Crypto (Part Three)

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The first time I ever heard the word Bitcoin was back in 2012, when I was a federal prosecutor at the U.

S. Department of Justice.

Previously on Red Pilled America. And I heard the word Bitcoin because I was asked to prepare an investigation and a case against it and to help shut it down. The product that would eventually make Silk Road a national headline were the drugs. It's a certifiable one-stop shop for illegal drugs that represents the most brazen attempt to peddle drugs online that we have ever seen. Two separate federal task forces were formed to find the mastermind behind Silk Road.

At the beginning, they thought Bitcoin was totally inaudible and that scared the government. The blockchain is basically one big banking statement for all Bitcoin transactions. And that history can be tracked and never be changed. It's permanent. The Silk Road administrator announced his new name as Dread Pirate Robert.

And, just like that, DPR, ordered and paid for the assassination of a total of six people that were threatening his Silk Road empire.

One of the primary reasons people think Bitcoin is dangerous to America is because our leaders claim it's nothing but a tool for criminals. Cryptocurrencies such as Bitcoin have been exploited to support billions of dollars of illicit activity like cybercrime, tax evasion, extortion, ransomware, illicit drugs, human trafficking. Many players have attempted to use cryptocurrencies to fund their malign behavior.

But that doesn't tell the whole truth. And we know this because it's the technology behind Bitcoin that's helped catch criminals. I'm Patrick Karelchi and this is Red Pilled America. It's our third and final episode looking into the cryptocurrency Bitcoin. This is a complicated series, so if you missed the earlier episodes, you may want to start from the beginning.

In part one, we explained how we'd been hearing a lot of concern about the new internet cash called Bitcoin, so we wanted to find out if it was really dangerous to America.

We learned that the idea of digital cash began forming in the early 1980s for people that wanted to bypass the watchful eye of the government. This concept percolated until the onset of the 2008 financial crisis, when a mysterious figure named Satoshi Nakamoto released his digital currency system to the public. He called it Bitcoin.

This new internet cash replaced the function of a trusted third party, like a bank or credit card company, with an automated system of computers. Bitcoin needed a large-scale test case to prove its utility, and that came with the launch of Silk Road, an anonymous online marketplace on the dark web, a site that became the eBay of illegal drugs, with Bitcoin as its currency.

We heard from Curtis Green, an early Bitcoin enthusiast, who was drawn to Silk Road's message boards because it was a hotspot for people interested in cryptocurrency. Curtis eventually became a paid employee of the site, a move that would quickly put his life in grave danger. In part 2, we watched as Chuck Schumer discovered Silk Road, and brought national attention not only to the illegal marketplace, but to the new digital cash Bitcoin as well. We also learned about the technology driving Bitcoin, called the blockchain, and how it allows bitcoins to be transferred from one person to another. The blockchain is a complete history of all transactions ever made with Bitcoin, and this history is permanent and can never be altered.

Then we watched as Silk Road transformed from a self-described libertarian marketplace to what appeared to be a ruthless digital drug cartel. As the captain of Silk Road, someone that went by the name of Dread, Pirate Roberts, or DPR, ordered the assassination of 6 people that threatened his enterprise. But just as DPR thought he'd tied up all his loose ends, a federal task force was closing in on a suspect, by the name of Ross Ulbricht.

So how did law enforcement find Dread Pirate Roberts, or DPR, as he's called, the mastermind behind the Silk Road marketplace? As most of these things go, it was a team effort, but there's usually one key individual that makes a difference, and in this case, that person was a young IRS agent named Gary Alford.

Gary was tasked with trying to trace the money going through Silk Road. Growing up in the Brooklyn Projects, he had first-hand knowledge of the negative impact of drugs. So the hunt for DPR became personal to Gary, so much so that over his weekends in June 2013, Gary found himself searching for the captain of Silk Road, not through some secret back-channel, only accessible to government agents. No, he used a tool available to everyone. He used Google.

Like any good researcher would do, Gary wanted to get as close as possible to the origin of the site. So he began looking for the first mention of Silk Road on the internet. A few things were widely known about this dark web marketplace. One, it was only accessible by the Tor browser. Two, Silk Road used Bitcoin as its currency.

And three, it was thought to have launched around early February 2011.

. So Gary used scant bits of info like these to search. for the first time, Silk Road emerged online. As any seasoned web researcher knows, Google has tools to focus its search results. One of those tools is an option to target a search within a specific date range.

So, for example, if you know the approximate date of a site launched, you can use unique search terms associated with that website and constrain Google to scour web pages that were posted before the launch date. That way, if you're lucky, you may find someone talking about the site before anyone else knows about it. Whoever that person is would be a great starting point to find the mastermind of the site. With the widely believed launch date of Silk Road being February 2011,, Gary began using search terms associated with Silk Road, but constrained Google to only return web pages published prior to its launch. You can try this at home.

Enter the four words Silk Road, Bitcoin Tor into Google, press enter, and, once the results come back, click the tools button in the menu. From there, you can constrain Google to search web pages that were published on or before January 31st 2011.. If you do this, what you'll likely find is that on the first page of Google results, or perhaps even in the very first spot, there's a posting entitled A Heroin Store on a website called BitcoinTalk.org. This is the page that Gary Alford says he found.

Forums like BitcoinTalk.

org are places where someone posts topics related to Bitcoin for people to discuss. This particular topic started when a user posted a thought experiment about how a drug dealer would set up a website that accepts bitcoins for heroin. The person who posted the topic asked users to try to find ways that someone could attack the store to take it down. The topic was first published on June 9th 2010, and many users responded to it. But the particular page that Gary found was a response posted months later, on January 29th 2011,, and the response mentioned Silk Road.

