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Silk Road Website Founder Loses Appeal of Conviction and Life Sentence

On May 31, 2017 the United States Court of Appeals for the Second Circuit unanimously affirmed the conviction and life imprisonment of Ross Ulbricht for drug trafficking and crimes associated with his creation and operation of the online marketplace known as Silk Road.  Among others challenges, Ulbricht argued on appeal that he should have been allowed to introduce evidence regarding former government agents who pled guilty to stealing Bitcoins as they investigated Silk Road and Ulbricht.  The Second Circuit disagreed, finding that while “the shocking personal corruption of these two government agents disgraced the agencies for which they worked,” it had nothing to do with whether Ulbricht operated Silk Road.  The Second Circuit similarly found Ulbricht’s other arguments unavailing, namely that (1) the government’s violated his Fourth Amendment rights through the use of pen registers and trap and trace devices to monitor IP addresses associated with internet traffic to and from Ulbricht’s wireless home router, and the search and seizure of his laptop and Facebook, Google accounts; (2) he was denied a fair trial due to the preclusion of certain testimony and evidence; and (3) it was improper for the court to consider six drug-related deaths relevant to his sentencing.

Silk Road was the largest online black market at the time of its shutdown in 2013 and the first known darknet market.  Browsing anonymously, Silk Road users principally bought and sold drugs, false identification documents, and computer hacking software using Bitcoins.  The government believes Silk Road customers exchanged approximately $183 million worth of illegal drugs, as well as other goods and services, through the site.  The FBI reported in October 2013 that it ultimately seized 144,000 Bitcoins, worth $28.5 million at the time.  Ulbricht was caught with more than $18 million in Bitcoins on his laptop.

Copyright 2022 K & L GatesNational Law Review, Volume VII, Number 156
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About this Author

Nicole Mueller, KL Gates Law Firm, Securities and Transactional Litigation Attorney
Associate

Ms. Mueller’s practice is focused in litigation under the federal and state securities laws and litigation arising out of mergers and acquisitions, other transactions and corporate governance matters. Her experience includes representing investment advisers, corporate officers and directors, and independent trustees in derivative lawsuits, investigations, and actions brought pursuant to Section 36(b) of the Investment Company Act of 1940. Ms. Mueller also practices in the areas of complex commercial litigation and arbitration, regulatory disputes, and employment law....

312-807-4341
Clifford C. Histed, Financial Markets Lawyer, Health Care Attorney, KL Gates, Law Firm
Partner

Cliff Histed focuses on representing companies and individuals operating in highly-regulated industries, particularly in the areas of financial markets, trading, and health care, during both criminal and regulatory proceedings, and in representing clients in litigation and at trial.

Mr. Histed is a former supervisory federal prosecutor and supervisory enforcement lawyer with the Commodity Futures Trading Commission.  He has more than 23 years’ experience investigating and prosecuting official misconduct, business frauds, and criminal offenses in...

312-807-4448
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