With Letter from Silk Road website creator to cryptocurrency enthusiasts
Let’s face it, anyone involved in cryptocurrency knows the system they are participating in—perhaps even profiting from— has a dark, potentially unlawful side. This is ongoing but it isn’t new. The first proof of concept for the use of Bitcoin, the Silk Road website, admittedly sold drugs and hacker tools. Bitcoin has an earned reputation that not all alt coins deserve.
But since 2017 and the tepid entrance of Wall Street into cryptocurrency, the amount of money from the “legitimate” side of finance far exceeds dark market money. Last year hedge funds and commodity exchanges all figured out a way to legally play in the murky waters, and to bet against cryptocurrency’s success. (Feel free to attribute the 2017 rise to $20,000, and the anemic hovering at $9,000 to Wall Street messing up the moon, or simply thank them for advancing adoption).
Still, arguably legit money hasn’t done anything to improve crypto’s image, things remain hazy if not unlawful by the standards of many countries. Traded on unregulated exchanges, pitched by sketchy ICOs, supported by a technology many don’t explain well—the cryptocurrency market is currently worth over $550Billion.
For entrepreneurs in this space, legal exposure continues to be a huge concern. Most ICOs will fail because they will underestimate compliance costs, let alone follow them. Only the marijuana industry combines the same legal anxiety with potential lucrative business opportunity seen in cryptocurrency.
Legal Uncertainty
The legal perils for everyone were on the minds of attendees at a recent Bitcoin, Ethereum & Blockchain Technology Conference in Dallas, Texas. Multiple compliance companies pitched services to ICOs and SEC regulations were clarified throughout three days of presentations. One popular presentation was called “The Ethical ICO”.
But in the most profound legal discussion, one room was talking about a man currently serving a double life sentence, plus 40 years for creating the first large scale website that accepted Bitcoin.
In a small connector room with a handwritten note on a white board labeled “Special Topics”, Lyn Ulbricht spoke about her son Ross Ulbricht, the 33-year-old man arrested in 2013 of creating and operating the Silk Road anonymous marketplace.
At the Dallas Bitcoin conference, Mrs. Ulbricht was speaking to a group of computer, finance and investment enthusiasts. It was the first time she has appeared before this growing subculture, she tells me. Not only are many in the audience aware of Ross’ case history, many have an ongoing stake in legal rights and criminal justice as they relate to cryptocurrency.
A Personal Appeal
What Mrs. Ulbricht offered was touching and intelligent, including a lo-fi PowerPoint presentation that included a shot of Ross participating in Ron Paul’s Senate campaign while in college at Penn State, and another of him with Lyn in a maximum-security federal prison. At a conference about technology, with sophisticated screens and backdrops, her slide show stood honestly and humbly out of place.
Perhaps it is the same for Ross. The federal prison in Florence, Colorado where he is now also holds some of the country’s most violent and dangerous criminals. In this maximum security prison, there are also inmates serving life sentences for marijuana trafficking—in one of the only US states where it is now legalized.
One can only imagine what Ross may have faced in the current atmosphere. Recently US President Trump has been mulling tougher drug policies including the death penalty.
According to a May 2107 article in Forbes, there are over 162,000 US inmates serving life sentences—and the numbers are “surging”. There have long been stories of drug dealers getting unjustified life sentences due to disastrous “three-strikes” sentencing. Still, over 3,000 US inmates are serving life sentences for non-violent drug crimes. Ross had no criminal record before receiving what amounts to a death sentence—for creating a web site with a philosophy of anonymity.
Five years after Ross’ arrest, several anonymous marketplaces have continued to thrive including Hansa, Alphabay and Evolution. When creators or participants have been arrested, all have been given far lighter sentences and none of them life. One administrator for Silk Road 2.0 was sentenced to 8 years when caught, another was released with no sentence at all. The biggest convicted cocaine, meth, and heroin dealers from the Silk Road will be free one day, or have already walked.
Next the US Supreme Court
Ross’s next opportunity will be with the US Supreme Court. During the discussion Lyn provided the audience with an update on Ross’ December 2017 filing. The recent Petition for Writ of Certiorari, a court filing that asks for the Supreme Court to review a lower court ruling, has been filed and is supported by 21 legal justice organizations.
“In this case, without a warrant or probable cause, the government seized petitioner’s private Internet traffic information and used that information to arrest and convict him of drug trafficking and related offenses. The district court then sentenced petitioner to life imprisonment without the possibility of parole—a sentence almost unheard of for a first-time offender charged with the offenses at issue. The district court imposed that sentence by resolving several disputed issues of fact; absent those judge found facts, petitioner’s sentence would have been unreasonable.” -Supreme Court Petition, page 3
Trafficking in Technology
Ross Ulbricht’s case is one every cryptocurrency trader, ICO captain or Bitcoin hodler should be familiar with. The anxiety that we are somehow trafficking in taboo technology comes from the early days of that first anonymous marketplace. (BTW all you BTM operators, why did you put your first machines in my ‘hood instead of the mall? You know why.)
