American Kingpin

by Nick Bilton

  “Brb, gotta move.”

  In one of the more nauseating experiences, while on his travels, Ross had set off to a sleepy surfer town in the middle of the jungle in Thailand. The plan was to lap up the waves, enjoy the beach, hike through the palm trees, maybe smoke some weed, and (if all went well) meet a pretty young backpacker. Except something went catastrophically awry on the site the moment he pulled into town. Someone had started stealing Bitcoins from his account as a result of a major programming error. Ross had no choice but to fix it right there and then—and it wasn’t an easy fix.

  He was holed up from morning until night in the local Internet café, incessantly biting his nails while he tried desperately to stop the Bitcoin robbery, all while locals and backpackers lackadaisically wandered down the jungle town’s dirt roads, drank beers, and surfed in the warm ocean waves. (“The people there thought I was a nut,” Ross later told Variety Jones. “There I was 18 hours a day on my laptop chewing my nails off. All these mellow people on vacation lookin at me like wtf is up with that guy?!”)

  Adding to this anxiety, Ross was terrified that someone would see the Silk Road logo or images of drugs on his screen or ask questions about the code he was writing. Worse, a local, trying to gain favor with his local cop buddies, might anonymously alert the authorities.

  The anxiety could be petrifying when he was at his most lucid. Given that Ross’s site was making it possible to buy drugs from anywhere with Internet access, he was technically a wanted man all around the world. That meant he could be subject to the laws of almost any country on the planet. And the last place Ross wanted to be arrested for enabling the sale of vast amounts of drugs was in Southeast Asia, where Westerners had been hanged when they were caught trafficking mere ounces of heroin.

  So there was only one thing to do. When it was clear that Erica’s Facebook post had gone unnoticed and that no one else suspected him of being anyone but Ross Ulbricht, he set a date to return to Texas. That alone didn’t resolve the anxiety of running the site. But Ross had a plan there too. He promised Variety Jones that he would start taking long walks, eating healthier meals to stay focused, and tripling his daily meditation quota to at least thirty minutes before he went to sleep. With VJ counseling him, Ross was going to try to handle the stresses that came with running the biggest drug Web site the world had ever seen.

  As for the nails? On April 10, a few days before he left Australia, he walked into a pharmacy, slid a few dollars across the counter, and walked out with a bottle of anti-nail-biting formula.

  He excitedly told Variety Jones about his new purchase. Ross said that he was going to apply the magic ointment to his nails at least once a day for the next week. “Time to kick the habit,” he told VJ.

  But he wouldn’t be able to kick it for long. Upon returning to America, Ross was going to discover that not only had the Silk Road grown immensely over the past few months, but law enforcement’s zeal to capture the Dread Pirate Roberts had too.

  Chapter 24

  CARL, ELADIO, AND NOB

  For a DEA agent, going undercover was one of the most exciting, and equally nerve-racking, aspects of the job. If you did it right, you could catch some unscrupulous people; if you did it wrong, those people could catch you.

  Carl Force had learned this lesson the hard way, as a newbie DEA agent almost fourteen years earlier, when one of his first assignments was on a case in the small town of Alamosa, Colorado.

  Carl had ended up there after arresting and then turning an informant, who promised to help facilitate some drug buys with the local dealers. The town was just north of the New Mexico border, so it was a perfect smuggling port to get coke and meth into the country.

  The informant set up a few meetings to get the initial operation off the ground, but things went haywire almost immediately. Whenever Carl would show up for an undercover drug buy, the informant would spin into a panic, frantically telling Carl that he looked too much like a cop and, as a result, was putting the entire operation (and possibly both of their lives) in serious danger.

  Carl didn’t like to be told what to do, but upon peering into a mirror he realized the informant was right; he looked exactly like a cop. So Carl decided to go through a mini physical transformation. He got his ears pierced with golden hoops, grew his hair out, and started to dress less like a DEA agent and more like someone who sold drugs for a living.

