail­ers with angels,” imply­ing that redand­white may have been a mem­ber of the Hell’s Angel motor­cy­cle gang, given its asso­ci­a­tion with the col­ors red and white. Another line allegedly read “sent pay­ment to angels for hit on tony76 and his 3 associates.”

In fact, Turner enu­mer­ated evi­dence found on Ulbricht’s seized machine that went far fur­ther in tying him to his alleged Dread Pirate Roberts iden­tity. When Ulbricht was arrested in the Glen Park library in San Fran­cisco, Turner said he was logged into the Silk Road under his Dread Pirate Roberts account and was look­ing at an admin­is­tra­tor con­trol page for the site as well as another page called “Mas­ter­mind” that showed Silk Road sales num­bers. Turner added that he was also logged into a chat pro­gram under the han­dle “dread,” and his Mac­book had the user­name “Frosty,” which he said was linked to Ulbricht’s email address in a post he’d made to a cod­ing forum.

Remark­ably, Turner also described a jour­nal taken from Ulbricht’s hard drive that recounts the story of Silk Road’s cre­ation. He listed details like the fact that Ulbricht had ini­tially called the Silk Road “Under­ground Bro­kers,” but had later decided to change the name. The pros­e­cu­tors’ let­ter to the court includes this passage:

I began work­ing on a project that had been in my mind for over a year. I was call­ing it Under­ground Bro­kers, but even­tu­ally set­tled on Silk Road. The idea was to cre­ate a web­site where peo­ple could buy any­thing anony­mously, with no trail what­so­ever that could lead back to them.

At another point, he wrote that in 2011, he would be “cre­at­ing a year of pros­per­ity and power beyond what I have ever expe­ri­enced before,” and added that “Silk Road is going to become a phe­nom­e­non and at least one per­son will tell me about it, unknow­ing that I was its creator.”

The jour­nal, accord­ing to Turner’s account, also details how Ulbricht grew sev­eral kilos of psy­che­delic mush­rooms in a lab in an “off-the-grid” cabin to have an ini­tial prod­uct to sell on the Silk Road. In a spread­sheet found on Ulbricht’s com­puter, Turner said Ulbricht’s expenses and income were listed, includ­ing a line for “sr inc.” that he said listed its value at $104 million.

To sup­port the prosecution’s argu­ment Ulbricht rep­re­sented a flight risk, he noted that Ulbricht had taken steps towards apply­ing for cit­i­zen­ship in the island nation of Dominica, and had dis­cussed mov­ing there with friends on Facebook.

4. In another update, we learn that the successor to Silk Road–Sheep Marketplace–has vanished taking vast amounts of its users’ bitcoins with it. The users of Sheep Marketplace, it would seem, have been fleeced!

“Anonymous Online Marketplace that Replaced Silk Road Vanishes . . . Taking $100 Million of Users’ Money With It” by Joshua Gardner; Daily Mail [UK]; 12/2/2013.

A shady online marketplace that anonymously sold drugs and guns has virtually disappeared, leaving illegal vendors believing they’ve been scammed out of as much as $100 million.

Sheep Marketplace emerged as the go-to replacement to Silk Road, a similar bazaar shuttered by the FBI in October.

Now users of the site, which operated outside the law to begin with and dealt only in anonymous Bitcoins, fear it was a scam all along.

Shielded from authorities and using special software to access the so-called ‘Deep Web’ site, buyers could find drugs, guns, and even hit men.
Buyers would put their Bitcoins into the marketplace, where sellers would withdraw them, with all the transactions moderated by the website.
Which is where the issue first arose.

In the days before the site shut down, vendors suddenly found themselves unable to access the Bitcoins tied up in the site’s wallet.
As they complained, reports RT, they found their comments suddenly yanked from the site’s forums.

Buyers also began to see suspicious things in the time leading up to this possible scam. Some vendors, though not all, began to list their drugs and other goods at prices far lower than ever before.

Now, many believe they were being bilked out of as many of their Bitcoins—a difficult to trace form of online currency currently worth over $1,000 a piece—as possible before taking the money and running.

On Sunday, visitors to the site found a note in place of the homepage that claimed a vendor called EBOOK101 had stolen from the site’s cache of Bitcoins.

‘This vendor found bug in system and stole 5400 BTC,’ reads the brief note. ‘Your money, our provisions, all was stolen.’
However, according to a post on Hacker News, a wallet of far more Bitcoins has been traced back to the site.

Valued at $45 million, 39,918 in Bitcoins could now be in the hands of a those behind the site after scamming untold numbers of hopeful drug users and gun toters out of their hard earned virtual cash.

Or perhaps even more.

According to the Daily Dot, one Redditor claims to have engaged in a virtual chase with Czech computer programmer Tomáš Jiřikovsky, who user sheeproadreloaded2 claims is behind the site and has absconded with 96,000 bitcoins, or about $95 million dollars. . . . .

5. “Pter­rafractyl” informs us of another aspect of the vul­ner­a­bil­ity of Bit­coin: “One of the inter­est­ing aspects about the bit­coin phe­nom­ena is that the more peo­ple that start using bit­coin the greater the defla­tion­ary pres­sure on the value of the bit­coins. That’s because there’s a fixed max­i­mum of 21 mil­lion bit­coins that can ever exist, so the greater the demand for bit­coins the more each bit­coin will cost in other cur­ren­cies. With the Chi­nese mar­ket now warm­ing up to bit­coin, and all those new poten­tial users, we might see a fas­ci­nat­ing exam­ple of a hyper­de­fla­tion­ary vir­tual gold bub­ble.”

“Bitcoins Climb to Record, on Wider Acceptance, China Trade” by Olga Kharif; Bloomberg News; 11/6/2013.

Bitcoin’s price hit a record at $265 on the Bit­Stamp online exchange, dri­ven by wider accep­tance of the vir­tual currency.

The dig­i­tal money, which can be used to pay for goods and ser­vices on the Inter­net, has risen 20-fold so far this year, as trad­ing activ­ity has increased. Bit­coins were trad­ing at $251.36 apiece at 6:30 p.m. in New York on Bit­Stamp, one of the more active Web-based exchanges where Bit­coins are traded for dol­lars, euros and other currencies.

The rally comes a month after the clos­ing of the “Silk Road Hid­den Web­site,” where peo­ple could obtain drugs, guns and other illicit goods using Bit­coins. The vir­tual cur­rency lost a third of its value in the days after the web­site was shut down. Bit­coins are becom­ing increas­ingly pop­u­lar, par­tic­u­larly in China, said Ugo Egbunike, direc­tor of busi­ness devel­op­ment at Index­U­ni­verse, an index-fund researcher.

“I thought Silk Road is going to do some dam­age to the price,” Egbunike said. “But with BTC China buy­ing this up — they seem to have picked up the slack.”

BTC China is now the world’s largest Bit­coin exchange, Nicholas Colas, a Con­vergEx Group ana­lyst, wrote in a Nov. 5 report.

The vir­tual cur­rency exists as soft­ware that’s designed to be untrace­able, mak­ing it an attrac­tive ten­der for those seek­ing to trade anony­mously via the Web. There are about 30 trans­ac­tions per minute, at an aver­age amount of 16 Bit­coins, accord­ing to a report today by the Fed­eral Reserve Bank of Chicago. . . .

6. Fur­ther updat­ing the dis­cus­sion “Pter­rafractyl” informs us: It would be pretty hilar­i­ous if Bit­coin, a cur­rency cher­ished by haunted by hyper­in­fla­tion­ary fears, because an object les­son in the dan­gers of defla­tion. But it’s hard to see how this les­son will be avoided if Bit­coin ever really caught on. One of the main fea­tures of the the cur­rency is that it’s capped out at 21 mil­lion coins but you can divide each coin up into smaller and smaller pieces. There­fore, the rea­son­ing goes, Bit­coin has defeated the infla­tion beast while still main­tain­ing the scal­a­bil­ity required to han­dle the vol­ume of trans­ac­tions in vir­tu­ally any sized econ­omy! Rev­o­lu­tion awaits! And this is sort of true of Bit­coins but the vic­tory over infla­tion also comes at the cost of built-in defla­tion cor­re­lated to the growth of the Bit­coin econ­omy (imag­ine if dol­lars grew more expen­sive with the growth of the US econ­omy). So the more Bit­coin grows in pop­u­lar­ity the greater the defla­tion, the greater the pay­out to the ear­li­est bit­coin investors, and the greater the temp­ta­tion to keep hold­ing onto those Bit­coins.

“If You Believe in Bitcoin, You Should Never Buy Anything in Bitcoin” by Jon Weisenthal; Business Insider; 11/10/2013.

Many Bit­coin believ­ers think that the dig­i­tal cur­rency will one day become the pre-eminent cur­rency of the inter­net. They basi­cally see it becom­ing the internet’s ver­sion of gold in that it’s nat­u­rally scarce, inde­pen­dent, vir­tu­ally impos­si­ble to manip­u­late, and cru­cially suited for a dig­i­tal world when money ought to be able to be moved seam­lessly and at no cost.

Well here’s a tip: If you think that this is true, then never use Bit­coin in a transaction.

As more peo­ple have got­ten into Bit­coin, the price has gone way up.

Vir­tu­ally every­one who has ever bought any­thing in Bit­coin has been a huge loser, who would have been bet­ter suited just hold­ing onto the Bit­coins instead.

Remem­ber the pizza that was pur­chased for $25 in Bit­coins years back? Had the per­son not bought that pizza, it would be worth nearly $3 mil­lion. That pur­chase was a cat­a­strophic deci­sion, as that was prob­a­bly the most expen­sive pizza of all time.