But is creating a piece of technology or a website worthy of ending someone’s freedom for life? At very least the case deserves re-sentencing. Rumors of nationwide overdoses and contract-for-hire killings never saw their day in court—still they were blatantly considered by Judge Katherine Forrest during sentencing.
And let’s be honest. Trafficking in nuclear technology doesn’t even appear to command a sentence of double life plus 40 years. We typically reserve such punishment for child rapists, murderers and terrorists. Dangers to society.
Only occasionally do we show our outrage in sentences for con men and charlatans who steal hundreds of millions—like giving Bernie Madoff 150 years for his ponzi schemes—not because we can truly calculate the damage, but because there were so many charges against him. Paul Manafort, the disgraced Trump campaign chairman is facing 305 years for his money laundering. It will do little to change behaviors in those who game the financial system.
In light, every US citizen, not just cryptocurrency gamblers, should be paying attention to Ross’s case. The way information was obtained to locate and connect him to the anonymous website reveals an ongoing threat to internet security rights and privacy. This is why blockchain and encryption are taking such hold—we no longer trust others in the digital world.
Investigators who were key to the case were sentenced to jail for stealing Bitcoin for themselves, witnesses were withheld from the defense, and the Justice Department relied on information from Mark Karpeles, a cryptocurrency nemesis for being captain during the Mt. Gox theft —one of the largest and most famous bitcoin frauds in crypto’s early history.
As much as anything, Ross Ulbricht’s case shows US law’s early inability to understand and control cryptocurrency technology. Lost were the discussions of why digital currency gained hold of society when it did—distrust of governments following the US bank bailout of 2009, and a rapid decline in world trust online due to social media and growing cyber attacks.
An Invested Audience
A Bitcoin, Ethereum and blockchain conference appears to be an ideal and important place for Mrs. Ulbricht and Ross to connect with supporters. “I mostly speak to Libertarian groups and criminal justice audiences,” Lyn told me. “Speaking to the cryptocurrency community is a new opportunity.”
Speaking to audience members after the presentation, many said they were honored to have been present. Others wondered aloud if they could go to prison for launching an ICO, and how they might be made an example. Here in January, Jared Rice, Sr. was charged with fraud by the SEC for creating AriseBank out of his Dallas apartment, collecting over $600 million in an ICO. The case is pending.
Most throughout the conference agreed Lyn should attend more technology events with the crypto and blockchain communities.
“Blockchain in general, and cryptocurrency in particular, owe a great deal to Ross Ulbricht,” said Jakob Ehlert, a graphic designer from Missouri. “The community should stand together to fight his unjust sentence.”
To conclude the presentation Lyn read a letter that Ross wrote exclusively for the conference. Here it is in its entirety:
Hi everyone. Thank you for hosting my mom and for hearing what she has to say. My Supreme Court petition is on track thanks to the support that many of you have given me over the years. Truly there is much love in this
community.
So this is an exciting time for Bitcoin, isn’t it? When I first learned about it it was trading for six cents or so. It’s incredible to see something increase 300,000 fold in value, wow. I saw it’s potential back then to transform our world and it hasn’t disappointed. If anything it has exceeded my
expectations.
Now there’s a multitude of alt coins that have sprung up and found a niche.
With dozens of coins experimenting with variations on Satoshi’s invention,
I have faith that we will find the optimal path forward, learning from each
other’s mistakes and copying success.
We are in the middle of a profound technological revolution. It’s beautiful
and awesome. I am grateful just bearing witness to it. It is also a profound
opportunity. Our subculture is having an outsized influence on society
right now that will only grow. We are the future, my friends.
I’ve been in prison a few years now so I am out of the loop. But it’s given
me perspective as well. Now more than ever we need a measure of self reflection. Let’s not forget our roots as we push ahead. Let’s stay grounded in the principles that Bitcoin was incubated in: decentralization, a focus on empowering individuals, and a community of love and respect.
I’m proud of how we’ve flourished and optimistic that the best is yet to come. I am fighting ever day for my freedom and hopeful that one day I will be out there with you.
All my love,
Ross
The letter reads like encouragement from someone who participated in Bitcoin’s early adoption, although his exposure to the cryptocurrency hype is limited (there are now over 1500 cryptocurrency tokens). His letter is short, perhaps even careful. It also seems timely in that it calls for a measure of self reflection by those of us outside.
His letter asks the audience to remember the roots of decentralization, individual freedom, love and respect—hardly the dangerous philosophy Judge Forrest chastised him for during sentencing.
Still, true to accounts of his nature, Ross Ulbricht’s letter shows he is still positive and loving towards a tech community that is intimately part of his downfall. In the end it becomes hard to rationalize Ross as someone so dangerous to the public that he deserves to be locked in a Super Max prison for the rest of his life.