At Silk Road 2.0, the FBI Finds the Worm

Blake Benthall, the operator of Silk Road 2.0, who was arrested by the FBI this week following a massive sting. (Image: coindesk.com)

Silk Road 2.0 could be a cautionary tale in every sense of the word: what not to do and how not to do it, with a satisfying morality wrap up at the end.

The Dark Net site’s somewhat mythic ride seems to have gotten too close to the sun, in the form of greed and depravity, and the law has now got their man in 2.0 operator Blake Benthall, arrested this week in San Francisco, mirroring the fate of his predecessor, the creator of the original Silk Road, who is now awaiting trial.

Just a year to the day since its launch, FBI agents from a global and massive sting operation made their move on the 26-year-old Benthall, a programmer of clearly some talent who had recently been employed at Carbon Five, followed by a brief stint as a flight software engineer for LA-based Space Exploration Technologies (SpaceX).

Although perhaps not directly gambling-related, Silk Roads 1 and 2, in fact, had a less-than-six-degrees of separation history with one of online gambling’s most controversial offshoots: Bitcoins. While the cryptocurrency is best-known to legitimate online gamblers as a novel form of bankrolling one’s play, Benthall’s appearance in a federal court this week showed Bitcoins’ darker side, as the young programmer was charged with being the main operator of Silk Road 2.0, a Bitcoin marketplace for the buying and selling of drugs, weapons, and illicit services of the most disturbing kind, including hit men for hire.

The Bitcoin Connection

Ironically, the takedown comes as Bitcoin is beginning to enter the mainstream consciousness as its increasingly embraced by businesses worldwide, not the least of which is a growing section of the online gambling industry, poker sites included.

The latest of such sites, the soon-to be-launched Breakout Gaming, is backed by no less than Johnny Chan and Jennifer Harman. Meanwhile, there are Bitcoin cafés in New York, Paris and Berlin; Bitcoin pubs in London; and even Alabama has a Bitcoin restaurant these days. And Las Vegas now has Bitcoin ATMs at the D Las Vegas Casino Hotel downtown, where you can even use the currency to pay for trinkets the gift shop.

But a massive operation involving US and European law enforcement across 17 countries that culminated this week in the arrest of 20 people and the closure of 400 illicit websites, reminded us of the Bitcoin’s darker side, as the currency of the Deep Web, with Benthall being the most-prized of the arrestees.

Deep Web

The Deep Web is the name given to Internet networks such as Tor that are hidden from traditional net browsers. These networks are heavily encrypted, and allow people to use the Internet with complete anonymity. Benthall’s site was a copycat site of the original Silk Road, where users could buy and sell anything from drugs to guns to forged documents and worse, much worse.

As a decentralized, unregulated cryptocurrency that operates outside the central banking system, Bitcoin is perfect for the Deep Web marketplaces, because it allows users to maintain anonymity when they buy and sell goods. But it looks like their days might be numbered.

The Tor Network

The development of Tor was originally funded by the US government to help dissidents living under dictatorships to communicate with the outside world anonymously. It also allows people within such regimes to access news sites and information services that are blocked by their own governments. To this end, the US believes it is in many ways a good thing. But total anonymity means just that. Not even Tor’s developers are able to spy on its users.

But the sheer number of sites shut down during this recent operation may tell a different story. Many are speculating that the FBI has cracked Tor.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division may even have hinted as much when he said this week that “the global law enforcement community has innovated and collaborated to disrupt these ‘dark market’ websites, no matter how sophisticated or far-flung they have become.”

The name of the operation is telling, too: Operation Onymous, as in “no longer anonymous.” It suggests that the association between Bitcoin and illicit, shadowy transactions may soon be a thing of the past and that criminals may no longer have a dark corner of the Internet in which to hide.

As for Benthall, he will have plenty  of time to contemplate his misdeeds: denied bail as a flight risk, he now awaits his next court appearance in Brooklyn, where he has been charged with everything from money laundering conspiracy to narcotic trafficking, computer hacking, and creating fake IDs. He could get as much as life in prison if convicted of all charges, putting the final cherry on this Greek myth of a criminal enterprise.

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