You are on page 1of 7

Andy Greenberg Forbes Staff

Covering the worlds of data security, privacy and hacker culture.


Follow
Forbes 8/14/2013 @ 11:31AM 618,277 views

Meet The Dread Pirate Roberts, The Man


Behind Booming Black Market Drug
Website Silk Road
This story appears in the September 2, 2013 issue of Forbes.

An entrepreneur as professionally careful as the Dread Pirate Roberts doesnt trust instant messaging
services. Forget phones or Skype. At one point during our eight-month preinterview courtship, I offer to
meet him at an undisclosed location outside the United States. Meeting in person is out of the question,
he says. I dont meet in person even with my closest advisors. When I ask for his name and nationality,
hes so spooked that he refuses to answer any other questions and we lose contact for a month.
All my communications with Roberts are routed exclusively through the messaging system and forums of
the website he owns and manages, the Silk Road. Accessing the site requires running the anonymity
software Tor, which encrypts Web traffic and triple-bounces it among thousands of computers around the
world. Like a long, blindfolded ride in the back of some guerrilla leaders van, Tor is designed to prevent
meand anyone elsefrom tracking the location of Silk Roads servers or the Dread Pirate Roberts himself.
The highest levels of government are hunting me, says Roberts. I cant take any chances.
If Roberts is paranoid, its because very powerful people really are out to get him. In the last two and a half
years Silk Road has grown into the Webs busiest bazaar for heroin, methamphetamines, crack, cocaine,
LSD, ecstasy and enough strains of marijuana to put an Amsterdam coffee shop to shame. The Drug
Enforcement Administration wont comment on whether its investigating Silk Road but wrote in a
statement that its aware of the site and is very proactive in keeping abreast of the digital undergrounds
ever-evolving technological advancements. Senator Chuck Schumer has demanded Silk Road be shut
down and called it the most brazen attempt to peddle drugs online that we have ever seen by lightyears.
Anyone can download and run Tor, exchange some dollars or euros for the digital currency Bitcoin and go
shopping on Silk Road for drugs that are vacuum-sealed and discreetly mailed via the U.S. Postal Service,
right under the federal governments nose. By the measure of Carnegie Mellon researcher Nicolas Christin,
Roberts eBay-like service was grossing $1.2 million a month in the first half of 2012. Since then the site
has doubled its product listings, and revenue now hits an annual run-rate of $30 million to $45 million by
FORBES estimate. One analysis of the Tor network performed by a student at Dublins Trinity College
found that Silk Road received around 60,000 visits a day, mostly users seeking to buy or sell drugs, along
with other illicit items including unregulated cigarettes and forged documents. Silk Road takes a
commission on all of its sales, starting at 10% and scaling down for larger transactions. Given that those
commissions are collected in Bitcoins, which have appreciated close to 200-fold against the dollar since
Silk Road launched in 2011, the Dread Pirate Roberts and any other stakeholders in Silk Road have likely
amassed millions in profits.

Unmasked: The Man Behind The Silk Road


Click here to read about the shutdown of the illegal bazaar and its tale of online
secrecy, murders-for-hire, courtroom drama and corruption.
Despite the giant DEA crosshairs painted on his back and growing signs that the feds are probing the socalled dark Web that Silk Road and other black market sites inhabit, Roberts spoke with FORBES in his
first-ever extended public interview for a reason: As with physical drug dealing, a turf war has emerged.
Competitors, namely a newly launched site called Atlantis with a real marketing budget and a CEO with far
less regard for his privacy, are stealing Roberts spotlight.
Up until now Ive done my best to keep Silk Road as low profile as possible letting people discover [it]
through word of mouth, Roberts says. At the same time, Silk Road has been around two and a half years.
Weve withstood a lot, and its not like our enemies are unaware any longer.
Roberts also has a political agenda: He sees himself not just as an enabler of street-corner pushers but also
as a radical libertarian revolutionary carving out an anarchic digital space beyond the reach of the taxation
and regulatory powers of the stateJulian Assange with a hypodermic needle. We cant stay silent forever.
We have an important message, and the time is ripe for the world to hear it, says Roberts. What were

doing isnt about scoring drugs or sticking it to the man. Its about standing up for our rights as human
beings and refusing to submit when weve done no wrong.
Silk Road is a vehicle for that message, he writes to me from somewhere in the Internets encrypted void.
All else is secondary.
While Roberts waxes philosophical, his competitors are finding motivation enough in grabbing some of
Silk Roads lucrative drug trade. On June 26 a video ad for Atlantis appeared on YouTube telling the story
of Charlie, a friendly-looking cartoon hipster. Charlie, according to text that popped up around the
videos frame as jingly music played, is a stoner who moves to a new city for work and cant find any
marijuana. That is, until he discovers Atlantis virtual black market, orders some pot and gets high as a
damn kite.
YouTube removed the video within days for violating its terms of service but not before it had received
close to 100,000 views and pulled the new Bitcoin-based black market into the public Internets awareness.
Atlantis ad took a direct shot at Silk Road, calling itself the worlds best anonymous online drug
marketplace.