Apparently, a user by the name of Altoid posted his response to the topic, but at some point deleted it. However, unfortunately for Altoid, deleting his response did not erase posts by other commenters that had already quoted him, and what Altoid said in his original post was very interesting. What he said was, quote, What an awesome thread. You guys have a ton of great ideas. Has anyone seen Silk Road yet?

It's kind of like an anonymous Amazon.

com. I don't think they have heroin on there, but they are selling other stuff. They basically use Bitcoin and Tor to broker anonymous transactions. End quote. Altoid then posted a link to a WordPress website that gave instructions on how to connect to Silk Road using the Tor browser.

Altoid was promoting Silk Road on a Bitcoin forum before anyone really knew about the site. The post gave a plethora of new paths to explore, so Gary didn't stop there. He searched Google using the WordPress site mentioned in the post and found a similar listing promoting Silk Road on a site called Shroomery.com, a website that helps spread information about magic mushrooms, a psychedelic drug. The post was published two days earlier and listed the same WordPress site that taught people how to use Tor to connect to Silk Road. And the username that published the post?

He also went by the name of Altoid. Gary decided to go back to BitcoinTalk.org and see if Altoid made any additional posts to that site, and what he found ended up being an enormous break in the hunt for Dread Pirate Roberts. Altoid's last entry on BitcoinTalk.org was on October 11, 2011.. The entry was a listing for a website development job and included an email to contact. And the email address?

RossUlbricht at gmail dot com. Altoid, the user that apparently first promoted Silk Road online, was someone named Ross Ulbricht.

Gary was of course elated, and he went back to work that Monday to share his find with his co-workers. But when he said he found the potential mastermind of Silk Road through a simple Google search, they brushed him off.

People have a hard time believing how much you can find by methodically searching the public web. A few years ago, everyone was trying to find a person who stole an anti-Trump protest flag that was being live-streamed from an unknown property occupied by actress Shia LaBeouf. We did a simple Google search and found an online police scanner that included a recording of someone being questioned near the property. the day before the flag was stolen. The officer read the license plate of the driver to dispatch.

We connected that license plate to a person involved in the flag heist, and voila, case solved, all through a simple Google search. Difficult things can be found if you take the time to hunt. Gary wasn't deterred by the disinterest of his colleagues. He returned home and began searching for all public data on Ross Ulbricht.

He found a listing on another forum with a post that connected Ross Ulbricht to another web alias, Frosty. Ross Ulbricht was using two online avatars, Altoid and Frosty. Gary pulled information from Google and learned that the last time Ross logged in with his Google account was in the San Francisco area. He even found a 35-minute video of Ross talking with a friend.

So, Ross, how did you come to live in San Francisco? You twisted my arm until I said, ah fine, I'll come. While Gary was busy building a profile of Ross Ulbricht, an FBI task force was also on the hunt for Dread Pirate Roberts. They didn't have a primary suspect yet, but they'd found the servers hosting Silk Road. One was in Philadelphia, another, the server storing Silk Bitcoins, was in Iceland.

They were also able to trace the IP address of one of the site's administrators to San Francisco. The federal task force was getting closer, just as Dread Pirate Roberts became bolder. In mid-August 2013,, DPR granted an interview with Forbes magazine, claiming he wasn't the original Dread Pirate Roberts, but that he'd inherited the site from its creator. And DPR was rather cocky in the interview, boasting, quote, we've won the state's war on drugs because of Bitcoin, end quote.

The article must have ruffled some feathers, because just a few weeks later, the New York task force decided to convene everyone involved in the hunt to one location to share information. IRS agent Gary Alford attended. While at the meeting, he heard someone mention San Francisco and chimed in that he'd had a suspect in San Francisco as well, but the team was dismissive. So the tenacious agent jumped on the phone with the prosecutor and shared the San Francisco IP address of his suspect, Ross Ulbricht. After searching their database, the prosecutor called for an immediate meeting with Gary, Homeland Security, and the FBI, because Gary's IP location was just around the block from another location where DPR was known to have logged in.

During the meeting, Gary mentioned, he found another avatar associated with his suspect. Ross Ulbricht used the name Frosty.

That's when the FBI perked up, because Frosty was the username of the person running Silk Road servers. They thought they had their man. Ross Ulbricht was likely Dread Pirate Roberts. The FBI issued a warrant for his arrest, but the team didn't want to just arrest Ross. They wanted to catch him in the act of being DPR on Silk Road so that he couldn't just claim he was framed.

To do this, the task force needed to grab his computer before he had a chance to shut it down and enact its encryption, forever locking them out of the computer and all of the evidence that it may contain. Fortunately, by this time, a Homeland Security special agent, Jared Derjagin, had infiltrated DPR's inner circle. Apparently, law enforcement had caught one of DPR's high-level staff members with the username Cyrus, and Derjagin took over his Silk Road account.

As Cyrus, Derjagin frequently communicated with Dread Pirate Roberts on a dark web service called Staff Chat. DPR went by Dread on that service. So, with Ross Ulbricht as their primary suspect, Derjagin and other members of the New York task force traveled to San Francisco to methodically map out his arrest. And the plan had to be executed flawlessly, because one false move could mean that Dread Pirate Roberts could slip away forever, scot-free.

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Treat yourself to the Licorice Guy and taste the difference. Hi, everyone. It's me, Katie Couric. If you follow me on social media, you know I love to cook, or at least try, especially alongside some of my favorite chefs and foodies, like Benny Blanco, Jake Cohen, Lighty Hoyt, Alison, Roman, and, of course, Ina Garten and Martha Stewart. So I started a free newsletter called Good Taste that comes out every Thursday, and it's serving up recipes that will make your mouth water.

