Silk Road Bust: The Rothbardian Connection, the Bitcoin Bounce, and The Nuts and Bolts of the Case Against Alleged Mastermind Ulbricht

Some followup news and commentary on
yesterday’s shuttering of Silk Road
and arrest of its alleged

Many have argued that movement libertarians need to stop wasting
their time with mere ideological education and get down to the
actual practice of building alternate institutions that
show-not-tell the world that government isn’t necessary to meet
human needs.

Those types should be cheering the news that accused “Dread
Pirate Roberts” Silk Road founder and operator Ross Ulbricht is a
classic Rothbardian libertarian of the Mises Institute variety. See
interesting profile from Business Insider
, which
reports Ulbricht:

lost his interest in physics and chemicals sometime after he
graduated from Penn State in 2008, in favor of a new passion —
libertarianism. He wrote on his LinkedIn

Now, my goals have shifted. I want to use economic
theory as a means to abolish the use of coercion and aggression
amongst mankind. Just as slavery has been abolished most
everywhere, I believe violence, coercion and all forms of force by
one person over another can come to an end. The most widespread and
systemic use of force is amongst institutions and governments, so
this is my current point of effort. The best way to change a
government is to change the minds of the governed, however. To that
end, I am creating an economic simulation to give people a
first-hand experience of what it would be like to live in a world
without the systemic use of force.

He became a fan of the Austrian School of Economics, a
conservative take on the free market. The indictment against him
says he became a devotee of the Mises Institute, and that the
writing of Ludwig von Mises and Murray Rothbard “provid[ed] the
philosophical underpinnings for Silk Road.”

Worth noting for future reference that a fair amount of chatter
around people seemingly close to Silk Road are claiming that if the
feds think they have “Dread Lord Pirate Roberts”
in the singular person of Ulbricht, that they are mistaken. Two
months ago Forbes had the
first press interview with
, supposedly, the Dread Lord.

The full government complaint out of New York (there’s a
separate indictment from Maryland) against Ulbricht can be
found here

Lots of other interesting rubble fluttering around the
supposedly shuttered doors of Silk Road including, as anyone who
understands that the human spirit cannot be fettered and that
“black markets” are real markets,
the rise to prominence of substitutes
, as Digital
 reports, most prominently Sheep Marketplace and
BlackMarket Reloaded.

A more well-known Silk Road competitor called Atlantis,
shut itself down just two week
s ago.

This federally caused glitch in what was probably still the
first thing most people think about when they think about Bitcoin
also predictably caused
some flutterings in Bitcoin valuation
, Wired

As news of the Silk Road shutdown spread, bitcoin values took a
tumble, initially dropping by about 20 percent, or close to $500
million by mid-morning, Pacific time. But values soon crawled back.
On the Bitstamp exchange, for example, bitcoins dropped from about
$125 to $90, before climbing back to $115 at midday. On the
slightly inflated Mt. Gox exchange, values went from $140 to 109,
before jumping back to $128.

Analysis at The Genesis Block
 concludes that “a
significant portion of bitcoin’s early traction and price gains can
be traced directly to Silk Road, with that impact waning over time,
most dramatically in the past six months.”

Also in Silk Road fallout:

•Meghan Ralston of Drug Policy Alliance at Huffington
notes how the Silk Road bust limns the foolish
fecklessness of war on drugs.

•The Verge reports, no surprise, that the hitman who
Ulbricht allegedly hired
was in fact an undercover cop

•The Verge also has some words from someone
claiming to be Ulbricht’s San Francisco roommate
. As Jonathan
Grubb wrote on Facebook, “Lesson from Silk Road: even the owner of
an international drug cartel can’t live in San Francisco without
having housemates.”

•Popehat has a
fascinatingly detailed account
for fans of federal law
enforcement about the hows and whys and likely nexts of the federal
case against Ulbricht. It includes this useful summation of all the
charges, from two separate investigations (in New York and
Maryland) against Ulbricht:

The New York complaint charges Ulbricht with three crimes:

1. A conspiracy to traffic in narcotics in violation
of Title 21, United
States Code, section 846.
 That charge requires proof that
(1) that two or more persons agreed to distribute drugs in
violation of federal law, and (2) the defendant knew of the
agreement, and (3) the defendant intentionally joined the

2. A “computer hacking conspiracy” in violation of Title 18, United
States Code, section 1030(a)(2)
.2 That
charge requires proof that (1) there was an agreement intentionally
to access a “protected computer”3 without
authorization or in excess of authorization and get information
from the “protected computer,” (2) the defendant knew about the
agreement, (3) the defendant intentionally joined the agreement,
(4) somebody committed an “overt act” — some affirmative step — in
support of the agreement.4

3. A conspiracy to launder money in violation of Title 18, United
States Code, sections 1956(a)(1)(A)(i) and (a)(1)(B)(i)
. That
charge requires proof that (1) the defendant conducted a
transaction with money, (2) the money was the proceeds of an
unlawful activity specified in the statute (including, for
instance, drug trafficking), (3) the defendant knew that the money
was the proceeds of that specified unlawful activity, and (4) the
defendant intended that the transaction promote the activity or
conceal the nature, the location, the source, the ownership, or the
control of the money.

The Maryland indictment charges Ulrich with three crimes:

1. A narcotics trafficking conspiracy, under the same statute
discussed above.

2. Attempted murder of a federal witness in violation
of Title 18, United
States Code, section 1512
. That charge requires proof that the
defendant (1) attempted to kill a person (2) intending to prevent
the person (3) from communicating to federal law enforcement or a
federal judge (4) about the commission of a federal crime. The
indictment charges Ulbricht as someone who aided and abetted this
crime under Title 18, United
States Code, section 2
; under that theory, if another person
commits a federal crime, the defendant is equally guilty if the
defendant intentionally “aids, abets, counsels, commands, induces
or procures” the commission of the crime.

3. Use of interstate commerce facilities to procure
murder-for-hire, in violation of Title 18, United
States Code, section 1958
. That charge requires proof that the
defendant(1) used or caused another to use any facility of
interstate or foreign commerce (like the internet); (2) with the
intent that a murder be committed; (3) in exchange for something of

Note to sticklers, the soliciting murder stuff does not require
an actual murder to have occurred, which indeed in this case it
seems there was not.