Of course this presents a Catch-22. How can Bit­coin become a real cur­rency if it’s not used in trans­ac­tions? And why would any­one use it in trans­ac­tions if becom­ing a real cur­rency offers so much more price appre­ci­a­tion? This con­tra­dic­tion is a core prob­lem, and it’s a rea­son why it’s prob­a­bly doomed to fail (real cur­ren­cies don’t have this issue, since cen­tral banks pre­vent rapid price appre­ci­a­tion, and they man­date that the cur­rency be used). . . .

7. The perils of “Bitcoinery” were illustrated when a Hong Kong Bitcoin market vanished, taking $5 million dollars with it!

Hong Kong Bit­coin Trad­ing Plat­form Van­ishes with Millions” by Liu Jiayi; ZDNet; 11/12/2013.

When ardent Chi­nese Bit­coin investors found that they could no longer access the web­site of Global Bond Lim­ited (GBL) in the early morn­ing of Octo­ber 26, it was already too late.

One investor under the pseu­do­nym of South Amer­i­can Vicuna orga­nized an online group for the los­ing traders and told IT Times on Mon­day that more than 30 mil­lion yuan from 500 investors, many of whom sold homes to get in the vir­tual cur­rency trade, could never be retrieved.

Accord­ing to the Vicuna, after the GBL’s web­site shut­down, it left only one mes­sage, say­ing that the site was com­pro­mised and investors who want to get back their invest­ment data shall trans­fer money to a des­ig­nated account. Now all con­tacts are not respond­ing, and the com­pany office in Hong Kong is as empty as the traders’ pockets.

GBL self-proclaimed that the local gov­ern­ment had approved vir­tual cur­rency exchange back on June 8, and lured buy­ers in with high lever­age rate and high yield. How­ever, the too-obvious-to-ignore trad­ing loop­hole in its trad­ing sys­tem raised con­cerns, but the “always-winning” traders were too obsessed to get out, accord­ing to Vicuna. . . .

8. Cornell University researchers have discovered a fundamental flaw in bitcoin that can permit a very small number of users to take over the market.

“Bit­coin Vul­ner­a­bil­ity Could Allow Mali­cious Min­ers to Seize Control”; MIT Technology Review; 11/8/2013.

One of Bitcoin’s big advan­tages is that it is decen­tralised with nobody in over­all con­trol. But now a sim­ple strat­egy has emerged that could allow almost any group to take over, say com­puter secu­rity analysts.

The dig­i­tal cur­rency Bit­coin is one of the zeit­geist phe­nom­ena of our time. Since 2009, it has grown from a dig­i­tal curios­ity to an online phe­nom­e­non. There are now some 11.5 mil­lion Bit­coins in cir­cu­la­tion and each one is worth over $300.

The Bit­coin sys­tem is specif­i­cally designed to over­come one of the seri­ous flaws of pre­vi­ous dig­i­tal currencies—the pos­si­bil­ity of dou­ble spend­ing; that two peo­ple could spend two copies of the same cur­rency at the same time. It is also decen­tralised so that no sin­gle organ­i­sa­tion or organ­ised group of indi­vid­u­als can con­trol the cur­rency and pre­vent cer­tain types of transactions.

But Bit­coin may not be quite as secure as every­body thought. Today, Ittay Eyal and Emin Gun Sirer at Cor­nell Uni­ver­sity in Ithaca say they’ve dis­cov­ered a flaw that allows any organ­ised group of Bit­coin min­ers to take over the cur­rency. And they say that some groups today are already big enough to do the job.

First some back­ground. Per­haps Bitcoin’s biggest advan­tage is its unique approach to pre­vent­ing dou­ble spend­ing. It does this by record­ing every trans­ac­tion in a sin­gle log known as a blockchain. An indi­vid­ual account can only spend a Bit­coin if the blockchain records that it owns the Bit­coin in the first place.

This log is pro­tected by cryp­top­uz­zles that can only be solved by large scale num­ber crunch­ing. When any­body solves such a puz­zle, they can record new trans­ac­tions and are rewarded with a fee in the form of new Bitcoins.

Hence the emer­gence of Bit­coin min­ers. These are peo­ple who devote com­put­ing power to solve cryp­top­uz­zles and are paid for their work in Bitcoins.

If you’re think­ing of a career as a Bit­coin miner, you’ll imme­di­ately run into a prob­lem. The cryp­top­uz­zles are so dif­fi­cult that the chances of solv­ing one by your­self is tiny. So Bit­coin min­ers work together in groups so that they can solve the prob­lems more quickly. If any one of them solves a puz­zle, they all share the proceeds.

There are lots of groups to join and there’s no advan­tage in join­ing one over another. The received wis­dom is that this keeps the min­ing decentralised.

But now Eyal and Sirer say that’s not true and have worked out how a self­ish group of min­ers could take over the cur­rency. “We show that the con­ven­tional wis­dom is wrong,” they say.

The trick is to mine for Bit­coins but to keep the results secret. This cre­ates a fork in the blockchain so that one half of the fork is pub­lic and the other half is secret.

The Bit­coin sys­tem has a way of resolv­ing these kinds of forks, which occur by acci­dent from time to time. It requires min­ers to join the longest fork. The trans­ac­tions in the other fork are then resub­mit­ted for resolution.

If the self­ish min­ers make their fork longer than the pub­lic one, it becomes the cho­sen chain.

The prob­lem is that the num­ber crunch­ing done on the fork that is aban­doned is wasted. So the self­ish min­ers end up get­ting more than their fair share of Bit­coins. This “enables pools of col­lud­ing min­ers that adopt it to earn rev­enues in excess of their min­ing power,” say Eyal and Sirer.

Hav­ing skewed the sys­tem in favour of self­ish min­ers, other min­ers see that they can make more Bit­coins by join­ing this group. The result is a tip­ping point in which the Bit­coin min­ing sys­tem sud­denly becomes dom­i­nated by a sin­gle group. And this group can exer­cise what­ever con­trol it likes over how trans­ac­tions are recorded.

Of course, self­ish min­ing only reaches a tip­ping point if the self­ish group con­sists of a cer­tain frac­tion of Bit­coin min­ers. Groups that are smaller than this can­not force the sys­tem to tip.

The key result that Eyal and Sirer have cal­cu­lated is that the tip­ping thresh­old is close to zero zero. So almost any group could adopt the self­ish min­ing strat­egy and end up con­trol­ling the system.

Eyal and Sirer have a solu­tion of sorts. This involves a chang­ing the sys­tem so that it chooses one fork over another at ran­dom (rather than choos­ing the loner one). When this choice is ran­dom, then it is harder for the self­ish min­ers to take control.

But not that much harder. Eyal and Sirer cal­cu­late that this raises the tip­ping thresh­old to groups that con­trol around 25 per cent of all Bit­coin min­ing. “Even with our pro­posed fix that raises the thresh­old to 25 per cent, the out­look is bleak: there already exist pools whose min­ing power exceeds the 25%,” they point out. . . . .

9. Not sur­pris­ingly, it turns out that Bit­coin is highly vul­ner­a­ble to self­ish “min­ing,” which could per­mit knowl­edge­able and enter­pris­ing male­fac­tors to cor­ner the market.

“In the Murky World of Bitcoin, Fraud is Quicker than the  Law” by Nathaniel Popper; The New York Times; 12/05/2013.

It was an invitation to a penny stock-style pump-and-dump scheme — only this one involved Bitcoin, the soaring, slightly scary virtual currency that has beckoned and bewildered people around the world.

While such bid ’em up, sell ’em off scams are shut down in the financial markets all the time, this one and other frauds involving digital money have gone unchecked. The reason, in no small part: Government authorities do not agree on which laws apply to Bitcoin — or even on what Bitcoin is.

The person behind the recent scheme, a trader known on Twitter as Fontas, said in a secure Internet chat that he operated with little fear of a crackdown.

“For now, the lack of regulations allows everything to happen,” Fontas said in the chat, where he verified his control of the Twitter account, which has thousands of followers, but did not give his identity. He added that Bitcoin and its users would benefit when someone steps in to police this financial wild west, and would stop his schemes when they do.

Chinese authorities drew attention to the issue on Thursday when they announced that they were barring Chinese banks from making Bitcoin transactions. The same day, the Bank of France issued its own warning about the potential risks. The news sent the price of Bitcoin tumbling, but it quickly bounced back to near its all-time high of around $1,200. . . .

10. Bit­coin users have relied on the TOR net­work, to a con­sid­er­able extent. Because TOR is not as secure as advertsed, some have avoided using it. Now the Max Planck Insti­tute is research­ing the devel­op­ment of a more secure oper­a­tion, that might per­mit dras­tic pro­lif­er­a­tion of the types of ills that appear inher­ent in the bit­coin concept.

“Anonymity Network Tor Needs a Tune-Up to Protect Users from Surveillance” by Toni Simonite; MIT Technology Review; 10/25/2013.

. . . . This month’s reports, based on documents leaked by Edward Snowden, didn’t say whether the NSA was doing so. But a 2012 presentation marked as based on material from 2007, released by the Guardian, and a 2006 NSA research report on Tor, released by the Washington Post did mention such techniques.

Stevens Le Blond, a researcher at the Max Planck Institute for Software Systems in Kaiserslautern, Germany, guesses that by now the NSA and equivalent agencies likely could use traffic correlation should they want to. “Since 2006, the academic community has done much work on traffic analysis and has developed attacks that are much more sophisticated than the ones described in this report.” Le Blond calls the potential for attacks like those detailed by Johnson “a big issue.”

Le Blond is working on the design of an alternative anonymity network called Aqua, designed to protect against traffic correlation. Traffic entering and exiting an Aqua network is made to be indistinguishable through a mixture of careful timing, and blending in some fake traffic. However, Aqua’s design is yet to be implemented in usable software and can so far only protect file sharing rather than all types of Internet usage. . . . .