Think a candied bacon, Bloody Mary, tacos with cabbage, slaw, curry, cauliflower with almonds and mint, and cherry slab pie with vanilla ice cream. to top it all off. I mean, yum. I'm getting hungry. But if you're not sold yet, we also have kitchen tips like a foolproof way to grill the perfect burger and must-have products like the best cast iron skillet.

to feel like a chef in your own kitchen. All you need to do is sign up at katiecouric.com slash goodtaste. That's K-A-T-I-E-C-O-U-R-I-C dot com. slash goodtaste. I promise your taste buds will be happy you did.

My name is Michael Wolff, and I'm the host of Fire and Fury, the podcast. Not too long ago, I saw Donald Trump, and he shouted, hey, Michael, I made you rich. And the truth is, my three books about Trump, they have sold a lot of copies. It all started eight years ago. I found myself in Donald Trump's Beverly Hills home sharing Häagen-Dazs ice cream with him.

I asked him, why was he running for president? And he answered, without missing a beat, because I want to be the most famous man in the world. Since then, I've become a go-to person when Trump and those around him want to talk. And now, every week, I'm going to share those insider stories with you. Listen to Fire and Fury, the podcast, on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts.

I'm Jacob Goldstein. I used to host a show called Planet Money. Now, I'm starting a new show. It's called What's Your Problem? Every week, on What's Your Problem, entrepreneurs and engineers describe the future they're going to build.

once they solve a few problems. How do you build a drone delivery business from scratch? Our customers, they want us to do this unbelievably reliably, in the storms, no matter what, hundreds of times a day. How do you turn a wild dream about a new kind of biology into a $10 billion company? We didn't have a particular technology.

We didn't have a way of making money. It was a great way to start a company. I highly recommend it. How do you sell millions of dollars worth of dog ramps for wiener dogs in the middle of a pandemic? We're working with 400 influencers.

The majority of them are actually not a person, but it's actually a dog. I can tell you right now, the dog ramp guy has some very interesting problems. Listen to What's Your Problem? on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts.

Welcome back. I'm Adriana Cortez. With Ross Albert as the primary suspect for Dread Pirate Roberts, Special Agent Der Jagen and other members of the New York Task Force traveled to San Francisco to methodically map out his arrest. The plan was to get Ross Albert into a public area. Then Special Agent Der Jagen would initiate a chat with DPR on Staff Chat and coax him into logging into Silk Road.

If Ross was in fact Dread Pirate Roberts, they could get his computer in an open, unencrypted state while he was connected to Silk Road as DPR, catching him red-handed running the drug enterprise.

On October 1, 2013,, Der Jagen connected with FBI agents who'd been monitoring Ross Albert the day before as he worked at a coffee shop near his apartment.

Der Jagen set up near the cafe with his laptop and monitored the user named Dread as he was logged into Staff Chat. When Dread logged off, Der Jagen concluded that Ross Albert was leaving his apartment and heading for a place with a public Wi-Fi. So the Special Agent notified the Task Force that Ross was on the move, then quickly moved to a bench near Ross Albert's home to trail him. As Der Jagen watched, Ross walked by carrying his laptop in a shoulder bag, waited at the intersection for a green light, then crossed the street and walked into Bello Coffee, the cafe he was in the day before. But the shop must have been too packed because half a minute later, he exited and walked down the street towards the Glen Park Public Library, just a street away.

The team's arrest plan was quickly changing.

As Ross set up in the library, Der Jagen found a spot in the stairwell and monitored Staff Chat for Dread to come back online. When Dread resurfaced on Staff Chat, Der Jagen sent him a message, as Cyrus. Hey, can you check out one of the flagged messages for me? Der Jagen asked Dread, referring to messages on Silk Road. Dread responded, you did Bitcoin exchange before you worked for me, right?

Yes, Der Jagen responded, but just for a little bit. Not anymore then? No, I stopped because of reporting requirements. Damn regulators, eh? Responded, Dread.

He continued. Okay, which post?

With DPR now logged into both Staff Chat and Silk Road, Der Jagen gave the signal to arrest Ross Albrecht. As Ross sat with his laptop at a library table, two federal agents acted out a lover's quarrel to distract Ross. And when he turned to watch the commotion, an agent swiftly grabbed Ross' computer, making sure to keep it open. as a swarm of agents came from all angles of the library to finally arrest the man they thought was Dread Pirate Roberts. The arrest was orchestrated perfectly.

The team was able to take possession of Ross' laptop before he was able to enact any encryption. And by looking at the laptop, it appeared they hooked the motherlode.

Ross' computer was logged into the Silk Road mastermind page as Dread Pirate Roberts. News of the arrest quickly hit the media. Now it was a giant black market in illegal drugs where buyers and sellers believed they could operate beyond the law. Last week, Channel 4 News showed just how easy it was to buy Class A drugs through Silk Road, a so-called dark website. Well, hidden behind special software, it was easy.

But it seems that the site's boasts about being impenetrable to police were wrong. It's now been taken offline and its alleged owner arrested by the FBI. Ross Albrecht has certainly made an impact on the FBI. They arrested the 29 year old in San Francisco and charged him with narcotics trafficking, money laundering, computer hacking and soliciting murder. They believe he is Dread Pirate Roberts, the master of this black market, Silk Road and eBay for drugs and other illegal goods.

But they needed a scapegoat and Ross was their scapegoat. That's my opinion. And I think, I personally think it was because of the Bitcoin. That's Lynn Albrecht, Ross' mom. She's been a vocal supporter of her son since his arrest and remembers that day well.

Yeah, I was just home, I'm about to go out to do errands and I went into my husband's home office and he was sitting with his head in his hands. I'm like, what happened? Are you OK? And he goes, Ross has been arrested. And I'm like, what?

Arrested? I mean, because, like I said, Ross had never been, you know, and I could tell it was serious, because he had his head in his hands and he handed me the phone. It was a Reuters reporter and she filled me in on this whole thing. And I was like, this is unbelievable. I mean, this is crazy.