The Forbes E-book On Bitcoin Secret Money: Living on Bitcoin in the


Real World, by Forbes staff writer Kashmir Hill, can be bought in Bitcoin or legal
tender.
The next day, an employee of Atlantis named Heisenberg held a group chat with reporters where he
described the site as the Facebook to [Silk Road's] Myspace. In comments now deleted from an ask-meanything session on the social news site Reddit, Atlantis chief executive, who goes by the name
Vladimir, listed advantages over Silk Road like less downtime and smaller fees for sellers. The road has
more users, he wrote, but our site is better (to put it bluntly).
The battle for the Webs drug corner is on.
***
THE DREAD PIRATE ROBERTS isnt shy about naming Silk Roads active ingredient: The
cryptographic digital currency known as Bitcoin. Weve won the States War on Drugs because of
Bitcoin, he writes.
Bitcoin, which came into widespread use around the same time as Silk Roads creation, isnt exactly the
financial-privacy panacea some believe it to beits transactions can be traced using the same mechanisms
that prevent fraud and counterfeiting within the Bitcoin economy. But unlike with dollars, euros or yen, the
integrity of the nearly $1 billion worth of Bitcoins floating around the Internet is maintained by the
distributed computing power of thousands of users who run the crypto-currencys software, not by any
bank or government. That means careful users never have to tie their accounts to their real-world identity.
As a result Bitcoin-funded services deep within the dark Web, masked by anonymity tools like Tor, claim
to offer everything from cyberattacks to weapons and explosives to stolen credit cards.
Mix up your coins in one of many available laundering servicesSilk Road runs one automatically for all
transactions on the siteand it becomes very difficult to follow the money. Even the FBI, according to one
of the bureaus leaked internal reports, worries that Bitcoins complexity and lack of a central authority
present distinct challenges for tracking criminal funds. The result is a currency as convenient as PayPal
and theoretically as anonymous as cash.

Were talking about the potential for a monumental shift in the power structure of the world, Roberts
writes. The people now can control the flow and distribution of information and the flow of money. Sector
by sector the State is being cut out of the equation and power is being returned to the individual.
Of course, Roberts lofty words on individual liberties provide a convenient veneer to justify his profitable
business selling illegal, dangerous and addictive substances. But Roberts argues that if his users want
heroin and crack, they should have the freedom to buy it and deal with the consequences. Unlike other
Bitcoin-based underground sites, Silk Road bans all but what Roberts defines as victimless contraband. He
wont permit the sale of child pornography, stolen goods or weapons, though the latter is a gray area. The
site has experimented with selling guns and may yet reintroduce them, Roberts says.
Aside from the thorny ethics of the Bitcoin underground economy, the currencys wild fluctuations present
a more practical problem. Silk Road allows the sites dealers to peg their Bitcoin prices to the dollar, so that
a typical gram of heroin on the site costs around $200 regardless of whether Bitcoins are worth 50 cents
apiece, as in early 2011, or $266, at their precrash peak in April 2013. (Theyre around $100 today.) The
site also offers a currency hedging system that protects dealers against swings in Bitcoins value while their
drugs are in transit.
Bitcoin did more than enable the modern online black market, Roberts says. It also brought him and Silk
Road together. Roberts isnt actually the sites founder, he revealed in our interview. He credits Silk Roads
creation to another, even more secretive entrepreneur whom he declined to tell me anything about and who
may have used the Dread Pirate Roberts nom de guerre before it was assumed by the person I
interviewed. The current Roberts discovered the site shortly after its creation in early 2011. Around that
time, he says, he found a security flaw in the wallet software that stored Silk Roads funds. The bug
could have allowed a hacker to identify the sites hardware and steal its Bitcoins. Instead of exploiting the
weakness, he helped the sites founder fix it, gained his trust and became an active partner in the business.
Eventually, the current Roberts says, he bought out Silk Roads creator and assumed full control. It was
his idea to pass the torch, in fact, says Roberts. He was well compensated.
In February 2012 a post appeared on Silk Roads forums proclaiming that the sites administrator would
henceforth be known as the Dread Pirate Roberts, a name taken from the dashing, masked protagonist in
the fantasy film The Princess Bride tellingly, a persona that is passed down in the film from one
generation of pirate to another. He soon began to live up to his colorful alter ego, posting lofty manifestos
about Silk Roads libertarian political ideals and love letters to his faithful users and vendors; hes even
hosted a Dread Pirate Roberts Book Club where he moderated discussions on authors from the Austrian
school of free market economics. Commenters on the site describe Roberts as a hero, a job creator,
our own Che Guevara and a name [that] will live [on] among the greatest men and women in history as
a soldier of justice and freedom.
When I ask Roberts how he defines his role at Silk RoadCEO? Owner?he tells me that he considers
himself a center of trust between the sites buyers and sellers, a tricky task given that all parties want to
remain anonymous. Silk Road has slowly demonstrated to users that it isnt a typical counterfeit-drug scam
site or a law enforcement trap. Its made wise use of the trust mechanisms companies like eBay and Airbnb
have popularized, including seller ratings and an escrow that releases payment to sellers only after
customers receive their merchandise.
Silk Road doesnt really sell drugs. It sells insurance and financial products, says Carnegie Mellon
computer engineering professor Nicolas Christin. It doesnt really matter whether youre selling T-shirts
or cocaine. The business model is to commoditize security.
With millions flowing into Silk Road, the vast majority of which Roberts says is reinvested back in its
booming black market, the Dread Pirate brushes off questions about his wealth and lifestyle. He says he
carefully limits his spending to keep a low profile but admitted in one forum post to partaking in a few