11. A supplemental story, not included in the original program, concerns Ron Paul’s enthusiastic views on bitcoin.

“Ron Paul:Bitcoin Could Destroy the Dollar” by Jose Pagliery; CNNMoney; 12/4/2013.

Imagine a world in which you can buy anything in secret. No banks. No fees. No worries inflation will make today’s money worth less tomorrow.

The digital currency Bitcoin promises all these things. And while it’s far from achieving any of them — its value is unstable and it’s rarely used — some have high hopes.

“There will be alternatives to the dollar, and this might be one of them,” said former U.S. congressman Ron Paul. If people start using bitcoins en masse, “it’ll go down in history as the destroyer of the dollar,” Paul added.

It’s unlikely that Bitcoin would replace the dollar or other government-controlled currencies. But it could serve as a kind of universal alternative currency that is accepted everywhere around the globe. Concerned about the dollar’s inflation? Just move your cash to bitcoins and use them to pay your bills instead. Tired of hefty credit card fees? Bitcoin allows transactions that bypass banks. . . .

12. In another supplemental story, not included in the original program, we learn that the European Central Bank views bitcoin as rooted fundamentally in the Ludwig von Mises/Friedrich von Hayek theoretical construct.

“ECB: ‘Roots Of Bitcoin Can Be Found In The Austrian School Of Economics'” by Jon Matonis; Forbes; 11/3/2012.

The ECB (Euro­pean Cen­tral Bank) has pro­duced the first offi­cial cen­tral bank study of the decen­tral­ized cryp­to­graphic money known as bit­coin, Vir­tual Cur­rency Schemes. Ignor­ing for a moment the ECB’s con­de­scend­ing and deroga­tory use of the vir­tual cur­rency phrase and scheme phrase, the study pro­duced at least one land­mark achievement.

In claim­ing that “The the­o­ret­i­cal roots of Bit­coin can be found in the Aus­trian school of eco­nom­ics,” the ECB for­ever linked Bit­coin to the proud eco­nomic her­itage of Menger, Mises, and Hayek as well as to Aus­trian busi­ness cycle the­ory. This recog­ni­tion is also a direct tes­ta­ment to the mon­e­tary the­ory work of Friedrich von Hayek who inspired many with his 1976 land­mark pub­li­ca­tion of Dena­tion­al­i­sa­tion of Money.

Bit­coin fully embod­ies the spirit of dena­tion­al­ized money as it seeks no author­ity for its con­tin­ued exis­tence and it rec­og­nizes no polit­i­cal bor­ders for its cir­cu­la­tion. Indeed accord­ing to the report, pro­po­nents see Bit­coin as “a good start­ing point to end the monop­oly cen­tral banks have in the issuance of money” and “inspired by the for­mer gold standard.”

Econ­o­mists from the 19th and mid-20th cen­turies can be for­given for not antic­i­pat­ing an inter­con­nected dig­i­tal realm like the Inter­net with its p2p dis­trib­uted archi­tec­ture, but mod­ern econ­o­mists can­not be. From their own con­clu­sions (on page 48) which inac­cu­rately lump Bit­coin together with Lin­den Dol­lars, here is what the modern-day econ­o­mists at the ECB are still not get­ting:

1. ECB con­cludes that if money cre­ation remains at a low level, bit­coin does not pose a risk to price sta­bil­ity. This is incor­rect on two lev­els. One, the cre­ation of new bit­coin is capped at 21 mil­lion with eight cur­rent dec­i­mal places so it grows through adop­tion and usage rather than mon­e­tary expan­sion. And two, as with gold, sil­ver, and other com­modi­ties hav­ing a mon­e­tary com­po­nent, price sta­bil­ity is a func­tion of the mar­ket not cen­tral planners;

2. ECB con­cludes that bit­coin can­not jeop­ar­dize finan­cial sta­bil­ity due to its low vol­ume and lim­ited con­nec­tion with the real econ­omy. Con­versely, bit­coin will tend to increase finan­cial sta­bil­ity and over­all sound­ness. Bitcoin’s con­nec­tion with the real econ­omy is only a con­cern for the reg­u­lated and taxed econ­omy, whereas bit­coin inde­pen­dently may thrive in the $10 tril­lion shadow or “orig­i­nal” econ­omy. Besides, with its repeated mar­ket inter­ven­tions, no one has done more to jeop­ar­dize finan­cial sta­bil­ity than the ECB itself;

3. ECB con­cludes that bit­coin is cur­rently not reg­u­lated and super­vised by any pub­lic author­ity. It would be more accu­rate to say that State-sponsored reg­u­la­tion is largely irrel­e­vant because of the inher­ent design prop­er­ties of a peer-to-peer dis­trib­uted com­put­ing sys­tem. But hap­pily, this is still a con­clu­sion that I can agree with and rec­om­mend that it remains the case;

4. ECB con­cludes that bit­coin could rep­re­sent a chal­lenge for pub­lic author­i­ties, given the legal uncer­tainty and poten­tial for per­form­ing ille­gal activ­i­ties. While pub­lic author­i­ties will cer­tainly be chal­lenged by the intro­duc­tion of a mon­e­tary unit that can­not be manip­u­lated for polit­i­cal pur­poses, bit­coin in some cases does have the abil­ity to pro­vide track­ing capa­bil­ity that far exceeds that of national cash or money sub­sti­tutes. What author­i­ties will find most trou­bling though, with bit­coin, is that money flows between indi­vid­u­als and busi­nesses will no longer be exploitable for pur­poses of unlim­ited iden­tity track­ing and uncon­sti­tu­tional ‘fish­ing expeditions’

13. We link a characteristically important and detailed post by “Pterrafractyl” on this subject.

14. In a comment, “Pterrafractyl” updates, noting that the probably mythical “Satoshi Nakamoto” is apparently the biggest bitcoin holder. This would make German Intel/Underground Reich the biggest holder, if our working hypothesis presented in FTR #760 is valid.

15. Another “Pterrafractyl” comment supports the working hypothesis that “Satoshi Nakamoto” is a fictitious name for probable European elements.

16. Yet another “Pterrafractyl” contribution notes that concentration of ownership appears to be a fundamental characteristic of bitcoin miners.

 

 

 


Discussion

15 comments for “FTR #764 Bit[coin]burg, Part 2, The Snowden-Inspired, Bitcoin-operated Online Murder Incorporated”

  1. Here’s an interesting fun-fact about the concentration of power in the bitcoin mining market and the risk of “selfish mining“:

    If you go here you can find a charge of the “hashrate distribution” that shows the relative amounts of the total hashes (hashes are calculated as part of the mining process). Notice how two guilds, BTC Guild and GHash.IO, control well over 50% of of the total mining processing power. Situations like this are a huge potential problem for how bitcoin is supposed to work. But, in a way, this is a symbol of bitcoin’s potential populism in that a guild consists of THOUSANDS of users all working together. So at least when the BTC Guild and GHash.IO take over the mining market the proceeds would be going to a large number of people and not just some handful of super-miners. Except it may not be quite that clean because, as of April of this year, the top 10 users in the BTC Guild accounted for half of the entire guild’s processing power and would therefore get about half of BTC Guild’s the proceeds and it’s unclear why a situation like that that wouldn’t still be the case today.

    Posted by Pterrafractyl | December 18, 2013, 12:16 pm
  2. We won’t know until Christmas day, but odds are Santa won’t be delivering all of the items on Ross Ulbricht’s wish list this year:

    The Register
    Ross Ulbricht: ‘Oi! Give me back my $34m in Silk Road Bitcoin booty’
    Claims asset seizure was illegal
    By Neil McAllister, 24th December 2013

    After his arrest in October, 29-year-old Ross Ulbricht maintains that he is not the Dread Pirate Roberts, mastermind of the online drugs marketplace Silk Road. But he also says the Bitcoins the authorities seized from Silk Road belong to him, and the government should give them back.

    Since shutting down the secretive online shop, the FBI claims to have confiscated electronic wallets containing more than 173,000 Bitcoins from Silk Road – an amount worth about $33.6m in real-world currency.

    The authorities claim these funds are the proceeds of a criminal conspiracy involving drugs trafficking and money laundering. Ulbricht, on the other hand, says that’s got nothing to do with him – yet the New York Post reports that he has also filed papers with a federal court in New York City demanding that the seized Bitcoins be returned to him.

    In a notarized statement dated December 11, Ulbricht reportedly says he “has an interest as owner” in the seized funds and argues that as a virtual currency, Bitcoins are “not subject to seizure” under federal forfeiture laws.

    It’s a neat argument. Since the Silk Road raid was the largest Bitcoin forfeiture in US history, the courts literally have never heard a case quite like it. It’s possible that a judge could rule that Bitcoins don’t count as the kind of property that can be seized in a criminal prosecution.

    It’s unlikely, though. In past cases, courts have seen fit for authorities to seize everything from cash to cars, boats, houses, artwork, and even intellectual property such as internet domain names. Just the fact that Ulbricht wants the Bitcoins back would seem to establish that they have value and are therefore fair game for forfeiture.

    Still, Ulbricht could certainly use the money. Although he was represented by a public defender in his first few court appearances, he has since retained the services of New York attorney Joshua Dratel, and his case looks like it could be a long one. Among other offenses, he is charged with commissioning the contract killings of as many as six people (although there is no evidence that anyone was actually killed).

