Silk Road 2.0 Operator Taken into Custody in San Francisco

Posted on: November 7, 2014, 03:09h. 

Last updated on: November 7, 2014, 03:15h.

Silk Road 2.0 operator arrested
Blake Benthall was arrested and charged, and Silk Road 2.0 seized by federal authorities, after a lengthy sting which determined the website was generating $8 million per month through the sale of drugs and other illicit services. (Image: FBI)

Silk Road 2.0, the second incarnation of the notorious Dark Net original site, is a bust, and the site’s operator is now in federal custody.

A 26-year-old man accused of operating a spin-off of the notorious Silk Road website was arrested on Wednesday in San Francisco.

Blake Benthall, a former software engineer at SpaceX rocket design company, has admitted running the site on the Deep Web, which operated as a Bitcoin marketplace for the buying and selling of every kind of drug imaginable, according to prosecutors. He was formally charged in a federal court on Friday.

While Bitcoin is being increasingly embraced by mainstream businesses, notably the online gambling industry, we were reminded again of its darker, more subversive origins. Bitcoin is a digital cryptocurrency with a global circulation of more than $1.4 billion that operates outside the central banking system, traded via encrypted peer-to-peer networks.

It was created as an anarchic alternative to mainstream currency by a shadowy never-definitively-seen figure (or group) called Satoshi Nakamoto, who has now disappeared into the ether, and because it’s a decentralized, unregulated currency, it can be used to buy and sell goods beyond the watchful eye of financial regulators.

Dark Side of Bitcoin

Silk Road 2.0 and its predecessor existed on the Deep Web, or as it is sometimes called the Dark Net, an Internet network hidden from traditional browsers that can only be accessed with the use of special software, such as Tor.

The FBI pulled the plug on the original Silk Road in September 2013, and its alleged creator, 29-year-old Ross William Ulbricht, who went by the name of “Dread Pirate Roberts,” is currently awaiting trial and denies the charges against him. Ulbricht sees himself as a “crypto-anarchist” on an ideological mission; his site, however, facilitated the anonymous sale of everything from drugs, to firearms, to hitmen and forged documents.

According to prosecutors, the Silk Road 2.0 site began trading 12 months ago and is thought to have been recreated by administrators of the old site. Benthall’s arrest was the culmination of a joint US and European operation across 17 countries, during which more than 400 other illegal websites were shut down. Six Britons were also arrested in connection with the administration of Silk Road 2.0.

Severe Flight Risk

“Since its launch in November 2013, Silk Road 2.0 has been used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to buyers throughout the world, as well as to launder millions of dollars generated by these unlawful transactions,” said US Attorney for the Southern District of New York Preet Bharara, the man behind the Black Friday online poker indictments.

“As of September 2014, Silk Road 2.0 was generating sales of at least approximately $8 million per month and had approximately 150,000 active users.”

Benthall appeared in court wearing a hooded sweatshirt with the words “Internet Better” on the back. Assistant US Attorney Kathryn Haun advised that he was a danger to the community and a “severe flight risk,” and recommended that he should be held without bail. She said investigators had found $100,000 in cash in his apartment, as well as fake identification documents.

He faces various charges that include conspiracy to commit narcotics trafficking, which carries a minimum of 10 years in prison.