If you were trying to get the attention of the Federal Bureau of Investigation, you couldn’t do much better than Blake Benthall, alleged (and, as of today, indicted) founder of the Silk Road 2.0 online drug marketplace.
Silk Road 2.0 arose, as you might have guessed, in the wake of the collapse of Silk Road, the original and most famous online drug bazaar. The original was shutttered by the FBI when they arrested Ross Ulbricht, aka Dread Pirate Roberts, the alleged founder and beneficial owner. SR1’s earnings via commission have been variously estimated as $80 million (by Quartz) and up to $307 million (฿614,305 from the FBI indictment) depending on when he cashed out his Bitcoins. Most of which he hasn’t, because the Feds seized 25% of them as proceeds of a crime and the rest went missing. Traffic analysis indicates Silk Road 2.0 was doing even more business than the original up until this morning, $8 million a month.
Interestingly, The Washington Post reports that multiple other darknet drug sites are also offline today. The article, by Christopher Ingraham, points out that by shutting down the original market behemoth, the Silk Road, the FBI caused a plethora of competitors to spring up all over, making it harder to track users and trace illegal deals. Now, with this second strike on the market leader, the scattering effect will be intensified. It’s as if someone bombed the only department store in downtown; a hundred suburban strip malls arise to take its place, and policing them takes a lot more time and money.
But back to Benthall. He’s a former Space-X employee and startup junkie, the kind of serial entrepreneur that never seems to have a breakout success (with one alleged exception, of course) but never lets that stop him. Looking at the Silk Road 2.0 case, we can kinda see why he hasn’t had a major sustainable business model to this point.
One of the Silk Road 2.0 servers was registered with his own personal email address. That’s right: email@example.com.
I don’t need to explain how stupid this is if you’re running an illegal business, do I?
Valleywag has the full indictment, which includes the WTF-worthy information that his hard drive was unencrypted, and that he maintained an unencrypted database of customer contact information.
Silk Road 2.0 also lost over $2.6 million of customer and vendor money several months ago; management blamed the known “transaction malleability flaw” in which thieves exploit a weakness in the blockchain’s recording of transactions. Just about that time Benthall bought himself a Tesla roadster.
Well, there are a couple of possibilities here (says the journalist putting on her Pundit Hat). Maybe Benthall really is as dumb as a sack of developmentally disabled rocks, and only made his entire setup transparent to the government by accident.
Or maybe those rumours that we’ve been hearing since the Silk Road 2.0 went up are actually true.
Those rumours: that it was an FBI honeypot all along, designed to capture the Silk Road users who somehow escaped Fed nets in the first takedown operation.
Those rumours are persistent, multi-sourced, and high-profile, and emerged within hours, if not minutes, of the site’s launch. At the time of the launch, Dwayne Melancon, chief technology officer for Tripwire, said “There is a lot of back-channel speculation that the take down of Silk Road was a ploy to steal millions in Bitcoins, and that the 25% seized by the FBI may have been sacrificed to cover up the embezzlement of the other 75% of the funds.” And the administrator of Silk Road 2.0 claimed to have been an admin of the old website.
It wouldn’t necessarily bother law enforcement if someone with whom they were cooperating made a great deal of money by helping them make their case. And if he thereafter set up a honeypot for them designed to attract the exact same people, well, that would be just swell from their perspective.
If, however, someone turned off the taps at some point, there’d be a problem, a very big problem, and those would fall on the head of the administrator. If for any reason the civilian administrator of a honeypot fell out with the FBI, they could use all of the access they had to simply take him down.
All of that is hypothetical, of course, except for the history and the warrant and the arrest and the offline darkweb sites. Although as the ActivistPost points out, the indictment indicates that the FBI had someone within the SilkRoad 2.0 since before it had even launched.
Very interesting, eh kittens? Stand by. Who knows? We may find out what Sabu has been doing with himself since his forcible retirement from LulzSec.