And Ross is such a stellar person. There's no way he'd hurt someone and blah, blah, blah. And then I turn on the TV and there's George Stephanopoulos. Stunning arrest of the drug kingpin who goes by the name Dread Pirate Roberts. Appears to have cornered the Internet drug market.

His real name is Ross Albrecht and his website, Silk Road, is packed with products like cocaine and heroin. George Stephanopoulos going, oh, they found the guy. I'm like, wait a minute, George, aren't we supposed to have innocent till proven guilty in a trial and stuff like that? You know, I mean, just typical media crap. And then, um, suddenly there's the phones ringing off the hook and the emails are pouring in and, and, uh, media is driving by, upsetting our neighbors, taking photos of everything and knocking on our door.

And I'm like, it was, it was like, it was so weird. It was just this, siege. And, um, honestly, that my life has not been the same since that day. It, that, that was just. everything changed because I knew I had to try to save him.

Many that knew Ross found it unbelievable that he was the mastermind of a massive online drug enterprise. At the time of his arrest, the 29 year old, six foot two good looking white dude was known by his friends and family as an easygoing, brilliant young man. He grew up in Austin, Texas, the son of Lynn and his father, Kirk. He has an older sister and, by all accounts, Ross had a pretty regular family. Yeah.

And he was always a very exceptionally easy going, and he still is easygoing. actually. He's got this personality, just really a joy to raise, uh, wasn't a problem at all. And, um, just a very pleasant person. I was able to take him around everywhere because he was so easy to do, you know, to take places.

Ross got good grades in high school. And when he graduated, he went to the university of Texas in Dallas. He majored in physics and worked in a solar lab where they develop solar cells for research for solar energy and published several academic papers there. And then went on to get a master's in, uh, at Penn state in material science and, um, engineering and then had a, actually was on his way to Cornell for his PhD and got passionate about, uh, well, he, the Ron, he got involved with the Ron Paul campaign. He got passionate about Austrian economics and all of the writings of those people and decided that telling him like, no, don't tell me, you're not going to do this, you know, as his mother.

But he said, I, I just don't have the passion for it. This is what I want to really get into is free markets and the whole freedom movement. And so that's what he did. Ross decided to explore the free markets by taking the entrepreneurial route. He opened a business.

It was a book business, online book business, kind of like a tiny Amazon really, but with used books. And he, um, was doing pretty well. He came up with a system that made it really efficient. And he basically how it worked was that he'd go around collecting people who donate books and then they would sell them and donate a portion of that to various charities in the, in Austin, including the prison literacy program. But as he developed this book site, he got interested in Bitcoin and decided to marry it with tour to launch silk road.

Yeah, it was to provide a truly free market. Um, that was, that offered privacy to users and use the use Bitcoin as the means of exchange. It was actually because he saw the potential for monetary freedom with Bitcoin and was very excited about it. Talk to me about it. Even, I even said, should I get some?

And he goes, no, it's too volatile. Don't, don't do that. To get silk road started. Ross actually grew magic mushrooms and sold them on the site. In other words, silk road was going to be a drug marketplace from the get-go.

As we've seen, Ross launched silk road in early 2011.

. And it's about here where the government and Ross's stories diverge. His lawyer and mother contend that Ross left silk road shortly after it launched because the enterprise was too stressful. Ross, when did he, was he involved with it throughout, or when did he ever step away from it? Um, the silk road I'm talking about.

Yeah. And, and what we, this is goes into a lot. and, um, something that we put together called railroaded, the targeting and caging of Ross Ulbricht, all based on the public record. It's heavily footnoted. It's on our website, and there's also an audio component that, no, he, he stepped away.

And, um, cause it got to be too much. He's not a computer programmer. In January, 2015,, Ross Ulbricht's trial began in a New York city courtroom. During the trial, Ross's lawyer suggested he sold the business in mid 2011 to an unspecified third party, but showed no clear evidence of that sale. His lawyer also suggested that around the time of his arrest, Ross was lured back to working on silk road and was either framed by the actual dread pirate Roberts, or perhaps he was framed by some other unknown person that hacked Ross's computer.

Who did this framing is unclear, but Ross was framed, argued his supporters. Even after watching a nearly three hour documentary entitled railroaded, the targeting and caging of Ross Ulbricht, the documentary had no real hard evidence proving Ross was framed. Instead, it weaves a complicated story suggesting a long list of potential culprits and how Ross was wronged throughout the judicial process.

Ross's mother, Lynn, follows this same line of argument. The defense was not permitted to pursue the alternate perpetrator, was not permitted to cross examine about certain things, was not allowed to bring witnesses. For instance, a tech witness who would have talked about how you cannot determine who was on the other side of an anonymous chat. The timestamps were questionable in the evidence. As I said, Ross was on an open source network at the library, how easily infiltrated that is.

Things can be tampered with. They had his laptop for three hours, unsupervised, just one guy. That's totally against protocol. I have no idea what that guy did with his laptop at all. There was an alternate perpetrator brought up a trial that the judge would not permit being pursued.

There were two corrupt agents who had free reign of the site, who could change anything, including the evidence the jury was seeing. They're now in prison. The trial was very fast, because a lot of the defense was not permitted to be heard. They wouldn't even let Ross turn around when we'd come into the room and smile at us, because they didn't want the jury to think he had a supportive family.

His libertarian views were not allowed to be known. A good number of them also worked for the government, which I think is a bit of a conflict of interest, because here's the government saying this, and they work for the government. I think there's a certain

assumption that, well, if the government's saying it and the prosecutor's saying it, it must be true. None of the legal things or anything like that that was sold on the site, because it was like an eBay, were allowed to be known. Even marijuana, of all things, which obviously is a drug, but that was not allowed to be known, even though it was the main drug that was sold. I think 10 out of 12 were over 40, and I don't really think many of them understood at all the technical aspects, the Bitcoin aspects. The Bitcoin witnesses that the defense wanted to call were not permitted to testify.