  To ensure he couldn’t be fingered as a Fed, he also took on a made-up persona that had an elaborate backstory. This taught Carl the crucial lesson that you don’t just show up to an undercover operation and simply say you work in the world of organized crime. You have to show someone that you do.

  A decade later, as he sat in the DEA office in Baltimore, staring at the user registration page for the Silk Road Web site, he was about to apply that lesson again.

  Carl had done his homework, prepping for this very moment. But before he could sign up for an account on the site, he had to figure out who he was going to be on the Silk Road. Unlike in his real-life undercover work, this time he would be hidden behind a keyboard, which meant he could be whoever, or whatever, he wanted. He could be black, white, Spanish, or Chinese. Male or female, or something in between. The online world was his stage; he just needed to decide who would come out from behind the curtain.

  Carl started with what he knew, plucking stories from his time down south, and he settled on the character of a smuggler from the Dominican Republic who siphoned $25 million of mostly coke and heroin into the United States each year. He gave this character the name Eladio Guzman, notably adapting the surname of the world’s most famous analog drug lord, El Chapo Guzmán, the head of Mexico’s Sinaloa Cartel. He then created an elaborate history for his Guzman, saying that he knew people all over South America to traffic drugs, launder money, or have people killed. Oh, and he was blind in one eye and wore an eye patch as a result.

  To ensure everything about him seemed real, Carl had a fake driver’s license created by the DEA with his real photo and his new made-up name.

  But on the Silk Road people wouldn’t use their real name, even if it was fake. So, in the same way that the leader of the site called himself the Dread Pirate Roberts, Carl would need to create a moniker for his made-up persona. Again, he decided to pick his nickname from something else he knew well: the Bible. Call it a gut feeling, years on the job, or overconfidence, but he wanted the nickname he chose to illustrate what was going to happen as a result of his work on the Silk Road. And so he chose a name from the Bible of a city that was destroyed by a king: the town of Nob.

  So Carl Force would become Eladio Guzman, the Dominican drug smuggler, who would go by the online nickname Nob.

  He went home and told his twelve-year-old daughter he needed her help. He grabbed a piece of white paper and with a black marker aggressively scribbled “ALL HAIL NOB.” He then placed an eye patch over his fake blind eye, pulled a dark hoodie over his bald head, and held up the piece of paper as his daughter snapped a picture of him.

  Then he signed up for an account as Nob.

  For the past month Carl had been meeting with the Baltimore agents to discuss a strategy for their probe. The plan wasn’t too different from Jared’s. They would try to build up a case (obviously a competing one, as they knew Jared was already working his own Silk Road investigation out of Chicago) by arresting dealers and then working their way up the ladder. There had been countless meetings to discuss this strategy, though Carl thought such a path would be too laborious.

  Or Carl could just say “fuck it” and try to knock on the big boss’s door.

  He chose the latter. On Thursday, April 21, at around noon, Carl sat at his computer, transformed himself into his new drug smuggler identity, and wrote an e-mail to the Dread Pirate Roberts. “Mr. Silk Road,” he began. “I am a great admirer of your work.” This accolade was followed by a brief explanation that Nob was a man of “considera
ble means” who had been in the drug business for more than twenty years. He noted quite frankly that he saw the Silk Road as the future of drug trafficking and that, most important, he had a proposal: “I want to buy the site.” He hit “send” and waited for a reply.

  When the HSI team in Baltimore found out what Carl had done, they were irate. This wasn’t part of the plan. Carl had gone rogue before they had even decided what they were going to do. There were calls from supervisors to the assistant special agent in charge, or ASAC, whose main job was to ensure that people like Carl didn’t go rogue. But Carl didn’t really care. He just kept looking at his e-mail, waiting for a reply from the Dread Pirate Roberts.

  He checked that afternoon—no reply. The following morning: still nothing. Tomorrow, he reasoned. The Dread Pirate Roberts will reply tomorrow.

