FBI Shuts Down the Second Silk Road

The FBI’s ultimately fruitless war against online drug sales had
another minor victory for them, as
Wired reports:

On Thursday international law enforcement agencies
including the FBI, the Department of Homeland Security and Europol
took down the Silk Road 2 and arrested its alleged operator
26-year-old Blake Benthall in San Francisco. Benthall, who is
accused of running the new Silk Road under the handle “Defcon,” has
been charged with narcotics trafficking, as well as conspiracy
charges related to money laundering, computer hacking, and
trafficking in fraudulent identification documents. The criminal
complaint against him alleges that the Silk Road 2 sold hundreds of
kilograms of drugs of every description to hundreds of thousands of
buyers around the world, with bitcoin-based sales of more than $8
million per month at the time of its seizure….

The criminal complaint against Benthall outlines how the Silk
Road 2′s staff was infiltrated by at least one undercover law
enforcement agent even before the site went online in November of
last year. In May of this year, the FBI somehow pinpointed the
foreign server that ran the Silk Road 2 despite its use of the
anonymity software Tor to protect its location, and obtained
records from the server’s hosting provider identifying
Benthall.

The complaint also traces Benthall’s proceeds from his alleged
management of the Silk Road 2′s bustling sales. Law enforcement
officials found that he used a bitcoin exchange to cash out
$273,626 between Silk Road 2′s creation in November of last year
and October of this year. About $70,000 of that money went towards
a down payment on a $127,000 Tesla Model S. Benthall is also
accused of holding the pursestrings for the Silk Road 2′s
employees:An undercover Homeland Security agent was also paid
$32,189 worth of bitcoin for work the agent did for the site.

The Wired link contains a copy of the criminal
complaint against Benthall.

This second Silk Road has already
lost market leadership in recent months to Agora, so it is not
like this destroys the online drug marketplace, but it sure cost
taxpayers a lot of money and is going to mess up the lives of
people just trying to help people buy and sell things they
want.

My Reason feature on the first Silk Road and its
shutdown is in the new December issue of Reason, in
subscribers hands right
about now.