Silk Road 2.0 FBI Seizure, A Lesson on Taking All The Wrong Steps

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The Silk Road 2.0 online marketplace has been taken down by the FBI and its alleged administrator arrested and charged in a Manhattan federal court. The website’s homepage now shows the iconic ‘this hidden site has been seized’ logo.

A Mr Blake Benthall is the 26 year old man accused of controlling Silk Road 2.0; a dark net business which the FBI claims had a monthly turnover of $8 million and over 150,000 active users. The website sprung up in the weeks following the original Silk Road bust. It had listings for over 13,000 items including psychedelics, cannabis, ecstasy and opiates. There were also fake passports, driver’s licenses and various hacking services. Unlike the original Silk Road, no assassination services or weapons sales seem to have come to light as yet.

Infiltration

A special agent with the FBI has described how Homeland Security Investigations (HSI) was able to infiltrate support staff involved with the running of Silk Road 2.0 and gain access to private areas of the website allegedly run by Benthall. The agent claims that HSI were also interacting regularly with the accused and that undercover agents purchased quantities of illegal substances from the website and had them shipped to an address in Manhattan. Agents were even paid for staffing Silk Road 2.0; the wage was around $32,000 for 2014, not a good deal considering the risks involved and the profits taken.

Server imaged

The FBI has stated that they located the Silk Road 2.0 server in a ‘foreign country’ in May 2014 and imaged the server. Information obtained through the imaging led them to believe that a prominent user known as ‘Defcon’ was administering the server.

Friendly chats

The server contained the private key needed to operate Silk Road 2.0 forums and logs of private messages between members. These private messages included various chats between someone known as ‘myself’ and someone known as ‘captain’. Content of the chats concerned previous Silk Road arrests and a pension plan for the increasingly nervous ‘captain’. The FBI believes that ‘captain’ was DPR2 (who disappeared from Silk Road 2.0 earlier this year) and ‘myself’ was Defcon, because they had observed Defcon referring to DPR2 as ‘captain’ in other posts. The FBI are citing these chats as evidence that Defcon stored them and therefore had administrative access to the website.

The case of the curious email address

They further state that after gaining access to the records of the web server company which hosted the Silk Road 2.0 website they found that it was maintained by a user with the email address [email protected] This level of stupidity must have even shocked the FBI. Google Inc. supplied logs showing that a user logged into the email address many times during 2014. They also gave the user’s IP address.

The IP address was traced to a hotel in Lake Tahoe, California. Blake Benthall was discovered to have been a guest at the hotel on that date. Another IP address that accessed Silk Road servers was discovered to belong to a Las Vegas hotel, and Benthall was again found to have been a guest on the date in question. He had even given his [email protected] email address as part of his hotel check-in contact details. Benthall further used the email address to register GitHub and Twitter accounts and uploaded pictures of himself to them. He also blabbed about Silk Road through these accounts.

As if Benthall’s stupidity couldn’t get any more evident, the email address continued to be used on Bitcoin trading websites and even as part of information given to buy a $200,000 Tesla motor car. He also used Google Chrome to perform many of his online escapades and several times did not even bother to use Tor to access the Silk Road 2.0 support database. Throughout the investigation the FBI had access to this database which contained questions from Silk Road 2.0 users and possibly identifying information.

Capture

Finally the FBI placed Benthall under physical surveillance and observed him accessing computers at the same time his Silk Road account came online; they also logged an unusual amount of Tor traffic to his address.

Benthall was raided and arrested at his home in San Francisco on the 5th November, he was found with $100,000 in cash. Upon his arrest he admitted to being the administrator of Silk Road 2.0. He is likely to be moved to New York for trial.

Charges

Relating to the charge of Narcotics Trafficking Conspiracy it has been alleged by the Southern District of New York that from December 2013 to October 2014 Blake Benthall AKA ‘Defcon’ and others did ‘combine, conspire, confederate, and agree together and with each other to violate the narcotics laws of the United States’, also that they ‘did distribute and possess with intent to distribute controlled substances and aid and abet such activity’. The controlled substances named in the charge sheet are ‘1 kilogram…of heroin, 5 kilograms…of cocaine, and 10 grams…of lysergic acid diethylamide.’

Further counts include Conspiracy to Commit and Aid and Abet Computer Hacking, Conspiracy to Transfer Fraudulent Identification Documents, and Money Laundering Conspiracy. Note that all of these charges come with the appendage ‘conspiracy’ which may potentially fall under the RICO statute and carry more serious penalties.

The arrest warrant makes several mistakes concerning the Bitcoin technology, an example of which is: ‘Bitcoin is an anonymous, decentralized form of electronic currency existing entirely on the internet’, a statement which is embarrassing false, Bitcoin is neither anonymous, nor is it internet exclusive or even dependant.

Operation ‘Ononymous’ and the future

The arrest of Benthall is part of a huge global law enforcement drive to take down dark web markets across the world. Over 400 websites are set to be raided under Operation ‘Ononymous’ and already numerous other individuals have been arrested in relation to them. The operation is a joint effort between 16 European countries and the US.

However, Silk Road 3.0 has already been launched while dark marketeers are getting behind the new wave of decentralized markets such as OpenBazar which have no central point of failure. It looks like the US is hell bent on embarking on this new unwinnable war on drugs, to add to its already unwinnable war on drugs, its unwinnable war on software piracy and its unwinnable war on terror.

Conclusion

The brazen and antagonistic attitude of Silk Road 2.0 launching right after the arrest of Ross Ulbricht was always going to draw special ire from the FBI. When all is said and done, users of Silk Road 2.0 have only themselves to blame if they are not sleeping well tonight. They should have expected this, and like many smarter users of the original Silk Road, realized that the party was over and it was time to call it a day.

It was obvious that this bust was only a matter of time, especially since Silk Road 2.0 was beset with administration problems from the beginning. However, what no one could have foreseen was the abject stupidity of this new administrator ‘Defcon’. The man has clearly made almost every mistake Ross Ulbricht made and more, despite the vows of Silk Road 2.0 administration never to fall into that trap.

The Silk Road 2.0 bust almost exactly mirrors that of Silk Road and there is no telling what personal information belonging to users the FBI now holds, since they have clearly been imaging the servers for months. Using email addresses containing personal information, uploading photographs and linking hotel check-ins with one’s identity is incredibly sloppy. It seems that it is not the FBI dark market users have to worry about, neither is it Tor or Bitcoin vulnerabilities, it is the administration.

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