The trial against Russ Ulbricht — the alleged mastermind of illegal online marketplace Silk Road — doesn’t look awesome for the defence.
He’s charged with money laundering, computer hacking, and conspiracy to commit narcotics trafficking while running Silk Road under the pseudonym Dread Pirate Roberts — a reference to the cult movie “The Princess Bride.” Ulbricht is on trial in Manhattan.
Since the trial began on Jan.13, prosecutors have called four witnesses to testify against 30-year-old Ulbricht and even presented his alleged diary entries that detail what he referred to as a “criminal enterprise.”
His defence, led by attorney Joshua Dratel, conceded in opening statements that Ulbricht had indeed founded Silk Road. But, the defence says, Ulbricht left the site for quite some time and only rejoined right before his arrest.
Dratel has been trying to convince the jury that Ulbricht is not the “real DPR.” Somebody else took over the site he started and expanded it into the massive narcotics emporium it became, Dratel’s argument goes. But Dratel has struggled to come up with alternative “DPRs” — especially as the journal entries and chat logs found on Ulbricht’s laptop continue to incriminate him.
Ulbricht’s lawyers have also filed paperwork suggesting he wouldn’t be breaking the law even if he were the real Dread Pirate Roberts. Here are his main arguments.
Silk Road’s operator is just a ‘landlord’
In the defence’s pre-trial motions, Dratel argues that his client should not be held responsible for the illegal conduct of Silk Road users since they’re not alleging he bought drugs sold on the site or managed any of the users. The motion referred to Ulbricht as the alleged “landlord” of Silk Road.
“A landlord is not a co-conspirator of, and/or liable for, the criminal conduct of his tenants, regardless whether the landlord knows that the premises are being used for illegal purposes,” the motion states.
The motion continued: “Analogously, no landlord has been prosecuted under the federal controlled substances statutes for renting an apartment to a know drug seller. Nor has any internet service provider been prosecuted because users of the service engage in illegal transactions using the provider’s internet service.”
The Communications Decency Act protects Silk Road’s operator
The motion goes on to invoke the Section 230 of the Communications Decency Act of 1996, in which Congress “manifested a support for a free-wheeling internet” where web hosts can operate without fear of civil liability for the content posted by others, according to Ulbricht’s lawyer.
While Ulbricht’s is a criminal case, and not a civil one, his lawyer’s motion said that the law still “provides firm and indisputable support for limiting the application of criminal statutes in the internet context when the alleged illegal conduct itself is performed not by the defendant, but by others using his web site.”
The act has been invoked in other cases, particularly in legal disputes involving revenge porn — sexually explicit media of an individual shared online without their consent, often as punishment for a breakup. Hunter Moore, the notorious operator of now-defunct revenge porn websites, has said Section 230 protected his work because he simply operated the websites and doesn’t post pictures.
Bitcoin can’t be ‘laundered’ like money
Dratel also argued that the money laundering charge must be dismissed because Silk Road’s financial transactions did not involve real money. Bitcoins — the only form of payment accepted on Silk Road — do not qualify as monetary instruments and therefore can’t be the focus of the monetary investigation, Dratel argued.
Judge Katherine Forrest didn’t buy it, however, deciding in July of last year that “Bitcoins carry value — that is their purpose and function — and act as a medium of exchange.”
This is not the first time a judge has ruled that bitcoin is or acts as a proxy for money. In 2013, Magistrate Judge Amos Maazant of the Eastern District of Texas federal court ruled that bitcoins were enough like money to be treated as such. That same year, Canada became one of the first countries to treat bitcoins as money and regulate their usage. Germany has also passed legislation equating bitcoins with real currency.
Ulbricht was arrested at the Glen Park Branch Library in San Francisco on Oct. 1, 2013, where he was allegedly logged into Silk Road’s servers and working under the username Dread Pirate Roberts. The pseudonym refers to a plotline in the movie “The Princess Bride,” in which multiple characters assume the intimidating Dread Pirate Roberts persona.
In a development that was true to “The Princess Bride,” a new Dread Pirate Roberts relaunched Silk Road 2.0 on Nov. 6, 2013. The new operator promised a “new and improved” version of the site, according to Forbes. When at least three of these employees were later arrested, the new DPR abruptly gave up control of the site and froze its activity, including its escrow system.
Subsequently, a user calling himself “Defcon” took over Silk Road 2.0. He was later identified as Blake Benthall, a 26-year-old San Francisco programmer who was arrested in November 2014.