Wednesday, October 23, 2013

Government Informants Were All Around Silk Road

A major Silk Road drug dealer was flipped by the government just months before Silk Road was shutdown and Ross Ulbricht was arrested.

According to The Smoking Gun:
One of the top narcotics dealers on Silk Road, the recently shuttered online drug bazaar, secretly began cooperating with federal agents after his Seattle-area home was raided in late-July, The Smoking Gun has learned.

The disclosure that Steven Sadler, known online as “Nod,” was flipped will likely cause significant distress for his large Silk Road customer base, which included retail and wholesale buyers of heroin, cocaine, and methamphetamine.

Additionally, suppliers for Sadler, 40, will likely also be concerned that they have been exposed to law enforcement scrutiny.
During a hearing:
 Sadler’s lawyer told [Judge] Tsuchida that her client was in “constant communication with the government."

But this isn't the only Silk Road related snitch. TSG reports:
 Investigators also were aided by a confidential informant who agreed to cooperate after agents seized several packages mailed to her by Silk Road heroin dealers. In a TSG interview, the woman--a business owner in her thirties--said she had made several heroin purchases from “Nod” and allowed investigators to take over her Silk Road account to make undercover drug purchases.
AND
 While Sadler’s narcotics operation was headquartered in his Bellevue apartment, investigators reported that an undercover cocaine buy in mid-June was mailed to a cooperating informant from West Hollywood, California. 

Bottom Line: The Feds were all over Silk Road, from every angle you can think of. Those who are using Bitcoin based on the idea that it is an anonymous money transfer system should heed the lessons of Silk Road. The government does have the capabilities to monitor these type activities. It is not anonymous.

That said, gold has no smell.

6 comments:

  1. Yes, online one must always assume any and everything they post (incl. even this comment, if approved :-) ) is traceable, track able, and non- retrievable. John Doe cases were once brought against individuals that
    thought they were anonymous on message boards like Yahoo, AOL, etc. They were able to trace the IP addresses back to the end-users’ computer, usually by having the service or provider turn the info. over (which it appears providers today are even more so willing to do). So one would think some of those using Bitcoin, or other services try and take other precautions(anonymity svcs., etc.) but most ‘schemes’ (to evade detection, Iding) can at some point be defeated, leading to ID recognition. One must also consider that in the physical world they are or will increasingly be tracked via camera drones, satellite, and cheap devices in the works enabling monitoring of most all global physical space. This will in some instances put a cloud over gold and other more physical, off-line transactions, as same as online one will never know if what they are doing is being recorded. Privacy, anonymity, both very difficult to have much of in today's world. Food for thought.

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  2. If the government set out to trap a bunch of drug dealers, they could hardly do better than to design Silk Road. Hey, wait a minute.....
    Now I don't believe that really happened, after Obamacare I'm not sure the govt could design a Silk Road and get it working. But SRoad sure was a gift to the govt.

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    Replies
    1. A real gift? They nabbed a few drug dealers and seized a few million dollars worth of bitcoin - hardly a prize worth bragging about.

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  3. "Snitch and we'll spare you." Has always been the DEA's m.o. They are very dangerous.

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  4. "Gold had no smell..." So, are you implying that gold would have worked better in this scenario?

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  5. Bitcoin was not the weak link in the Silk Road affair. Poor operational security is what brought it down.

    One can argue that Bitcoin actually performed famously here. There were thousands of successful transactions and the Feds couldn't get to the operators "main stash". If Russ Ulbricht had a few brain wallets tucked away then he'll be a very rich man the day he gets out of prison. Yes, gold has no smell but it sure stinks when trying to send value across distance or when trying to hide from confiscation.

    ReplyDelete

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