    Posted by Pterrafractyl | December 24, 2013, 7:01 pm
  3. One of the yet to be answered questions regarding the future of bitcoin is what happens when one of the large stakeholders decides to publicly cash out? It turns out the FBI is giving us a mini-preview of such an event: The FBI just got clearance to auction off nearly 30k bitcoins of the 144k they seized from Ross Ulbricht which means the bitcoin market has a bit of a stress-test coming up:

    ArsTechnica
    Feds ready to auction off $25 million in Silk Road Bitcoin
    Funds seized from alleged Silk Road founder Ross Ulbricht are still in contention.

    by Megan Geuss – Jan 16 2014, 8:15pm CST

    In a press release on Thursday, the US Attorney’s office for the Southern District of New York announced the forfeiture of 29,655 bitcoins that were seized from a Silk Road server during a raid in October. At current exchange rates, that purse is worth about $25 million, up from $3.5 to 4 million when it was seized. The US Attorney’s office also announced that the Silk Road website will be forfeited along with the bitcoins.

    A spokesperson for the US Attorney’s office told Forbes that the bitcoins will be auctioned off, although he could not say when the auction will take place. It will be the federal government’s first-ever auction of bitcoins, and as Forbes points out, there is no legally certified US Bitcoin exchange, so converting the stash into cash first will likely not be an option.

    Ross Ulbricht, who allegedly went by the name of Dread Pirate Roberts and who is suspected of being the mastermind behind the Silk Road, has been in custody since federal agents arrested him at the Glen Park branch of the San Francisco Public Library three months ago. That day, feds also seized a cache of 144,000 bitcoins that belonged to Ulbricht personally. While the government is seeking to auction off those bitcoins as well, Ulbricht is contesting the forfeiture in civil court.

    Just two days after the Silk Road and its assets were seized, Bitcoin enthusiasts discovered the wallet. At the time, it contained almost 27,000 bitcoins seized from the Silk Road that were being held by the federal government. As Bitcoin transactions are public, several people began transferring very small amounts of bitcoin into the federally held wallet so as to send a message to the authorities in the “public field” of the transaction. Some messages included “Public Note: I THOUGHT OF SNIFFING FARTS WHILST SENDING THESE BITCOINS TO YOU” as well as “Public Note: hey computer geek, who control this address. ‘Ross Ulbricht’ is not the bad guy, you are a bad guy. Please open your eyes, dont be brainwashed, and think your self!!!” Those micro-transactions will also be included in the auction, it seems.

    So people voluntarily send bitcoins to the FBI just to send the agency angry messages in the transaction’s “public field” and make that message part of the bitcoin public record? It looks like we just discovered how governments are going to fund themselves after crypto-currencies have replaced cash and transactions are no longer taxable. Just think of how many angry revenue-enhancing bitcoin-messages government agencies will receive once crypto-currencyagorism adds its force to the dominant Norquistagorism that’s already has been Starving the Beast for a generation. Thanks to bitcoin, anti-government hate-mail can finance the government. Hello surpluses!

    Posted by Pterrafractyl | January 18, 2014, 10:12 pm
  4. Cody Wilson, the guy brought us the 3D-printable gun, has a new plan to liberate humanity from the New World Order: The Dark Wallet:

    Forbes
    Dark Wallet Aims To Be The Anarchist’s Bitcoin App Of Choice

    Andy Greenberg, Forbes Staff

    Bitcoin may be the world’s first decentralized, stateless digital currency. But in the eyes of at least one group of anarchists, the Bitcoin community has been getting a little too cozy with the establishment. And they want to bring the cryptocurrency back to its anti-regulatory roots.

    On Thursday a group of libertarian Bitcoin developers calling themselves Unsystem launched a crowdfunding campaign to raise money to code a new Bitcoin “wallet” they’re calling Dark Wallet. Like any Bitcoin wallet, Dark Wallet will store a user’s Bitcoins and interact with the Bitcoin network, allowing the owner to spend and receive the currency. But unlike other wallets, Dark Wallet is designed specifically to preserve and even enhance the properties of Bitcoin that make it a potentially anonymous, tough-to-trace coin of the Internet underground.

    “If Bitcoin represents anything to us, it’s the ability to forbid the government,” says Cody Wilson, Dark Wallet’s project manager. (If Wilson’s name sounds familiar, he’s also the creator of the world’s first fully 3D-printable gun, another project designed to show how technology can undermine government regulation.) “DarkWallet is your way of locking out the State, flipping the channel to one beyond observation.”

    Bitcoin has already served as a powerful tool for the so-called “dark web”– the lawless, anonymity-enabled corners of the Internet alluded to in some parts of Wilson’s video. Bitcoin’s most recent moment in the spotlight came with the shutdown of the Silk Road, the Bitcoin-based anonymous online marketplace for illegal drugs that generated hundreds of millions of dollars worth of sales in its 2.5 years online; The FBI seized another $28.5 million in stored bitcoins believed to belong to the site’s now-arrested alleged owner 29-year-old Ross Ulbricht just last week.

    Bitcoin enabled the Silk Road by acting as a trustworthy form of payment that didn’t require any real names. Though all Bitcoin transactions are publicly visible within the Bitcoin network, they’re only linked to pseudonyms, and users can anonymize the coins further by sending them through a Bitcoin laundry that mixes up users’ bitcoins with those of other users to make them harder to trace; Silk Road automatically mixed the coins of all its users.

    But Dark Wallet would go further towards making Bitcoin a truly untraceable form of digital cash. The wallet creators plan to include a feature called “trustless mixing” according to Amir Taaki, one of Unsystem’s founders and a longtime Bitcoin developer. Rather than hand a user’s bitcoins off to a typical Bitcoin laundry service that must be trusted to send back another more anonymous bitcoin, trustless mixing bundles together a collection of Bitcoin transactions and simultaneously sends them to new Bitcoin addresses that are also controlled by the same users; Since no one watching the transactions can see whose coins went where, the technique erases any ownership-identifying traces on the coins, while also avoiding the problem of trusting a third-party service to sufficiently mix the coins and not to simply steal them.

    The software, which is intended to be a browser plug-in for Chrome and Firefox, would automatically coordinate the process with other users over the anonymity service Tor or similar services to further hide users’ identities. The process could even be reduced to an anonymizing “toggle switch” that would enable users to launder their coins on command, says Taaki. “You buy the bitcoins in a normal exchange, switch this on, and it slowly anonymizes them for you in the background,” he says.

    Dark Wallet would also aim to solve another potential privacy problem with Bitcoin that arises from wallet software “announcing” transactions to the Bitcoin network from a tell-tale IP address. By broadcasting the messages from a proxy address or over the Tor network, Taaki says that Dark Wallet could prevent anyone from tracking a user based on those transaction announcements.

    Wilson and Taaki see Dark Wallet in part as an answer to Bitcoin’s increasing adoption by users and developers with more mainstream, government-friendly views. In the video above and in their writeup of Dark Wallet on Unsystem’s website, they directly attack the Bitcoin Foundation, a non-profit group that has sought to engage with governments and use lobbying tactics to compromise on potential regulation of Bitcoin. “Many prominent Bitcoin developers are actively in collusion with members of law enforcement and seeking approval from government legislators,” reads one portion of the Dark Wallet text. “We believe this is not in Bitcoin user’s self interest, and instead serves wealthy business interests that make up the self-titled Bitcoin Foundation.”

    Posted by Pterrafractyl | January 21, 2014, 8:16 pm
  5. California and New York appear to be racing to lay down bitcoin regulations and become bitcoin business hubs, thus sucking away bitcoin enthusiasts from the rest of the country. Brain-drains aren’t all bad:

    Bloomberg
    New York Vying With California to Write Bitcoin Rules
    By Carter Dougherty Jan 27, 2014 7:18 PM CT

    California and New York, home to Silicon Valley and Wall Street, are preparing to write rules of the road for entrepreneurs driving a surge of interest in Bitcoin and other virtual currencies.

    The outcome could determine how big a threat Bitcoin poses to established payment companies including JPMorgan Chase & Co. and Visa Inc. as well as where venture capital and talent converge to form a geographic hub for U.S. startups.

    “If a state becomes Bitcoin-friendly, it will see a huge increase in companies,” said Adam Ettinger, an attorney with San Francisco-based Strategic Counsel Corp., which advises technology investors. “That will mean the brightest minds working on some of the most innovative payment technology we’ve seen in awhile.”

    Bitcoin, a five-year-old protocol for issuing and moving money across the Internet, has gained traction with merchants selling everything from Sacramento Kings basketball tickets to kitchen mixers on Overstock.com. Venture capitalists see promise in it as an alternative to the global payment system currently dominated by companies including Visa, Western Union Co. (WU) and large banks.

    Legal Status

    Bitcoin’s legal status has been uncertain. In March, the U.S. Treasury Department’s Financial Crimes Enforcement Network, which polices money laundering, said virtual-currency firms may be regulated as money transmitters. The move set off the race among states, which license such firms, to determine if and how their laws apply.

    Regulators and law enforcers have expressed concern that Bitcoin could facilitate money laundering and sales of drugs and other illegal goods.

    Federal prosecutors in New York today indicted the head of a digital currency exchange company on charges of conspiring to launder more than $1 million in Bitcoin tied to Silk Road, an online drug bazaar. Charlie Shrem, the chief executive officer of BitInstant, is also the vice chairman of the Bitcoin Foundation, the group that oversees the currency’s software protocols and lobbies regulators. In October, U.S. authorities shut down Silk Road and arrested its operator for hosting illegal transactions.

    Money Transmitters

    Stephanie Newberg, president of the Money Transmitter Regulators Association, a group of state officials, said Bitcoin will dominate her association’s agenda precisely because its legal status is unclear.

    “Some states have statutes that are broad enough to do it immediately,” said Newberg, who is also deputy commissioner of banking in Texas. “Other states don’t. It’s a state-by-state question.”

    JPMorgan Chief Executive Officer Jamie Dimon has said he expects that Bitcoin will be less of a threat once regulators intervene.

    Bitcoin “will eventually be made as a payment system, I think, to follow the same standards as the other payment systems, and that will probably be the end of them,” Dimon said Jan. 23 in an interview on CNBC.