  Chapter 25

  JARED’S CHICAGO VERSUS CARL’S BALTIMORE

  Jared’s tiny HSI office was starting to look less like an office and more like an extension of the mail center at Chicago O’Hare. Circling the room along the walls were dozens of tubs piled as high as a small child, all filled to the brim with envelopes—around five hundred in all. These packages all had one thing in common: they had at one point contained drugs purchased on the Silk Road.

  Above those piles of mail, the office walls were decorated with printouts and photos of the different drugs—pills, baggies, rocks—that had once been inside those envelopes.

  It was clear that Jared, who didn’t take no for an answer, had fallen deep into the Silk Road case with his stubborn obsessiveness.

  He had been working on a system to try to figure out which envelopes (and drugs) came from which vendors on the site. When a package was discovered by the customs officials, no matter what time of the day or night, Jared would get in the Pervert Car and drive to the airport, pick up the narcotics, snap pictures, and fill out seizure documents before returning everything to his office. Then it was off to the Web site to look through every single picture of the drugs for sale and try to figure out where the package had come from.

  Given that the Silk Road now had thousands of dealers, it was not an easy task. But Jared was always up for a laborious and all-consuming challenge. He reasoned that when (or at this rate, if) they finally caught the leader of the Silk Road, Jared would have hundreds of pounds of evidence tying the site to actual drugs.

  He had learned a lot by purchasing his own drugs on the site, figuring out who was selling what and learning how drugs coming from differing countries might look different from one another. (Some used puffy envelopes; other drugs were hidden in everyday objects like CD cases. Some dealers put them in hollowed-out dead batteries; others stuck tabs of LSD to the backs of photos.) Yet with all of this information coming together, he had also learned something else rather disturbing. The site was growing too quickly for anyone to catch up to it.

  In the months since Jared had started to investigate the case, the Silk Road had become a phenomenon. It was being written about in the press all over the world on a daily basis, and given that the site was still running after eighteen months, other potential customers felt more confident buying drugs and guns, so the customer base was growing rapidly.

  The slew of press came with consequences, not just for the leader of the Silk Road, but also for Jared. All those stories in all those newspapers and blogs meant that other government agents were learning about the Silk Road, and Jared assumed they would want in on the case.

  And he was right.

  In the spring of 2012, on a late afternoon, Jared was sitting in his office, sifting through the latest envelopes customs had intercepted and, like a doctor checking an X-ray, holding up photos of drugs next to images on the Web site. He had checked in with his wife, Kim, and was trying to wrap things up to make it to the airport before racing home when his computer sounded a loud DING!, announcing a new e-mail.

  This wasn’t just any e-mail. The system that agents use to keep records of their cases is designed to notify each agent when someone else in the government has read their specific case files. The e-mail that Jared had just received told him that two people at Homeland Security in Baltimore, a sister office within the same agency, were at that very moment reading one of his case files. As he sat there looking at the message on his screen and wondering what was going on, there was another DING! And another. Soon it was like an old lady had hit the jackpot in Las Vegas. DING! DING! DING! DING! DING!

  As Jared sat there perplexed as to what was going on, things grew even stranger. His supervisor in Chicago received an e-mail from another supervisor in Baltimore, saying that a group of agents wanted to come out to the Windy City to talk about the Silk Road case. To add to this bizarre, out-of-the-blue request, the Baltimore agents were bringing their U.S. attorney with them.

  This could mean only one thing: Baltimore wanted in on Jared’s case. But Jared didn’t want anyone impinging on his hunt for the Dread Pirate Roberts. This was his case, not theirs, and other people would surely drag him down in his pursuit. He also knew that coming out and saying that would only lead to infighting, which would only lead to a “deconfliction meeting,” where someone very high up in government decides who gets to run a case. That wasn’t a good scenario for Jared. In a standoff with older agents, he would likely lose.

  So Jared and his boss at HSI agreed to a meeting with the Baltimore team at the Dirksen Federal Building, where Jared had first sold the Chicago U.S. attorney on the Silk Road case.

