FBI Shuts Down Billion-Dollar Online Drug Market

The Federal Bureau of Investigation has arrested and charged a man accused of running a notorious Internet "underground market" that let users trade illegal drugs and weapons. The "Silk Road" site combined a range of technologies to offer users greater secrecy.

The site was part of the so-called "dark Internet": the collection of sites that were part of the Internet but were not reachable through ordinary links.

Users could only visit the site by using software known as TOR, or The Onion Router. The name came from the way that data sent through the software was redirected through thousands of locations (like peeling back the layers of an onion), making it difficult, if not impossible, to trace who was doing what.

The site itself didn't sell anything. Instead, users could make deals with each other. Most purchases were made using Bitcoin, an online virtual currency.

Each Bitcoin is unique and created by a complex computer algorithm. Users can transfer Bitcoins to one another without having to use a bank, thereby making it harder for authorities to track financial activity.

Drug, Gun Trading Fuelled Billion-Dollar Business

The FBI believes the TOR site played host to $1.2 billion in transactions over a period of just two years. As the site takes a commission on each sale, its owner -- popularly known online as "Dread Pirate Roberts" -- is estimated to have taken in nearly $80 million.

In a long-running investigation, law enforcement officers used the TOR site to purchase more than 100 drug packages, including cocaine, heroin, and crystal meth.

It seems the FBI was able to not only work out exactly what computer was hosting the site, but could read private messages from Dread Pirate Roberts. Using this information they identified him as 29-year-old Ross Ulbricht of San Francisco and made an arrest at a public library.

Ulbricht is facing several charges, including involvement in computer hacking, money laundering, and narcotics trafficking. At the time of writing, Ulbricht had not entered a plea.

Site Boss Suspected of Putting Hit On Blackmailer

The FBI also suspects Ulbricht may have been involved in arranging the 'hit' of a user who threatened to expose him. However, the FBI says it does not have enough evidence to make a charge. (Source: bbc.co.uk)

The FBI has also seized $3.6 million worth of Bitcoins.

The case doesn't necessarily mean an end to online underground markets, however. Security experts say the FBI wasn't able to crack the case because of a flaw in the privacy offered by The Onion Router system.

Instead, it appears Ulbricht made some simple mistakes in failing to hide his own identity. (Source: theverge.com)