    Different Approaches

    California and New York have so far adopted different approaches. New York’s superintendent of financial services, Benjamin Lawsky, moved publicly against Bitcoin startups last year, issuing subpoenas for information on their business, a move the companies complain has forced them to spend seed capital on lawyers. Tomorrow Lawsky is scheduled to convene two days of public hearings to consider whether New York should establish what he has called a “BitLicense.”

    By contrast, officials in California have been quietly meeting with lawyers and compliance experts for advice before making public moves, according to a person advising Bitcoin companies who asked not to be identified because the meetings were private.

    Patrick Murck, general counsel of the Seattle-based Bitcoin Foundation, a group that promotes the use of digital currency, pointedly complimented California on its approach during a U.S. congressional hearing.

    Legal ‘Gap’

    Marco Santori, a lawyer with Nesenoff & Miltenberg LLP in New York who advises virtual-currency startups, said companies that receive money from a customer to convert into Bitcoin may not fall under that law, since the funds aren’t being transmitted. Since “money” isn’t defined in the law, New York may not have jurisdiction, he said.

    “These laws are nowhere near what they’d need to be to regulate Bitcoin businesses,” Santori said.

    As a result, Lawsky’s department is considering use of its “gap authority” to regulate virtual currencies, according to a person briefed on the discussions. This authority, included in the law that created the department in 2011, allows it to regulate financial services not otherwise covered by state law.

    Companies including New York-based Union Square Ventures have met with staff for Senator Charles Schumer, a New York Democrat, to press their case for creating a Bitcoin-friendly regulatory environment, according to a person familiar with the discussions. Union Square, headed by Fred Wilson, contributed $51,500 to Democratic candidates and organizations in the 2012 election cycle, according to the Center for Responsive Politics.

    Lawsky, who was previously chief counsel to Schumer, has said he is mindful of the effects of regulation on what could be an emerging industry.

    “We want New York to be a place where these companies are coming and thriving, and at the same time, put in the rules of the road and protections to ensure we don’t have money laundering,” Lawsky told CNBC on Jan. 10.

    It’s fortunate that the bitcoin brain drain is swirling into states with large populations. Smaller states that become bitcoin hubs might not be states for much longer.

    Posted by Pterrafractyl | January 30, 2014, 10:30 am
  6. Here’s the latest manifestation of Cody Wilson’s violence-oriented brand of anarchic idealism: cheap machines for making your own untraceable guns:

    Wired
    The $1,200 Machine That Lets Anyone Make a Metal Gun at Home

    By Andy Greenberg
    10.01.14 |
    6:30 am |

    When Cody Wilson revealed the world’s first fully 3-D printed gun last year, he showed that the “maker” movement has enabled anyone to create a working, lethal firearm with a click in the privacy of his or her garage. Now he’s moved on to a new form of digital DIY gunsmithing. And this time the results aren’t made of plastic.

    Wilson’s latest radically libertarian project is a PC-connected milling machine he calls the Ghost Gunner. Like any computer-numerically-controlled (or CNC) mill, the one-foot-cubed black box uses a drill bit mounted on a head that moves in three dimensions to automatically carve digitally-modeled shapes into polymer, wood or aluminum. But this CNC mill, sold by Wilson’s organization known as Defense Distributed for $1,200, is designed to create one object in particular: the component of an AR-15 rifle known as its lower receiver.

    That simple chunk of metal has become the epicenter of a gun control firestorm. A lower receiver is the body of the gun that connects its stock, barrel, magazine and other parts. As such, it’s also the rifle’s most regulated element. Mill your own lower receiver at home, however, and you can order the rest of the parts from online gun shops, creating a semi-automatic weapon with no serial number, obtained with no background check, no waiting period or other regulatory hurdles. Some gun control advocates call it a “ghost gun.” Selling that untraceable gun body is illegal, but no law prevents you from making one.

    Exploiting the legal loophole around lower receivers isn’t a new idea for gun enthusiasts—some hobbyist gunsmiths have been making their own AR-15 bodies for years. But Wilson, for whom the Ghost Gunner is only the latest in a series of anti-regulatory provocations, is determined to make the process easier and more accessible than ever before. “Typically this has been the realm of gunsmiths, not the casual user. This is where digital manufacturing, the maker movement, changes things,” he says. “We developed something that’s very cheap, that makes traditional gunsmithing affordable. You can do it at home.”

    Wilson’s goal of enabling anyone to privately fabricate an untraceable gun is part of a larger anarchist mission: To show how technology can render the entire notion of government obsolete. He’s spent the last two years developing firearms designed to be printed as easily as ink on a page, neutering attempts at gun control. “This is a way to jab at the bleeding hearts of these total statists,” Wilson says. “It’s about humiliating the power that wants to humiliate you.”

    Defense Distributed’s controversial creations have included 3-D printable plastic magazines and lower receivers for AR-15s as well as an entire 3D-printed pistol he called the Liberator. But he says his switch from 3-D printing to CNC milling metal makes the ubiquitous creation of usable, lethal weapons one step more practical. “3-D printing [guns] was about signaling the future. This is about the present,” he says. “You can use this machine today to create something to the standards you’re used to…The gold standard of the gun community is metal.”

    That simple chunk of metal has become the epicenter of a gun control firestorm.

    As with 3D-printers, however, CNC mills are quickly moving from the realm of industrial manufacturing to affordable, personal devices. Desktop CNC mills like the Shapeoko and the Nomad cost just thousands or even hundreds of dollars. The Ghost Gunner was built with $20 open-source Arduino microcontrollers, a custom-designed spindle (the head that holds the drill) and a steel carbide bit. Defense Distributed’s machine can’t carve pieces as large as its competitors, but its small size makes it more rigid and precise, allowing it to cut an aluminum lower receiver from an 80 percent lower in around an hour. That’s a task Wilson says would still be impossible with today’s cheapest hobbyist mills but doesn’t require five-figure professional tools. “We’re making this easier by an order of magnitude,” he says.

    Subversive ambitions aside, Wilson doesn’t hide the fact that the Ghost Gunner is also a money-making project. Unlike Defense Distributed’s 3D-printing projects in the past, Wilson says selling its own CNC mill offers his group a way to fund its activities. He considered offering pre-orders of the device through an Indiegogo or Kickstarter campaign, but both sites’ terms of service don’t allow the sale of weapons or tools for making them.

    Since he first launched Defense Distributed in 2012, Wilson has demonstrated a knack for throwing technological gasoline onto political fires, from uncontrollable 3D-printed guns to Bitcoin money-laundering software. His latest creation promises to be equally controversial: He’s releasing the Ghost Gunner’s on the heels of a debate in California over a state law that would ban the manufacture of all guns without serial numbers. The bill, widely known as the “Ghost Gun ban” and introduced by Los Angeles state senator Kevin de Leon earlier this year was designed to criminalize either 3-D printing or finishing an 80 percent lower without a government-assigned serial number in California. The legislation passed California’s senate and assembly, but was vetoed Tuesday by the state’s governor Jerry Brown, who wrote that he “can’t see how adding a serial number to a homemade gun would significantly advance public safety.”

    “Our strategy is to literalize and reify their nightmare, to give them the world they’re talking about.”

    In the wake of the governor’s veto of the Ghost Gun ban, Wilson’s CNC mill could make untraceable guns all the more accessible. And as the video above shows, Wilson isn’t shying away from that face-off so much as directly confronting gun control advocates. He’s gone as far as applying for a trademark for the term “Ghost Gun,” a move that could limit how gun control advocates are legally able to use it.

    “This wouldn’t be worth doing if Kevin de Leon didn’t know about it,” Wilson says. “What excites me is giving this world to the politicians. Our strategy is to literalize and reify their nightmare, to give them the world they’re talking about.”

    And if, as in the case of John Zawahri, his milling machine is used to create uncontrollable weapons that result in real violence? Wilson stands by the answer that he’s given to that question when it was asked of his 3-D printed guns: That the potential for violence is part of the price of freedom. “I believe it’s in the stable of popular rights afforded to the people, a republican ideal consistent with civil liberties,” he says.

    “You can have an unserialized toothbrush, and you can have an unserialized rifle,” he adds. “This is important to me. The untraceable firearm is my stand.”

    Posted by Pterrafractyl | December 21, 2014, 8:48 pm
  7. Posted by Pterrafractyl | December 24, 2014, 3:14 pm
  8. Was Ross Ulbricht the creator of Silk Road but not the Dread Pirate Roberts? That’s his new story and he’s sticking to it:

    Wired
    Silk Road Defense Says Ulbricht Was Framed by the ‘Real’ Dread Pirate Roberts

    By Andy Greenberg
    01.13.15 5:27 pm

    For the past year, the FBI and federal prosecutors have told and retold the story of how Ross Ulbricht created, owned and operated the massive, anonymous online drug empire known as the Silk Road. But as his trial began Tuesday, Ulbricht’s defense lawyers for the first time told their own version of that story. And while theirs also begins with Ulbricht creating the Silk Road, it ends with Ulbricht being framed by the “real” operators of the site to whom he’d handed over control.

    In his opening statement in a Manhattan courtroom, defense attorney Joshua Dratel began with a surprising admission: that his client Ross Ulbricht was in fact the founder of the Silk Road.

    But Dratel went on to explain that the site was meant merely to be a kind of “economic experiment” that Ulbricht only controlled for a brief time. The eventual adoptive owners of the Silk Road, Dratel claimed, would later trick Ulbricht into serving as the “fall guy” when they sensed an impending law enforcement crackdown.

    “After a few months, he found it too stressful for him, and he handed it over to others,” Dratel told the jury, describing the Silk Road’s early days. “At the end, he was lured back by those operators to…take the fall for the people running the website.”

    “Ross was not a drug dealer,” Dratel added. “He was not a kingpin.”

