International probe leads to the arrest of the alleged operator of “Silk Road 2.0”

NEW YORK – Special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the FBI arrested the administrator of a black market website designed to buy and sell illegal drugs and other unlawful goods over the Internet. The arrest is the result of an international investigation by HSI, FBI and the European Police (EUROPOL).

Blake Benthall, 26, aka “Defcon” was arrested Thursday in San Francisco, California in connection with his operation and ownership of the Silk Road 2.0 website, a hidden website designed to enable its users to buy and sell illegal drugs and other unlawful goods and services anonymously and beyond the reach of law enforcement. He will have an initial hearing Thursday in federal court in San Francisco.

"As alleged, Blake Benthall attempted to resurrect Silk Road, a secret website that law enforcement seized last year, by running Silk Road 2.0, a nearly identical criminal enterprise. Let’s be clear – this Silk Road, in whatever form, is the road to prison,” said Preet Bharar, U.S. attorney for the Southern District of New York. “Those looking to follow in the footsteps of alleged cybercriminals should understand that we will return as many times as necessary to shut down noxious online criminal bazaars. We don’t get tired.”

“It’s been more than a year since the FBI made an arrest of the administrator of the black-market bazaar, Silk Road, and here we stand again, announcing the arrest of the creator and operator of Silk Road 2.0. Following a very close business model to the first, as alleged, Blake Benthall ran a website on the Tor network facilitating supposedly anonymous deals of drugs and illegal services generating millions of dollars in monthly sales. Benthall should have known that those who hide behind the keyboard will ultimately be found,” said George Venizelos, assistant director in charge of the FBI New York. “The FBI worked with law enforcement partners here and abroad on this case and will continue to investigate and bring to prosecution those who seek to run similar black markets online.”

“Today we have demonstrated that, together, we are able to efficiently remove vital criminal infrastructures that are supporting serious organized crime. And we are not 'just' removing these services from the open Internet; this time we have also hit services on the Darknet using Tor where, for a long time, criminals have considered themselves untouchable. We can now show that they are neither invisible nor untouchable, said Troels Oerting, director of EUROPOL’s European cybercrime center (EC3). “The results of today’s law enforcement action will of course not last forever. The Joint Cybercrime Action Taskforce was created to serve as a platform for targeted operations against global criminal networks and infrastructure, carried out by EC3 and our colleagues in EU member states and beyond. The criminals can run but they can’t hide. And our work continues.”

According to the complaint unsealed today in Manhattan federal court:

Since about December 2013, Benthall has secretly owned and operated an underground website known as “Silk Road 2.0” – one of the most extensive, sophisticated, and widely used criminal marketplaces on the Internet today. The website has operated on the Tor network, a special network of computers on the Internet, distributed around the world, designed to conceal the true IP addresses of the computers on the network and thereby the identities of the network’s users. Since its launch in November 2013, Silk Road 2.0 has been used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to buyers throughout the world, as well as to launder millions of dollars generated by these unlawful transactions. As of September 2014, Silk Road 2.0 was generating sales of at least approximately $8 million per month.

Silk Road 2.0 was created in the wake of the government’s October 2013 seizure of the website known as “Silk Road” and the arrest of its alleged owner and operator, Ross William Ulbricht aka “Dread Pirate Roberts.” The original Silk Road website had been designed to enable people anywhere in the world to buy and sell illegal drugs and other illegal goods and services anonymously and beyond the reach of law enforcement. Before its seizure in October 2013, Silk Road was used extensively to facilitate such transactions.

In November 2013, approximately five weeks after the government shut down Silk Road and arrested Ulbricht, Silk Road 2.0 was launched. Designed to fill the void left by the government’s seizure of Silk Road, Silk Road 2.0 was virtually identical to the original Silk Road website in the way it appeared and functioned. In particular, like its predecessor, Silk Road 2.0 operated exclusively on the Tor network and required all transactions to be paid for in Bitcoins in order to preserve its users’ anonymity and evade detection by law enforcement. 

The offerings on Silk Road 2.0 consisted overwhelmingly of illegal drugs, which were openly advertised as such on the site. As of Oct. 17, 2014, Silk Road 2.0 had over 13,000 listings for controlled substances, including, among others, approximately 1,783 listings for “Psychedelics,” approximately 1,697 listings for “Ecstasy,” approximately 1,707 listings for “Cannabis,” and approximately 379 listings for “Opioids.” Besides illegal narcotics, other illicit goods and services were openly advertised for sale on Silk Road 2.0 as well, including fraudulent identification documents and computer-hacking tools and services. 

When Silk Road 2.0 was launched, it was controlled for a short time by a co-conspirator using the same online moniker as that allegedly used by Ross Ulbricht in operating the original Silk Road website – “Dread Pirate Roberts.” In late December 2013, however, Benthall, using the moniker “Defcon,” took over administration of the site and has owned and operated it continuously since that time. In that role, Benthall has controlled and overseen all aspects of Silk Road 2.0, including, among other things: the computer infrastructure and programming code underlying the website; the terms of service and commission rates imposed on vendors and customers of the website; the small staff of online administrators and forum moderators who have assisted with the day-to-day operation of the website; and the massive profits generated from the operation of the illegal business.

During the government’s investigation, which was conducted jointly by HSI and the FBI, an HSI special agent acting in an undercover capacity (the “HSI-UC”) successfully infiltrated the support staff involved in running Silk Road 2.0 and was given access to private, restricted areas of the site reserved for Benthall and his administrative staff. By doing so, the HSI-UC was able to interact directly with Benthall throughout his operation of the website.

Benthall, of San Francisco, California, is charged with one count of conspiring to commit narcotics trafficking, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison; one count of conspiring to commit computer hacking, which carries a maximum sentence of five years in prison; one count of conspiring to traffic in fraudulent identification documents, which carries a maximum sentence of 15 years in prison; and one count of money laundering conspiracy, which carries a maximum sentence of 20 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Bharara praised the outstanding joint efforts of HSI and its Cyber Crimes Center and Chicago-O’Hare Field Office and the FBI and its New York Special Operations and Cyber Branch. He also thanked the Drug Enforcement Administration’s New York Organized Crime Drug Enforcement Strike Force, which comprises agents and officers of the DEA, the Internal Revenue Service, the New York City Police Department, HSI, the New York State Police, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Secret Service, the U.S. Marshals Service, Office of Foreign Assets Control, and New York Department of Taxation.

Mr. Bharara also thanked the Department of Justice’s Computer Crime and Intellectual Property Section for its assistance and support, the Office of International Affairs, and the law enforcement authorities of France, Germany, Lithuania, the Netherlands, and the United Kingdom. Bharara also noted that the investigation remains ongoing.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Asset Forfeiture Unit. Assistant U.S. Attorneys Serrin Turner, Timothy Howard, and Daniel Noble are leading the prosecution.

The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.