It kind of goes on and on at all the complication. It's a very complicated case.

The prosecution, on the other hand, had a very clear, cohesive, and simple narrative, and that is that Ross created Silk Road and ran the site from the beginning to the end, and only came up with the Dread Pirate Roberts persona to muddy the waters in the event that law enforcement closed in on him.

The prosecution's case against Ross was absolutely overwhelming.

First and foremost, he was caught red-handed, logged in as Dread Pirate Roberts. The Silk Road servers automatically recognized his laptop at login. Ross's laptop was named Frosty, the same name the Silk Road servers recognized. There was a detailed electronic journal on his laptop, and many of the significant events and dates in the journal aligned with things that Dread Pirate Roberts said in Silk Road chat logs and forums. His Gmail account included confirmation emails addressed to Altoid, the same avatar used to promote Silk Road before anyone really knew about the site.

Specific events and vacations Ross posted on social media, aligned both in timing and content with things DPR said. An entire backup of the Silk Road server was found in Ross's possession. His close friend even testified that he helped Ross write the code for the site, and also to authenticate his messages, DPR used what's called a private PGP key as a signature. That private key was found on Ross's computer, and the key never changed throughout the entire time Dread Pirate Roberts existed. But perhaps the biggest indication that Ross Albrecht was in fact the head of the Silk Road site was something else that was found on his laptop.

Something that would be used to suggest Ross Albrecht was a ruthless drug kingpin.

Hi,

everyone. It's me, Katie Couric. Have you heard about my newsletter called Body and Soul? It has everything you need to know about your physical and mental health. Personally, I'm overwhelmed by the wellness industry.

I mean, there's so much information out there about lifting weights, pelvic floors, cold plunges, anti-aging. So I launched Body and Soul to share doctor-approved insights about all of that and more. We're tackling everything. Serums to use through menopause, exercises that improve your brain health, and how to naturally lower your blood pressure and cholesterol. Oh, and if you're as sore as I am from pickleball, we'll help you with that too.

Most importantly, it's information you can trust. Everything is vetted by experts at top of their field, and you can write into them directly to have your questions answered. So sign up for Body and Soul at katiecouric.com slash bodyandsoul. Taking better care of yourself is just a click away. My name is Michael Wolff, and I'm the host of Fire and Fury, the podcast.

Not too long ago, I saw Donald Trump and he shouted, Hey, Michael, I made you rich. And the truth is, my three books about Trump, they have sold a lot of copies. It all started eight years ago. I found myself in Donald Trump's Beverly Hills home, sharing Häagen-Dazs ice cream with him. I asked him, why was he running for president?

And he answered, without missing a beat, because I want to be the most famous man in the world. Since then, I've become a go-to person when Trump and those around him want to talk. And now, every week, I'm going to share those insider stories with you. Listen to Fire and Fury, the podcast on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. I'm Jacob Goldstein.

I used to host a show called Planet Money. Now I'm starting a new show. It's called What's Your Problem? Every week on What's Your Problem, entrepreneurs and engineers describe the future they're going to build. once they solve a few problems.

How do you build a drone delivery business from scratch? Our customers, they want us to do this unbelievably reliably, in the storms, no matter what, hundreds of times a day. How do you turn a wild dream about a new kind of biology into a $10 billion company? We didn't have a particular technology. We didn't have a way of making money.

It was a great way to start a company. I highly recommend it.

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Welcome back. The evidence showing Ross Ulbrich was Dread Pirate Roberts was overwhelming, but perhaps the biggest indication that Ross Ulbrich was in fact the head of Silk Road was something else that was found on his laptop. Something that would be used to suggest that Ross was a ruthless drug kingpin. When the federal task force confiscated Ross Ulbrich's computer, they found a Bitcoin wallet on his hard drive. A witness for the prosecution, former FBI agent Ilwon Yum, led an analysis of this Bitcoin wallet.

You may recall from part two of this series that the blockchain is the technology driving Bitcoin, and that it stores every Bitcoin transaction that has ever occurred onto an immutable, permanent public ledger called the blockchain. For each transaction, it doesn't store anyone's name, but instead it stores the Bitcoin address of the sender, the Bitcoin address of the receiver, the amount of Bitcoin sent, and the date it was sent. Since the FBI had both the server that hosted Silk Road's Bitcoin wallet and Ross Ulbrich's computer that housed the Bitcoin wallet, former FBI agent Yum was able to use the blockchain to trace more than $13 million in direct transaction from Silk Road's Bitcoin address to the Bitcoin address on Ross Ulbrich's laptop. It was undeniable. Ross Ulbrich's computer contained massive amounts of money from a criminal drug enterprise.

The only response to this damning evidence has been that the Bitcoin wallet was planted on Ross's computer by someone else, which we'll get to in a bit. But first, and undoubtedly the biggest controversy associated with the Silk Road case, was the alleged murder-for-hire plots. You may recall from part two that DPR ordered and paid for the assassination of six people that threatened his Silk Road enterprise. That information was gathered during the federal investigation, found in chat logs on the Silk Road server, and in the journal found on Ross Ulbrich's computer. But to date, the government was never able to prove that any of these murders ever actually occurred.

Ross was never charged or convicted of a murder-for-hire plot. The prosecution did contend, however, that DPR did in fact order and pay for assassinations and believe they happened at the time, and the prosecution brought this up in trial. I asked Lynn Ulbrich about the murder-for-hire accusations against Ross. So, for example, with Ross's case, the first we hear about this is at the bail hearing, totally ambushed by this, at the bail hearing, trying to get bail. And so they used that to deprive him of bail.