    Powerful New Evidence Against Ulbricht

    That new story, describing Ulbricht as a patsy for the powerful online drug lords who operated the Silk Road at its peak, won’t be an easy sell. In its own opening statement, the prosecution described powerful evidence against Ulbricht that includes proof the FBI caught him logged into a Silk Road administrator panel in the San Francisco public library last year and a journal and logbook found on his laptop that detail his activities running the Silk Road.

    Assistant US attorney Timothy Howard also said in his statement that Ulbricht at one point confessed to running the Silk Road to an old college friend. That purported personal breach of Ulbricht’s secrecy represents a damaging new claim from the prosecution, and Howard said that the college friend would be serving as a witness in the trial.

    As the alleged administrator of the Silk Road known as the Dread Pirate Roberts, Ulbricht faces charges including narcotics, money laundering and hacking conspiracies. But Tuesday’s opening statements show that the trial will center around proving that Ulbricht is in fact the Dread Pirate Roberts. The Silk Road, after all, used the anonymity software Tor and the cryptocurrency bitcoin expressly to hide its users’ identities, and the trial could be a case study in how law enforcement cuts through those layers of technological obfuscation—or fails to.

    “The Internet is a strange place,” Dratel told the jury. “People can create and fabricate profiles for themselves and others.”

    “The Perfect Fall Guy”

    As Dratel told it, Ulbricht had long given up control of the Silk Road by the time he was arrested and charged with running the site last year. But as the site’s initial creator, he was the “perfect fall guy,” Dratel said. He told the jury that he would present evidence that the “real” Dread Pirate Roberts paid for information about the law enforcement investigation that focused on him, including information that they had possibly learned his real name. “And that name is not Ross Ulbricht,” Dratel said.

    The new operators of the Silk Road “had been alerted the walls were closing in,” Dratel said. “That’s what compelled the Dread Pirate Roberts to put his escape plan into action,” framing Ulbricht, according to Dratel’s telling.

    In Dratel’s version of events, Ulbricht’s store of bitcoins was simply the earnings from his early investments in the cryptocurrency, not the Silk Road profits the prosecutors allege. He points out that the bitcoins seized from Ulbricht are only a “small fraction” of the full $18 million the government has said the Dread Pirate Roberts earned in Silk Road commissions. And he implied that the evidence found on Ulbricht’s computer at the time of his arrest was falsified to “leave him holding the bag when the real operators of Silk Road knew their time was up.” He didn’t elaborate on how evidence could have been planted on Ulbricht’s PC.

    “[The Dread Pirate Roberts] is someone who studiously avoided revealing his identity to anyone on the site…This same person goes to a public library and uses a public Wifi connection?” Dratel asked the jury. “That Ross is DPR is a contradiction so fundamental that it defies common sense.”

    Dratel added, “The real DPR is out there.”

    Will Ulbricht remain a Libertarian hero if he’s not the Dead Pirate Roberts? It might ruin his Randian mystique.

    Posted by Pterrafractyl | January 18, 2015, 6:09 pm
  9. Ross Ubricht, the alleged “Dread Pirate Roberts”, was just convicted:

    Accused Silk Road Operator Ross Ulbricht Convicted On Drug Charges
    Reuters
    Posted: 02/04/2015 4:26 pm EST Updated: 02/04/2015 4:59 pm EST

    NEW YORK, Feb 4 (Reuters) – The suspected operator of the underground website Silk Road was convicted on Wednesday on narcotics and other criminal charges for his role in orchestrating a scheme that enabled around $200 million of anonymous online drug sales using bitcoins.

    Ross Ulbricht, 30, was convicted by a federal jury in Manhattan on all seven counts he faced following a closely watched four-week trial that spilled out of U.S. investigations of the use of the bitcoin digital currency for drug trafficking and other crimes.

    The jury of six men and six women needed a little over three hours to deliberate before finding Ulbricht guilty of charges that included drug trafficking and conspiracies to commit money laundering and computer hacking.

    Ulbricht faces up to life in prison. He has attracted many supporters to his cause, including some who say the government’s case is an attack on Internet freedom.

    After the verdict was read, Ulbricht turned toward his supporters and raised his hand as he was led from the court. “Ross is a hero,” shouted one supporter wearing dreadlocks.

    Silk Road operated from at least January 2011 until October 2013, when authorities seized the website and arrested Ulbricht at a public library in San Francisco.

    Prosecutors said Ulbricht ran Silk Road as “Dread Pirate Roberts,” an alias borrowed from a character in the 1987 movie “The Princess Bride.”

    “FALL GUY”

    The website relied on the so-called Tor network, which lets users communicate anonymously, and accepted payment through bitcoins, which according to prosecutors allowed users to conceal their identities and locations.

    By the time it was shut down, Silk Road had generated nearly $213.9 million in sales and $13.2 million in commissions, prosecutors said.

    Note that the following wasn’t quite accurate:

    The website relied on the so-called Tor network, which lets users communicate anonymously, and accepted payment through bitcoins, which according to prosecutors allowed users to conceal their identities and locations.

    Bitcoin and Tor aren’t actually anonymous for everyone. Keep that in mind while you’re planning your verv own Silk Road 3.0 decentralized “Dread Pirate Roberts”-less Silk Road:

    Gizmodo
    Silk Road 3 Is Already Up, But It’s Not the Future of Darknet Drugs

    Kate Knibbs

    11/07/14 12:46pm

    Silk Road 3 Is Already Up, But It’s Not the Future of Darknet Drugs

    There are three things you can count on in life: Death, taxes, and people buying drugs on the internet. Yesterday, the FBI seized black market website Silk Road 2.0 and charged the alleged admin Blake Benthall in federal court, trumpeting its bust with a sassy takedown notice.

    This is a blow to the cocaine information superhighway crowd, sure, but don’t expect digital dealers to go cold turkey anytime soon. Within a few hours, “Silk Road 3 Reloaded” (http://qxvfcavhse45ckpw.onion/login.php)) went live, though as the Daily Dot points out,, it’s actually an existing drug bazaar rebranded to capitalize on the post-raid hype. But even if 3.0 turns into 4.0 turns into 5.0, Silk Road and its ilk aren’t the future of deep web contraband. More likely, the latest bust will only buoy a new wave of decentralized markets.

    I talked to Carlos Lopez (a pseudonym, naturally), a prominent darknet vendor, about what the future of darknet drug deals looks like after the raid. “For any site nowadays longevity is vital, and for me as a vendor thinking long-term, and for me to take it seriously, it would need to be decentralized,” he told me over encrypted email.

    Peer-to-peer markets will not have a “Dread Pirate Roberts” at the helm. Without a figurehead/operator to arrest and a main datacenter, it would be far more difficult for law enforcement to seize a decentralized dark market. Using this model, people could create any number of different markets, and law enforcement would have to cast a far wider net to arrest vendors and buyers instead of going after admin. (And that will probably happen, but it will declaw any drug bust PR.)

    There is already one decentralized market gaining support after this raid, called OpenBazaar. It’s not meant to be a hub of drug sales; it’s meant to be an eBay rival. OpenBazaar wants to work for all peer-to-peer commerce, and while markets like Silk Road and Evolution focused on illegal product sales, OpenBazaar does not. That doesn’t mean that people can’t use it to sell drugs, though. They very much could. And when they do, it’ll be harder for law enforcement to arrest a figurehead, because there won’t be one.

    OpenBazaar isn’t ready for secure transactions yet, and it’s still in beta. But it has a savvy team of volunteer developers prepping it, including Google software engineer Dionysis Zindros. It could represent an interesting development for peer-to-peer transactions of all types, but since the darknet’s drug community is currently without a secure home, it could also turn into a safer option for former Silk Road vendors and buyers.

    Along with Silk Road 2, Europol says upwards of 50 markets, including Cloud 9 and Hydra, were seized this week as part of a joint operation between the FBI, Europol, and Interpol known as “Onymous.” This raid included the forum of a defunct market called Cannabis Road, emphasizing that law enforcement are interested in scouring through comments to find participants, not just in the operators. They mean business.

    There are still enough options functioning that vendors and buyers can just hopscotch to the next one when these seizures happen. Markets like Evolution and Agora evaded seizure (unless, of course, they’re honeypots). But this constellation of raids is not the last we’ll see.

    As we can see, the future is bright for the online crypto marketplaces of the Darknet. Sure, individual marketplaces might get shut down, but shutting down a big hub like Silk Road isn’t really going to be an option in the future since there won’t be any big hubs to shut down. Just lots of little, constantly changing marketplaces that vendors can select from. And that means:

    Peer-to-peer markets will not have a “Dread Pirate Roberts” at the helm. Without a figurehead/operator to arrest and a main datacenter, it would be far more difficult for law enforcement to seize a decentralized dark market. Using this model, people could create any number of different markets, and law enforcement would have to cast a far wider net to arrest vendors and buyers instead of going after admin. (And that will probably happen, but it will declaw any drug bust PR.)

    And as humanity has seen with some of its other attempts to shut down decentralized illegal marketplaces one buyer and vendor at a time, that’s not going to be cheap or easy strategy to implement. And yet there’s undoubtedly going to be content sold on these exchanges like illegal weapons (imagine the advanced weaponry of the future) that society definitely isn’t going to want to make widely available to anyone with an internet connection. Alternative methods of shrinking these online dark markets so law enforcement can focus on the most dangerous buyers and sellers is probably going to be required. And long overdue.

