FBI arrests Silk Road’s “Dread Pirate Roberts,” Bitcoin trading jolted

The FBI on Wednesday shut down Silk Road, a notorious online market, and charged its 29-year-old administrator, known as Dread Pirate Roberts, for drug trafficking and computer hacking conspiracy.

In a detailed complaint, an FBI agent described Silk Road as theĀ “most sophisticated and extensive criminal marketplace on the Internet today” and pointed to service categories likeĀ “Counterfeit Bills,” “Firearms + Ammunition” and “Hitmen (10+ countries).” Update: the Dread Pirate has also been charged with attempted murder, a charge that carries a potential 30 year sentence.

The complaint claims that the site brokered $1.2 billion in sales in its two-and-a-half year existence, and that the site owners reaped $80 million in commission.

The sales all took place in Bitcoin, a synthetic currency that affords its users a high degree of anonymity. Reuters, which reported that the Dread Pirate Roberts was arrested in San Francisco, said authorities seized $3.6 million worth of Bitcoin. The FBI agent’s allegations also refer to a heavy volume of Bitcoin flowing in and out of wallets associated with Silk Road; here’s a sample flow from two days in September:

Screen shot

News of Silk Road’s closure appears to have hit the value of Bitcoin; a site that posts prices for various exchanges suggests the currency has fallen around 20 percent. Digg, meanwhile, tweeted this:

Update: Bitcoin’s price had largely recovered by end of day.

The allegations also include detailed descriptions of Tor technology, which provides a decentralized method of distributing information on the internet. The FBI did, however, appear to appreciate that Tor is not intrinsically criminal:

“[A]lthough Tor has known legitimate uses, it also is known to be used by cybercriminals seeking to anonymize their online activity,” read the complaint.

The arrest and seizure has sparked surprise and outrage on discussion forums like Reddit, where readers are posting images that show what the Silk Road site now depicts:

Screen Shot of domain seizure

Here’s the complaint, courtesy of security researcher Brian Krebs:

Silk Road Complaint

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