first-world pleasures. The only such pleasure he would describe to me is smoking a bowl of sticky
indica buds at the end of a long day.
As far as my monetary net worth is concerned, the future value of Silk Road as an organization dwarfs its
and my liquid assets. I wouldnt sell out for less than 10 figures, maybe 11, he writes with a dash of
vainglory. At some point youre going to have to put Dread Pirate Roberts on that list you all keep over at
Forbes. ;)
***
ITS A RULE AS TIMELESS as black markets: Where illegal money goes, violence follows. In a digital
market that violence is virtual, but its as financially real as torching your competitors warehouse.
In late April Silk Road went offline for nearly a week, straining under a sustained cyberattack that left its
sensitive data untouched but overwhelmed its servers. The attack, according to Roberts, was the most
sophisticated in Silk Roads history, taking advantage of previously unknown vulnerabilities in Tor and
repeatedly shifting tactics to avoid the sites defenses.
The sabotage occurred within weeks of rival site Atlantis launch. Commenters on the Reddit forum
devoted to Silk Road suggested that Roberts customers and vendors switch to Atlantis during the
downtime, leading to gossip that the newcomer had engineered the attack.
Rumors, nothing more than that, says Atlantis CEO Vladimir when I interview him in an encrypted chat
room. (Like Roberts, Vlad doesnt share much about himself, other than a background in software
development, some experience as a small-time pot dealer and a love of psychedelics.) I have suspicions
[about whether] an attack ever took place. Its far more likely they were having infrastructure issues.
Roberts, for his part, wont comment on the April attacks source. He tells me hes happy to see
competition in the Web drug market, even as Atlantis boasted in June that it surpassed $500,000 in
cumulative transactions. Roberts points out that another site, Black Market Reloaded, has long copied Silk
Roads modeleven offering a wider variety of merchandise, including illegal firearmswhile still attracting
only a small fraction of Roberts customers. I like having them nipping at my heels, Roberts tells me.
Keeps me motivated.
In a comment on copycats posted to Silk Roads forums a few days after Atlantis released its video ad,
however, Roberts seemed to fire back. If you take someones invention, tweak one little thing and then go
around telling everyone that you are better, you get zero respect from me, he wrote. Though the rest of
the message focused on the difference between Bitcoin and a newer crypto-currency called Litecoin, users
interpreted the comment as a thinly veiled dig at Atlantis.
Meanwhile, Silk Road has also been adopting some of Atlantis marketing tactics: In addition to Roberts
first real interview, hes created a new public site at SilkRoadLink.com that serves as an online guide to
accessing Silk Road, bringing his business, at least tentatively, outside Tors obscured network.
Competition aside, Roberts has chosen a risky time to raise his profile, as law enforcement tightens its net.
Dealers in South Carolina and Australia have been arrested after allegedly selling on Silk Road, although
both may have also been dealing in the physical world. In May the proprietors of a Bitcoin-like digital
currency system called Liberty Reserve were indicted and accused of helping to launder $6 billion. That
same month the biggest Bitcoin currency exchange, Tokyos Mt. Gox, announced it would require
identification for anyone seeking to trade in real world currencies. Then, last month, the FBI exploited a
vulnerability in Tor to capture the alleged administrator of a child pornography site in Ireland. And,
perhaps most threatening to Roberts, the NSA has been revealed to have fed intelligence to the DEA and
other law enforcement agencies.

All of that gives Roberts good reason to distrust any means of communication and payment that could
possibly be cracked by law enforcement. In 2012 the operators of a Silk Road-like site known as the
Farmers Market were identified and indicted in a DEA operation called Adam Bomb. Though they had
used Tor to hide their domain, they had communicated with one another using the encrypted e-mail service
Hushmail, a service known to cooperate with law enforcement, and had accepted payments through PayPal
instead of Bitcoin. Just days after Atlantis Vladimir insisted that he and his chief operating officer
communicate with me using an encrypted IM program called Cryptocat, a bug in the program was revealed
that could have allowed all of our communications to be read.
Despite his caution, Roberts personal security remains an open question. But the potential lifetime in
prison he might face if identified hasnt slowed down his growing illegal empire. We are like a little seed
in a big jungle that has just broken the surface of the forest floor, he wrote in one speech posted to the
sites forums last year. Its a big scary jungle with lots of dangerous creatures, each honed by evolution to
survive in the hostile environment known as human society. But the environment is rapidly changing, and
the jungle has never seen a species quite like the Silk Road.