Federal authorities last week arrested a Washington state man accused of being one of the most active and sought-after drug dealers on the online black market known as the “Silk Road.” Meanwhile, new details about the recent coordinated takedown of the Silk Road became public, as other former buyers and sellers on the fraud bazaar pondered who might be next and whether competing online drug markets will move in to fill the void.
A complaint unsealed Oct. 2 by the U.S. District Court for the Western District of Washington at Seattle alleges that Steven Lloyd Sadler, 40, of Bellevue, Wash., used the nickname “NOD” on the Silk Road, and was among the “top one percent of sellers” on the Silk Road, selling high-quality cocaine, heroin and methamphetamine in small, individual-use amounts to hundreds of buyers around the world.
Investigators with the FBI and U.S. Post Office inspectors say they tracked dozens of packages containing drugs allegedly shipped by Sadler and a woman who was living with him at the time of his arrest. Authorities tied Sadler to the Silk Road after intercepting a package of cocaine and heroin destined for an Alaskan resident. That resident agreed to cooperate with authorities in the hopes of reducing his own sentence, and said he’d purchased the drugs from NOD via the Silk Road.
Agents in Seattle sought and were granted permission to place GPS tracking devices on Sadler’s car and that of his roommate, Jenna White, also charged in this case. Investigators allege that the tracking showed the two traveled to at least 38 post offices in the Seattle area during the surveillance period.
Interestingly, the investigators used the feedback on NOD’s Silk Road seller profile to get a sense of the volume of drugs he sold. Much like eBay sellers, merchants on the Silk Road are evaluated by previous buyers, who are encouraged to leave feedback about the quality of the seller’s goods and services. According to the government, NOD had 1,400 reviews for individual sales/purchases of small amounts of drugs, including: 2,269.5 grams of cocaine, 593 grams of heroin and 105 grams of meth. The complaint notes that these amounts don’t count sales going back more than five months prior to the investigation, when NOD first created his Silk Road vendor account.
Cryptome has published a copy of the complaint (PDF) against Sadler. A copy of Sadler’s case docket is here. NOD’s reputation on the Silk Road also was discussed for several months on this Reddit thread.
Many readers of last week’s story on the Silk Road takedown have been asking what is known about the locations of the Silk Road servers that were copied by the FBI. It’s still unclear how agents gained access to those servers, but a civil forfeiture complaint released by the Justice Department shows that they were aware of five, geographically dispersed servers that were supporting the Silk Road, either by directly hosting the site and/or hosting the Bitcoin wallets that the Silk Road maintains for buyers and sellers.
Two of those servers were located in Iceland, one in Latvia, another in Romania, and apparently one in the United States. See the map above.
As if the subset of Bitcoin users who frequented the Silk Road already didn’t have enough to worry about, there are indications that the individual(s) responsible for creating a competing Tor-based drug market — SheepMarketplace — may have made some missteps that could make it easier for authorities to discover the true location of that fraud bazaar as well. Check out this Reddit thread for more on that.
Also, there are some indications that a Silk Road 2.0 is in the works, at least according to DailyGadgetry.com. If that doesn’t work out, perhaps would-be future Dread Pirate Robertses will turn to Bitwasp, a budding Github project which aims to provide open source code for setting up standalone markets using Bitcoin.
“I think what you’re going to see is that a lot of me-too communities spring up and get squished pretty quickly,” said Nicholas Weaver, a researcher at the International Computer Science Institute (ICSI) and at University of California San Diego. “Part of the reason why the Silk Road was so useful was that it was so popular, and a half dozen smaller markets could be far less efficient than these larger markets. But personally, I’m betting we’ll soon see a fair number of them.”
Finally, it seems a large number of Bitcoin users have been spending tiny fractions of their coinage to send messages to the FBI’s Bitcoin address on Blockchain. Some of the love letters to the FBI are amusing, such as, “All your Bitcoins are belong to us,” while others sound a defiant tone, including this one: “One star is born as another fades away. Which one will come next? is my favorite riddle.” Said a girl puffing rings in a dot, dot, dash haze. “No worry, No hurry. They can’t stop the signal.”
Update, Oct. 8, 2013, 10:30 a.m.: The BBC is reporting that four men have been arrested in the U.K. for alleged drug offenses on the Silk Road, and that more arrests are expected in the coming weeks. The BBC quotes the U.K. National Crime Agency as saying such sites would are a “key priority.”
Update, Oct. 8, 2013, 1:32 p.m.: This Swedish news site is reporting that two men from Helsingborg have been arrested on suspicion of transacting in marijuana via the Silk Road.
Update, Oct. 9, 2013, 9:32 a.m.: A previous version of this story incorrectly stated that one of the servers seized by U.S. authorities was in Switzerland. Closer examination of the data reveals that the server was actually at a bulletproof hosting provider called Voxility, in Bucharest, Romania.