Terrible news for lovers of black market (that is, free market) commerce free of the watching eyes and clutching hands of government. Even shut down, the government manages to ruin things for everyone, having this morning, says The Guardian, shut down the "Silk Road" site for anonymous online commerce and arrested its alleged operator.
The bad news:
Police in New York say that a man has been arrested over the ownership and operation of Silk Road, a site which was used to sell drugs over the internet and which used Bitcoins for funding. Ross William Ulbricht, who the police claim operated the site under the name "Dread Pirate Roberts" or "DPR", was arrested in San Francisco. Documents seen by the Guardian say that Ulbricht was in possession of 26,000 Bitcoins, worth approximately $3.6m. Silk Road was normally reached via the Tor anonymisation network. The police complaint says that Silk Road was "a vast online marketplace responsible for the distribution of hundreds of kilograms of illegal drugs and other illicit goods and services." Other online sources confirmed that the site now displays a message saying that it has been taken seized. One suggests that it is the domain for the site which has been seized, rather than the server itself.
UPDATE: BBC is reporting some real crimes that Ulbricht is alleged to have committed: soliciting murder.
A second document alleges that private communications recovered from the Silk Road's computer server suggested the suspect had been willing to pursue violent means to defend his interests. It said that messages sent in March and April indicated he had "solicited a murder-for-hire" of a Canadian Silk Road user nicknamed FriendlyChemist who had tried to extort money by threatening to release the identities of thousands of the site's users. Subsequent messages indicated he had been sent a photograph of the victim after paying $150,000 to have the blackmailer killed. "I've received the picture and deleted it. Thank you again for your swift action," Mr Ulbricht is alleged to have written to an assassin. However, the court documents note that Canadian law enforcers have said there was no record of a homicide taking place in White Rock, British Columbia at the time.
UPDATE II: Of special libertarian interest, see this Reddit thread that connects the website of the Mises Institute with how Ulbricht was caught:
An agent involved in the investigation ("Agent-1"), found the first few references to SR on the internet from somebody only identified as "altoid", attempting to promote the site in its beginning days, in January of 2011.
In October of the same year, a user also going by the name of "altoid" made a posting on Bitcoin Talk titled "a venture backed Bitcoin startup company", which directed interested users to "rossulbricht at gmail dot com".
That email address is what led to DPR's downfall.
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After identifying "altoid", they started connecting the "DPR" identity to Ulbricht pretty quickly.
Ulbricht's Google+ page and YouTube profile both make multiple references to the a website dubbed the "Mises Institute". DPR's signature on the SR forums contained a link to the Mises Institute.
DPR cited the "Austrian Economic theory" along with the works of Ludwig von Mises and Murray Rothbard, all of which are closesly associated with the Mises Institute.
Server logs show that someone logged onto the SR administration panel from San Fransisco around the same time that Ulbricht was staying in San Fransisco.
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