The defense didn't even know about it. Then they were permitted, the prosecution was permitted to talk about it at trial, even though they said, we're not charging him with this, there's no murders, but believe us, just trust us, he did this. Now, that's not how it's supposed to work. You're supposed to have, you know, proof and all of that. No, they were permitted to prejudice the jury with that.

Then the judge, she used it. So, and they basically, what they claimed was, is that he was involved in some kind of a plot to take out people that were investigating him? No, it was, he was accused, and it's all based on, again, anonymous digital evidence, no witnesses, nothing. He was accused of paying hitmen. Now, mind you, there were no hitmen allowed on Silk Road, but anyway, paying hitmen to kill, one was somebody blackmailing, supposedly blackmailing him or threatening to give names of people on Silk Road.

There was, a couple of different instances. One was Curtis Green, who supposedly, they faked his death and showed pictures. He's the guy who says he doesn't think it was Ross. I actually talked to Curtis Green about this, and his take was a little different than Lynn's. And do you think that Ross was involved with the murder for hire?

You know, that's something I don't know. When, my view has changed on that multiple times, and so I'm not, you know, I flip-flopped mentally because I was told so many different stories, so I don't know what to believe. Well, Bitcoin helps shed some light on this issue. You may recall from Part 2 that Dread Pirate Roberts was in communication with a supposed Hell's Angel called Red and White, and asked him to assassinate a guy named Friendly Chemist. The Department of Justice says these communications were found on Silk Road's market server and user forum.

Red and White said he would charge somewhere between $150,000 and $300,000 to kill Friendly Chemist. But DPR balked, stating, quote, Don't want to be a pain here, but the price seems high. Not long ago, I had a clean hit done for $80,000.. Are the prices you quoted the best you can do? End quote.

$80,000 is the same amount of money that the DOJ says. DPR anonymously wired to an undercover agent for the fake assassination of Curtis Green. Red and White responded to DPR, holding firm on the $150,000 price tag, and told DPR, quote, If you want it done by Monday, that only leaves today. It's Sunday morning here. We always seem to miss each other online.

So I will leave a Bitcoin address in case you want to pay that way. Red and White continued, quote, I will check the computer in about 10 hours. And if I see that you do want to go ahead with this and a payment has been sent, we'll do it today. End quote. Red and White sent his Bitcoin address along with this message to DPR.

Dread Pirate Roberts responded a few hours later and said, Thank you, Red and White. I've only ever commissioned the one other hit. So I'm still learning this market. I have no problem putting my faith in you, and I'm sure you will do a good job. The exchange rate is about 90 right now.

So at $90 per Bitcoin, $150,000 is about 1,670 Bitcoins. End quote. DPR then paid Red and White the 1,670 Bitcoins. And to prove it, he sent Red and White the Bitcoin transaction number, which is like a confirmation number for a credit card payment. And sure enough, the transaction is immortalized on the blockchain.

Anyone can go there now and see it. But DPR's interaction with Red and White didn't end there. He also called for the hit of four more people and negotiated with Red and White the price of $500,000 for the job. At the time, $500,000 was roughly 3,000 Bitcoins. So DPR sent 3,000 Bitcoins to Red and White's Bitcoin address and again sent the blockchain transaction number to confirm the payment went through.

And if you go to the blockchain right now, the transaction is, once again, forever immortalized. However, the blockchain does not record the names of the sender and receiver. So how do we know Ross Ulbrich sent these payments? Well, the Bitcoin addresses that sent the alleged hitman. the money were found on Ross Ulbrich's laptop.

Even Ross's lawyer had to admit to that fact to an appeals judge. Was there not evidence that he paid $650,000 worth of Bitcoin to someone who had represented that he killed people at the orders of Dread Pirate Roberts? That, again, that we can't elevate. Yes, yes, yes, yes, but, but you can't, but only in the sense of what's on an internet chat room. We can't.

But I don't understand this. It's one thing to say, wouldn't, you know, in a fantasy chat, you know, I'd like to kill everybody that I don't like. It's a different thing to actually pay money to someone. Ross Ulbrich was never charged with or found guilty of a murder for hire plot, that's for sure. But a Bitcoin wallet that was on his laptop sent money to a man claiming to have successfully killed five people.

Make of that what you may. Many still argue that the incriminating evidence found on Ross Ulbrich's laptop was all planted. That argument reminds me of another story. A woman who was caught with meth in her vagina claims to police that it was not hers. You see, in order to believe that the government planted all of this incriminating evidence on Ross's computer, you also have to believe that they planted evidence that incriminated one of their own federal agents.

Remember, in part two, when DPR was constantly getting approached by Silk Road users attempting to extract money from him? One was Death From Above, who claimed to know DPR's identity and was going to release it to the public. Then another user, French Made, claimed to have inside information on the federal investigation into Silk Road. DPR paid French Made for that info. After Ross was arrested, they found a folder on his computer that stored the information that French Made provided.

There were also journal entries on Ross's laptop documenting communications with French Made. that also matched up with chat logs between DPR and French Made on the Silk Road server.

And who was French Made and Death From Above? Well, it turns out that both were none other than a DEA agent named Carl Force, and we know this because of the blockchain. Carl Force was the DEA agent that went undercover into Silk Road as a mafia-connected drug dealer called Knob, the same Knob that sent Curtis Green cocaine, the same Knob that DPR hired to kill Curtis Green, and the same Knob that staged Curtis Green's murder. A few months after Ross Ulbrich was arrested, a Department of Justice prosecutor named Katie Hahn got a tip. The essence of the tip was Knob's moving around a lot of bitcoin.

Now remember, I was in San Francisco at the time, used to kind of crazies calling me up, telling me about the government conspiracies that were going on, so I took this with a grain of salt. But the tipster was pretty insistent.