    Posted by Pterrafractyl | February 5, 2015, 8:35 pm
  10. While bitcoins are understandably very alluring to many for a variety of reasons that can be difficult to understand, it turns out bitcoin’s fan base includes a pair of federal agents involved with the Silk Road investigation that appear to be bitcoin enthusiasts for a very simple reason. They wanted money:

    The Los Angeles Times
    Former federal agents at center of Silk Road case charged with stealing bitcoin
    By James Queally contact the reporter

    March 30, 2015, 12:33 PM

    Two former federal agents at the center of an investigation into the black market website Silk Road, where drugs were sold for bitcoin, have been accused of stealing digital currency during the probe, according to court documents made public Monday.

    Carl M. Force and Shaun W. Bridges, who were both integral to the operation that ended with the conviction of the alleged founder of Silk Road, have been charged with theft of government property, wire fraud and money laundering, according to a 95-page criminal complaint unsealed on Monday.

    The complaint was filed on March 25 in U.S. District Court in San Francisco.

    Earlier this year, Ross William Ulbricht was convicted of creating and operating Silk Road. He was found guilty of allowing millions of drug deals to take place through the website and earning $18 million in bitcoins while the site was operational.

    Force, a former investigator with the Drug Enforcement Administration, was the lead undercover agent tasked with communicating with “Dread Pirate Roberts,” the online alias allegedly used by Ulbricht, according to the complaint. He allegedly demanded Ulbricht pay him $250,000 in bitcoin to not offer certain information to the government, and on another occasion, created an online alias under which he asked Ulbricht for $100,000 in bitcoin in exchange for information on the federal probe into Silk Road, according to the complaint.

    Force also allegedly laundered funds given to him as part of the investigation, siphoning them into personal accounts rather than turning them over to the government, according to the complaint.

    Bridges, a former Secret Service agent, is accused of stealing hundreds of thousands in bitcoin from Silk Road, according to the complaint. In January 2013, the website “suffered a sizable theft of bitcoins” which were moved into a digital currency exchange in Japan.

    Around the same time, Bridges formed a limited liability company and, according to the complaint, funded that business’s account “exclusively with wire deposits” from the same Japanese exchange, the complaint said.

    Ulbricht’s New York-based attorney, Joshua Dratel, has repeatedly said Ulbricht was not “Dread Pirate Roberts,” an alias that is a reference to a charachter from the film “The Princess Bride.”

    Dratel was expected to release a statement on Monday afternoon concerning the arrests of Bridges and Force.

    The government spent at least two years infiltrating Silk Road. During Ulbricht’s trial, Homeland Security Agent Jared Der-Yeghiayan testified that he began to take over staff accounts on the website as federal agents arrested employees of the site who agreed to cooperate. The government presented numerous instant messages at trial between Der-Yeghiayan and Ulbricht, who went by the alias Dread Pirate Roberts online.

    Posted by Pterrafractyl | March 30, 2015, 3:07 pm
  11. Posted by participo | March 31, 2015, 2:45 pm
  12. If you’re a former subscriber of the “Ashley Madison” website for cheating, just FYI, you might getting a friendly email soon:

    Gizmodo
    Extortionists Are After the Ashley Madison Users and They Want Bitcoin

    Adam Clark Estes
    8/21/15 2:55pm

    People are the worst. An unknown number of assholes are threatening to expose Ashley Madison users, presumably ruining their marriages. The hacking victims must pay the extortionists “exactly 1.0000001 Bitcoins” or the spouse gets notified. Ugh.

    This is an unnerving but not unpredictable turn of events. The data that the Ashley Madison hackers released early this week included millions of real email addresses, along with real home addresses, sexual proclivities and other very private information. Security blogger Brian Krebs talked to security firms who have evidence of extortion schemes linked to Ashley Madison data. Turns out spam filters are catching a number of emails being sent to victims from people who say they’ll make the information public unless they get paid!

    Here’s one caught by an email provider in Milwaukee:

    Hello,

    Unfortunately, your data was leaked in the recent hacking of Ashley Madison and I now have your information.

    If you would like to prevent me from finding and sharing this information with your significant other send exactly 1.0000001 Bitcoins (approx. value $225 USD) to the following address:

    1B8eH7HR87vbVbMzX4gk9nYyus3KnXs4Ez

    Sending the wrong amount means I won’t know it’s you who paid.

    You have 7 days from receipt of this email to send the BTC [bitcoins]. If you need help locating a place to purchase BTC, you can start here…..

    One security expert explained to Krebs that this type of extortion could be dangerous. “There is going to be a dramatic crime wave of these types of virtual shakedowns, and they’ll evolve into spear-phishing campaigns that leverage crypto malware,” said Tom Kellerman of Trend Micro.

    That sounds a little dramatic, but bear in mind just how many people were involved. Even if you assume some of the accounts were fake, there are potentially millions who’ve had their private information posted on the dark web for anybody to see and abuse. Some of these people are in the military, too, where they’d face possible penalties for adultery. If some goons think they can squeeze a bitcoin out of each of them, there are potentially tens of millions of dollars to be made.

    The word “potentially” is important because some of these extortion emails are obviously getting stuck in spam filters, and some of the extortionists could easily just be bluffing. Either way, everybody loses when companies fail to secure their users’ data. Everybody except the criminals.

    While extorting someone over data that’s already publicly available might seem like an odd thing to do, keep in mind that the data so huge and difficult to access that it’s not necessarily easy for a spouse to find out you were using the site. It’s not like there’s a search engine for Ashley Madison users, at least not yet. But there’s nothing stopping someone from creating one and suddenly making it really easy to find out if someone you know used the site.

    So, until all that data become more accessible, the threats do carry some degree of weight which suggests we’re probably going to see a wave of extortionists trying to do exactly this scheme. And ANYONE with an internet connection can potentially be an extortionist…they just have to put in the effort to obtain and parse the data. So even if you end up paying the fee, there’s nothing stopping all the other extortionists from doing exactly the same thing to you.

    As far as extortion-related game-theory goes, this one is a doozy. Ah, the joys of the digital age.

    Posted by Pterrafractyl | August 21, 2015, 3:13 pm
  13. Link to fascinating NYT article about the role an IRS investigator played in identifying Ross Ulbricht:

    http://www.nytimes.com/2015/12/27/business/dealbook/the-unsung-tax-agent-who-put-a-face-on-the-silk-road.html?smid=pl-share&_r=1

    Posted by Kathleen | December 26, 2015, 11:16 am
  14. Here’s an example of a services that’s going to become increasingly popular as anonymous communication technologies and anonymous payment systems like Bitcoin continue to roll out. Especially during finals week: Bitcoin-based robocall-bomb-threats-for-hire services:

    The Washington Post
    Telephone bomb threats prompt numerous school evacuations and lockdowns in Va., N.J.

    By Moriah Balingit and T. Rees Shapiro March 4 at 3:24 PM

    Police in Northern Virginia and New Jersey are investigating bomb threats that were called in to dozens of schools Friday morning, threats that prompted evacuations and lockdowns.

    Many of the schools received the threats via automated phone calls — known as robocalls — a method that has become increasingly common for school bomb threats nationwide and one that is difficult to track. A rash of robocalls led to evacuations and lockdowns of 13 schools in three states in January, none of which were found to be credible..

    At least seven schools in Northern Virginia received bomb threats Friday morning, prompting some to evacuate and others to lock down. Falls Church City’s lone high school, George Mason High, was evacuated after it received what school officials described as an “automated bomb threat” by phone shortly before noon.

    Fairfax County Police are investigating bomb threats that were called in to three public schools and one private school between 11:22 a.m. and noon, but authorities declined to say whether those threats were from robocalls. Police determined them not to be credible and Fairfax County Public Schools officials decided to continue class normally at the three high schools that received threats.

    “Police are investigating and have determined the threats are not credible, and are intended only to disrupt school operations,” said Mary Shaw, a school system spokeswoman. “We do not believe any FCPS students are at risk and we are continuing with normal school operations at all of our schools for the remainder of the day.”

    Bomb threats also were called into schools in a dozen districts in New Jersey at around 11 a.m. Friday, disrupting school for thousands of students, according to a report in The Record.. The problem has become so severe that the Bergen County Prosecutor’s Office has decided to host a symposium to discuss how to handle such threats. It was the second time in a week that robocall bomb threats shut down multiple schools in New Jersey.

    Robocalls are becoming an increasingly common method of delivery for school bomb threats, said Amy Klinger, an assistant professor at Ashland University in Ohio and a co-founder of the Educator’s School Safety Network, a national non-profit school safety organization.

    Klinger said that Internet-based organizations charged the equivalent of $50 in bitcoins to create a bomb scare using automated phone calls, which account for 13 percent of all threats, according to her school security research.

    “Schools are really caught in this dilemma of what do we do? Do we ignore it? But you can’t,” Klinger said, noting that some schools receive multiple threats in a single day and evacuate their buildings for each occurrence, creating significant delays during the academic day. “That’s a really dangerous precedent to say we’re just going to stop responding. So it’s really kind of a Catch 22 that schools have found themselves in. We need to respond but every time we do it just generates more threats.”

    Klinger, in a recent school security report, wrote that bomb threats against schools have increased significantly in recent years. So far during the 2015-2016 school year, Klinger found that a total of 745 bomb threats had been made against schools, a 143 percent increase compared to the same time period during the 2012-2013 school year.

    In January, schools nationwide received 206 bomb threats, the highest number ever recorded, Klinger found. Her research also determined that threats were made indiscriminately, with 48 of the 50 states in the country recording school-based bomb threats.

    “It’s not going away,” Klinger said. “The only option is to empower schools to be able to handle these things.”

    “Klinger said that Internet-based organizations charged the equivalent of $50 in bitcoins to create a bomb scare using automated phone calls, which account for 13 percent of all threats, according to her school security research.”
    At $50 a bomb threat, it’s almost kind of amazing that the trend isn’t growing even faster than it already is:


    Klinger, in a recent school security report, wrote that bomb threats against schools have increased significantly in recent years. So far during the 2015-2016 school year, Klinger found that a total of 745 bomb threats had been made against schools, a 143 percent increase compared to the same time period during the 2012-2013 school year.