  On the day of the meeting, Jared showed up at the home of the fifty-ton Flamingo expecting one or two people from the Baltimore contingent, but instead a small army streamed inside the office, including agents, assistants, and their own personal Baltimore assistant U.S. attorney, who introduced himself as Justin.

  After some formalities and awkward handshakes, the Baltimore attorney spoke. “Thanks for meeting with us. We’ve been reading your reports, Jared”—momentarily looking in his direction—“and you’re doing some really great work, just great reporting in there.”

  Jared thought to himself, I know you’ve been reading my fucking reports. I’ve been getting alerts in my in-box every fifteen minutes for the past few fucking weeks. He kept his rant to himself for now and instead smiled and nodded.

  The Baltimore attorney then explained that the HSI agents in the room, Mike and Greg (who also worked with Carl Force), had picked up a lead in a bust, a dealer who had been “turned” and had given them a list of names belonging to people who sold drugs on the Silk Road. The attorney went on to say that they were going to trace all the people on the list, and “one of those names is going to be the leader of the Silk Road.” The Baltimore team sat there gloating with pride at their plan.

  Jared couldn’t stop himself from interrupting them. “You guys have no idea what you’re up against,” he said, upset. “You have no respect for Tor and Bitcoin and . . .”

  Justin from Baltimore ignored Jared’s comment and insinuated that Baltimore HSI was going to be taking over the case against the Silk Road. They might let Chicago join in if Jared had something to contribute.

  Furious, Jared was about to interrupt again when he was beaten to it by his own supervisor, who seemed equally annoyed at the way these Baltimore agents had stormed into their town trying to throw their weight around. “Here’s what we’re going to do,” Jared’s supervisor declared in a bellicose tone. “You guys are going to go your way; we’re going to go our way.”

  The room fell silent. Any ounce of cordiality that had been there when the meeting began had vanished. Jared’s supervisor went on to dictate that if HSI Baltimore bumped into the investigation by HSI Chicago, they would go up through the ranks and deal with it accordingly. “We’ll deconflict when we have to.”

  Silence hung there for a second and Justin spoke again. “That’s fine,” he said as the group from Baltimore got up to leave. “But we’re pretty sure we’re going
to have this site shut down in a couple of weeks.”

  Chapter 26

  THE MUTINY

  Every founder goes through it.

  When Facebook introduced the “timeline,” its few-million-strong user base grew enraged at the privacy violations that came with involuntarily sharing everything you did with others. But Mark Zuckerberg had no choice; he needed to grow his revenue, and this was the path forward. Uber went through it when the company defiantly refused to eliminate its “surge pricing” model, which would make customers’ car rides double, triple, and in some instances even octuple without much warning. But Travis Kalanick had no choice; he needed to grow his revenue. Every tech company has faced these challenges: Twitter, Google, Apple, Yahoo! All seemingly screwing over their customers for their own gain. People don’t realize that these are simply some of the tough decisions a CEO must make in order to survive. So if Ross wanted to continue to grow the Silk Road, he had to make these kinds of grueling decisions too. And just as in the revolts at Facebook and Uber and every other start-up in Silicon Valley that had pissed off its users, the drug dealers on the Silk Road were outraged at the latest decisions of the Dread Pirate Roberts. So much so that there was talk of a mutiny on the HMS Silk Road.

  Rumors had been rumbling up through the decks of the ship for weeks about such a rebellion. At first Ross had justly brushed them off as just that, rumors, assuming they were just hearsay from a couple of unhappy vendors who were spreading gossip. Yet now the chatter was growing louder, and there was talk of an insurgency, or even of a mass exodus, that could be in the works on the site.

  The turmoil had begun earlier in the year when Ross had made the decision to raise the commission rate he was charging dealers on the site. Back then, whether someone bought a tiny baggie of weed seeds for $5 or $5,000 worth of cocaine, the Silk Road would take a 6.23 percent commission for helping facilitate the deal.