And I looked into it a little further and found that Knob was liquidating hundreds of thousands of dollars of bitcoin every month. I thought it was probably a poorly backstopped undercover operation. But I looked into it a little further and I found that Knob was liquidating this to his own personal accounts. And when I subpoenaed some of those entities, what I found was that Knob, with his badge, was telling them to delete all of the transaction history. So now I was getting suspicious too.

So Katie Hahn went to the blockchain to follow the history of Knob or Carl Force's bitcoin transactions. So, using the blockchain, working backwards, we went to Knob's accounts and we traced those bitcoin payments. You can see it up on your screen here. And what's interesting is where we trace those payments to. Right back to the Silk Road.

It turns out that those payments, when we compared them and the timing to Ross Ulbricht's journals of when he had paid FrenchMade, turns out that Knob was FrenchMade. He'd been selling Ross Ulbricht's DPR information into the government's investigation the whole time. But that's not all. He'd also been extorting Ulbricht as death from above, threatening to reveal his identity to law enforcement. In short, Knob was a double agent.

He'd gone rogue and he was playing both sides the entire time. Carl Force was arrested and is serving a six and a half year sentence in federal prison. Federal law enforcement didn't even know about Carl Force's corruption until months after Ross Ulbricht's arrest. So to believe that the government planted Ross Ulbricht's computer with all of this damning evidence, you also have to believe that they planted evidence against one of their own. And here's the kicker.

They had to have planted it before they even knew Carl Force was corrupt. The technology behind bitcoin brought down the mastermind of Silk Road and a federal agent. But the blockchain also helped prove another man's innocence.

Do you remember the missing 20,000 bitcoins that the government thought Curtis Green stole? The blockchain helped find that money as well. Going back to the blockchain and looking at the stolen 21,000 bitcoin, the $150 million, we saw that the patterns of the theft were very different from French maize and death from above. Instead of going through a series of convoluted hops, the stolen funds from the Silk Road accounts went straight to one place. To Mt.

Gox. Mt. Gox was a cryptocurrency exchange based in Japan. But it too had suffered a series of hacks to the tune of $500 million.

And what this meant was that by the time we traced this to Japan and to Mt. Gox, there were no records available for us to go look at. But remember what I told you about the blockchain? That it's immutable and it's permanent? So we were able to trace the flow of funds through the blockchain from Mt.

Gox to a U.

S. financial institution. And where that led was also a surprise. Right back to the Silk Road task force, but not to Knob. To a secret service agent on that same task force.

A secret service agent by the name of Sean Bridges. Sean Bridges had also been at that proffer session where Curtis had turned over his password and computer and credentials. And that night, Sean Bridges went home using Curtis Green's computer, username, credentials, and password and drained Silk Road accounts of 21,000 Bitcoin. And he framed it. He framed Curtis Green.

And then he stood by the next day where his fellow agents on the task force confronted Green and told Green to come clean.

And he also stood by knowing that Russell Brooke had put a hit out on Curtis Green. In fact, Sean Bridges helped stage those proof of death photos and helped stage the torture and murder of Curtis Green. So later that year, we brought charges against both of these agents for embezzlement, extortion, international money laundering, and obstruction of justice. Things really out of a movie. And in fact, if you can believe it, some of the guys in this story had movie deals.

But they won't be appearing in the movie because they're now sitting in federal prison. But they almost weren't. Why? These guys were the perfect criminals. With 30 years of law enforcement investigative experience behind them, they knew exactly how to cover their tracks.

They were also able to get unwitting participants like banks, cryptocurrency exchanges, and other entities to destroy evidence. These guys had Justice Department subpoenas. they forged, court orders, seizure warrants. They even destroyed evidence in burn bags. But the one thing they couldn't escape was the immutable, transparent blockchain.

And I'm here to tell you that without it, we never would have caught these guys. In fact, without the blockchain, they would have still been sitting in the federal government today instead of in the federal penitentiary. The technology behind Bitcoin proved that it can be used to trace criminal behavior. Ross Ulbricht ultimately lost his trial and was found guilty on all counts. He was sentenced by the judge to do two life sentences plus 40 years without the possibility of parole.

He also lost his appeal and the Supreme Court refused to hear his case. He now has only two options. Again, Lynn Ulbricht. So now there's a habeas petition that's been filed, which is basically for various arguments, Ross should have a new trial. It's asking for a new trial in the district court in New York.

And then the other thing is clemency. Joaquin El Chapo Guzman, the notorious drug kingpin that was the head of the ruthless Sinaloa cartel for roughly three decades, was found guilty of massive drug trafficking, money laundering, conspiracy to murder, and was directed to hand over $14 billion in drug money. Comparatively speaking, Silk Road was a minuscule operation. Yet El Chapo got a lighter sentence than Ross Ulbricht. Some think that the harsh sentence was handed down to stop Bitcoin in its tracks, to taint the cryptocurrency as a tool for criminals.

I think Silk Road was a marginal company. That's Mike Cernovich, filmmaker, journalist, author, and an early proponent of cryptocurrency. Why did they target it? Because Wall Street wanted to destroy Bitcoin before it could get big enough to compete for them. Because a lot of people don't want to have to deal with central bankers.

The Trump administration has tried to paint Bitcoin and other cryptocurrencies as dangerous. Crypto is being talked about. The president actually weighed in and tweeted about cryptocurrencies last night. He wrote in part this, I'm not a fan of Bitcoin and other cryptocurrencies, which are not money and whose value is highly volatile, based on thin air, he writes. Unregulated crypto assets can facilitate unlawful behavior, including drug trade and other illegal activity, writes the president.

But the Federal Reserve prints the U.

S. dollar out of thin air. And there's nothing more that facilitates unlawful behavior than paper money. As we've shown, cryptocurrency actually helps law enforcement catch criminals. Cryptocurrencies also have another benefit.

In these politically volatile times, activists within financial institutions have worked to unbank their adversaries. Again, Mike Cernovich. So now, of course, we're seeing that banks, Bank of America, won't do business with gun owners. What happens when every big bank won't even do business with people exercising their constitutional rights? There are people being banned for free speech.