    In January, schools nationwide received 206 bomb threats, the highest number ever recorded, Klinger found. Her research also determined that threats were made indiscriminately, with 48 of the 50 states in the country recording school-based bomb threats.

    Of course, as anonymous communication technologies and next-generation Bitcoin-like payment systems that don’t have Bitcoin’s pseudoanonymous vulnerabilities are developed and grow in popularity, it only seems reasonable that the growth of the threats-for-hire marketplace is only going to accelerate too.
    And that acceleration could create a rather interesting supply and demand dynamic because the more threats of this nature because the New Normal, the more societies are going to suffer from “threat fatigue” and stop caring or even responding to such threats and, therefore, the lower the “market” value for such threats. Who knows, we might be witnessing the first phase of a tech-enabled “threat bubble”: In the first phase we have the growth in the popularity of these threat “services” as people see the power at their disposal for just $50 bitcoins, which is then followed by a collective societal “shrug” over future threats because they just become ubiquitous. Anonymous bomb threats could become seen as a slightly more annoying version of internet trolling. Just in real life.

    That, of course, assumes that we hit a point where such threats are just ignored. And, as Amy Klinger pointed out, setting a precedent where schools just routinely ignore such threats isn’t something societies just casually do. At the same time, when you do respond to them, by clearing the school or whatever, you just end up encourage more threats:


    “Schools are really caught in this dilemma of what do we do? Do we ignore it? But you can’t,” Klinger said, noting that some schools receive multiple threats in a single day and evacuate their buildings for each occurrence, creating significant delays during the academic day. “That’s a really dangerous precedent to say we’re just going to stop responding. So it’s really kind of a Catch 22 that schools have found themselves in. We need to respond but every time we do it just generates more threats.

    It’s all quite a conundrum. One of the many conundrums we can throw on the “technology is a double-edge sword” pile that’s only going to keep growing. It’s a pretty big pile.

    Posted by Pterrafractyl | March 4, 2016, 4:21 pm
  15. More good times with the Bitcoin/TOR/Dark Web cypherpunk freedom package: Made-to-order remote controlled dynamite (although the seller might be the FBI):

    The Washington Post

    Texas man trying to buy explosives wanted to ‘send message’ by bombing a building, feds say

    By Lindsey Bever
    September 20, 2016

    A Texas boat repairman has been arrested and charged by federal authorities for attempting to purchase dynamite, grenades and wireless transmitters with an intent to burn someone’s vehicle and apartment “to the ground.”

    Federal authorities launched an undercover operation last month to monitor 50-year-old Cary Lee Ogborn, who they believed accessed an underground marketplace for illegal goods and tried to “transport explosives for the purpose of injury or destruction of property,” according to the U.S. Attorney’s Office for the Southern District of Texas.

    Ogborn, who had his initial court appearance on Monday, is due back Wednesday for his probable cause and detention hearing, according to news reports.

    “With terrorism, you don’t want to be reactive,” FBI spokeswoman Shauna Dunlap told the Houston Chronicle. “Our goal is to detect and deter events before they occur. An effective way to do this is through an undercover operation.”

    The federal public defender’s office declined to comment on the case.

    Federal prosecutors allege that starting in late August, online user “boatmanstv” went into an underground marketplace called AlphaBay, which uses onion routing, or TOR, to conceal users’ IP addresses, according to a criminal complaint filed in U.S. District Court.

    The user, who authorities believe was Ogborn, began communicating with an undercover FBI agent he apparently thought was an online explosives dealer.

    The user wrote that he wanted to buy a detonator to blow up a five-gallon drum of gasoline.

    “Dont need big explosion,” he wrote Aug. 27, according to court records, “just need to make sure building 20 ft x 40 ft made of wood burns to the ground.”

    That same day, he explained that he was planning to put explosives under a structure being used as someone’s apartment and detonate it from a distance.

    “The building like shed or storage, so yes like a house of wood,” he wrote, according to court records. “I guess I could use 1/4 stick TNT and gas to make sure it burns, or diesel fuel? I may use pressure sprayer to wet down the outside of the building right before I trigger it to help the burn. Dont know exactly whats inside but person using for apartment.

    “Person will not be there when set off. Dont want to kill, just send message.”

    Then at one point, “boatmanstv” inquired about a grenade, documents show.

    “The idea we have for this person is, while he sleeping we put grenade in back of truck and run to our car 20 to 30 meters away, then the truck blow up, he heres [sic] truck blow up and come outside while he outside we blow up house,” he wrote Sept 14. “Tell me about the grenade please. How far do we need to be away? What postal carrier for this package?”

    Federal authorities linked Ogborn to a marine repair shop in Houston, where a sign reads, “Cary’s Mobile Marine Services! Home Of Your Mobile Home DR,” according to the court documents. Neighbors said Ogborn lives and works at that location.

    It’s still unclear who Ogborn’s intended victim was and what kind of relationship they had.

    Earlier this month, the FBI agent sent a message to an email address provided by “boatmanstv,” telling him that the equipment would be sent concealed inside a toy.

    “We make it easy to initiate like we say. All wire connected you just add 2 battery inside car alarm and put detonator inside hole in dynamite,” it read, according to court documents. “When ready to detonate it just you push car alarm button from key it initiate.”

    Prosecutors said Ogborn agreed to pay $600 for the explosives.

    The undercover investigation revealed that “boatmanstv” had previously placed 32 orders, totaling more than $15,000 in Bitcoin, on that underground marketplace.

    Prosecutors said Ogborn picked up a package Friday that he believed contained the explosives and took it back to the boat repair shop. He was arrested for “attempting to transport explosives with the intent that those explosives be used to kill, injure, or intimidate any individual or to damage or destroy a vehicle or building,” according to the U.S. Attorney’s Office.

    He appeared Monday in federal court in a wheelchair, complaining that he was injured, but then walked out of the courthouse, Alfredo Perez, a spokesman for the U.S. Marshals Service, told the Houston Chronicle.

    The newspaper reported that, over the years, Ogborn has been in legal trouble for drug possession, driving with a suspended license, auto theft, committing insurance fraud and “possessing illegal metal knuckles.”

    “The idea we have for this person is, while he sleeping we put grenade in back of truck and run to our car 20 to 30 meters away, then the truck blow up, he heres [sic] truck blow up and come outside while he outside we blow up house…Tell me about the grenade please. How far do we need to be away? What postal carrier for this package?”

    Isn’t the Dark Web fun? You can get dynamite with a wireless fuse all ready to go. Just add batteries. Plus a hand grenade. The only drawback is that the person selling you this material might be a law enforcement agent.

    But if this guy hadn’t ended up making the buy from the FBI it seems reasonable to assume that a local news story about a Houston area cabin burning down during a grenade attack was just around the corner. At least it seems quite possible that he could have easily ended up hooking up with a non-FBI seller since he apparently used “AlphaBay” before. 32 times:

    The undercover investigation revealed that “boatmanstv” had previously placed 32 orders, totaling more than $15,000 in Bitcoin, on that underground marketplace.

    That sure could buy a lot of dynamite. Or $15,000 of whatever else he might have wanted on AlphaBay. It will be interesting to learn what else he bought. Especially since AlphaBay claims to be a kinder, gentler sort of lawless Dark Web marketplace that won’t allow people to hire hitmen or other “services that are here only to hurt people”. Yep, that’s the claim:

    Vice Motherboard

    This Dark Web Market Just Started Offering Contracts for Anything

    Written by Joseph Cox
    Contributor

    May 1, 2015 // 05:40 PM EST

    Reputation is everything on the dark web. In a space where each person in a deal is anonymous, users need to be able to be reasonably sure they are going to receive the specific drug or weapon they ordered.

    Now, recently launched AlphaBay dark web market is introducing a system that should allow practically any type of deal to be linked to a user’s reputation through the use of “digital contracts” verified by AlphaBay.

    Each contract costs $5 to initiate, paid to the market administrators, and it’s entirely up to the users what to put in the contract.

    Buyers and vendors can already make custom agreements. That isn’t new, “but contracts are for more long term business,” alpha02 told me over encrypted chat.

    “For example, a user wants to buy X pieces a week of something, or someone wants to give special treatment,” alpha02 said.

    When one of the parties of the contract feels they’ve been cheated, they can, in a similar way to PayPal, raise a dispute. At this point, an AlphaBay moderator will step in and decide on an appropriate action. That might result in a “failed” contract being added to the offending user’s profile, meaning that others can see that they have a habit of going back on their promises.

    “Too much may result in banning,” alpha02 continued.

    Presumably, since these contracts are just between two different users, those participating can decide to sell whatever they want. However, alpha02 says they will still try to keep the dealings within the rules of the market.

    “Hitmen will never be allowed, as we don’t want this kind of attention. We don’t allow services that are here only to hurt people, like hitmen,” alpha02 said.

    In the volatile dark web, with scams, disappearances and site closures, anything that even hints at stability is probably going to be welcomed by users. Whether these contracts will actually be used remains to be seen, but they are another manifestation of an apparently lawless space regulating itself.

    “Hitmen will never be allowed, as we don’t want this kind of attention. We don’t allow services that are here only to hurt people, like hitmen”.

    So now we know: If you have the need burn someone’s house down and blow up their car, AlphaBay won’t irresponsibly allow you to hire someone else to do that. But if you want to order a remotely detonated stick of dynamite and a hand grenade, that’s totally cool. Just be aware that you might be making that purchase from an FBI agent so, you know, make it clear that this is just for sending a message and you don’t want to actually kill anyone. You wouldn’t want to give AlphaBay a bad reputation.

    Posted by Pterrafractyl | September 22, 2016, 2:02 pm

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