And that's why Trump is losing the plot when he wants to go after Bitcoin. Many big tech companies like Patreon and PayPal have also blocked people from using their services. Bitcoin has helped solve that troubling phenomenon. But as it currently stands, it is a very viable alternative to people who are no longer welcome within, perhaps, some traditional financial institutions. So that does give them another option.

That's Billy Bambra, a freelance journalist that's been covering cryptocurrencies since 2012.

. We're already seeing the issue of deplatforming come up amongst some groups where companies don't want to work with them. PayPal, for example, Patreon, have said that they're going to consider or in some case already have done barring people from their platforms. as digital money becomes much more important than physical money. This is going to be bigger issue in the future, because really we're letting private companies decide who has access to money.

Bitcoin is a way, and other cryptocurrencies are a way, of stopping big companies being involved in that decision. The future of cryptocurrency looks so promising that Facebook is trying to get in on the action. Facebook announcing a new digital currency called Libra. And Facebook says this digital currency aims to make it as easy to send money around the world as it is to send a photo. Now, the currency is set to launch in the first half of next year and will be run not by Facebook, but by a nonprofit in Switzerland.

And, unlike Bitcoin, Libra, this digital currency will be backed by real money. So if you put in a dollar or some other currency into Libra, you'll get a dollar or the equivalent out. Now, the goal is for that reserve of real money to make the whole currency more stable, unlike Bitcoin, which is obviously very volatile. there. The social media behemoth is trying to squeeze into the currency game, and many believe it has an even larger potential to become a global currency.

It would have enormous attraction to people involved with China. That's economist Peter Morisi, professor emeritus at the University of Maryland's Robert H. Smith School of Business. There's the Chinese government being so authoritarian and so capable of just taking away anything you own anytime it wants to, including your life. The yuan is not a good candidate to be a reserve currency, and this could provide a convenient alternative.

The Chinese now use Bitcoin to get money in and out of the country, so they can't otherwise get in and out. The same thing with the Koreans. This would be a much more attractive alternative to Bitcoin, because it would have a much more stable value. So, you know, governments are worried. However, I don't know that anybody can prevent it.

With Facebook now wanting in, the government may try to stop the growth of cryptocurrency in other ways. Again, Peter Morisi. And the real question becomes, is this like armies? You know, it's illegal to have a private army in the United States. Should it be illegal to have private money?

You can make it illegal in the United States, but who's to prevent someone from establishing private money out of Switzerland?

Which brings us back to the question, is Bitcoin dangerous to America? What would happen, for example, if Gulf nations, rather than trading oil and dollars, moved to Bitcoin? That would, I think, destroy America as a global empire. That said, I don't think that they're going to do that, because Bitcoin has way too much volatility. It's revolutionary, and it's going to change the way we do things.

That's why I put blockchain technology up there, to the invention of the cell phone, to the invention of the computer.

And the technology behind Bitcoin, the blockchain, has so many positive uses that we don't even see them yet. For example, imagine an election system built on the blockchain technology that drives Bitcoin. It could drastically eliminate voter fraud, because every vote could be stored on the blockchain ledger, just like every Bitcoin transaction. And if there's any claim of voter fraud, the entire vote for that election is there on the blockchain for all to see and audit. And it could never be changed because it's immutable.

That's the possibility of the technology underpinning Bitcoin. Bitcoin is also not dangerous in the way our leaders are telling us. The U.S. dollar is made out of thin air and nothing facilitates illegal behavior more than paper money. Bitcoin, by contrast, has helped put criminals behind bars.

Now you might be thinking that cryptocurrency really is just used by criminals. But nothing could be further from the truth. In fact, it's not surprising that in those early days, criminals were using cryptocurrencies. After all, criminals are great beta testers of any new technology. Think about in the early days of the internet.

Although we now all use it, some of its earliest adopters were fraudsters. And the same is true of cryptocurrency. In 2012,, 30% of Bitcoin transaction value was associated with dark net markets like Alphabet or Silk Road. But by 2018, that number is down to less than 1%. The fact of the matter is that plenty of ordinary people all over the world now are using cryptocurrency.

Bitcoin may have had a dark web start, but it's now entered the mainstream. And some may not like to hear this, but Ross Ulbricht helped prove that Bitcoin can be used at scale as internet cash. It's too early to say how Bitcoin, blockchain, or other cryptocurrencies will be used in America. Who could have predicted Fortnite or Snapchat in the early days of the dial-up internet? But I think it's safe to say that crypto is here to stay.

And it appears that some of our leaders in Washington, D.

C.

, like House Minority Leader Kevin McCarthy, are beginning to get on board the crypto train. But I'm just surprised that a Republican sitting in, you know, in a powerful position is making the case. for, really, I think you're making the case for blockchain and Bitcoin, Leader. Well, look, I like, I like Bitcoin. Be sure to catch our new series entitled Crypto Revisited, where we do another deep dive into cryptocurrency.

roughly three and a half years after airing this series. We answer the question, where is cryptocurrency going? The industry is no longer in its infancy, and our crypto revisited conclusion will no doubt shock you.

Red Pilled America is an iHeartRadio original podcast. It's owned and produced by Patrick Karelchi and me, Adriana Cortez, of Informed Ventures. Now you can get ad-free access to our entire archive of episodes by becoming a backstage subscriber. To subscribe, visit redpilledamerica.com and click join in the top menu. That's redpilledamerica.com and click join in the top menu.

Thanks for listening.

Transcribed by https://otter.

ai

I'm Jacob Goldstein. I used to host Planet Money. Now I'm starting a new show. It's called What's Your Problem? Every week on What's Your Problem, entrepreneurs and engineers describe the future they're going to build.

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