Silk Road case goes to court

The U.S. Attorney's office of the Southern District of New York has accused Ulbricht of facilitating over $1.2 billion in sales of unlawful and illegal goods on Silk Road. U.S. District Judge Katherine Forrest of the Southern District of New York is overseeing the case.

Texas resident Ulbricht was indicted last February, after being arrested in October 2013 in California. At the time of his arrest, Ulbricht was charged with narcotics conspiracy, engaging in a continuing criminal enterprise, conspiracy to commit computer hacking, and money laundering. Both the charges of narcotics and engaging in a criminal enterprise have maximum penalties of lifetime imprisonment. Ulbricht has plead not guilty to all charges.

Ulbricht allegedly ran Silk Road from January 2011 until October 2013, when it was shut down by law enforcement agencies. Prosecutors described the Web site as "the most sophisticated and extensive criminal marketplace on the Internet, serving as a sprawling black-market bazaar where unlawful goods and services, including illegal drugs of virtually all varieties, were bought and sold regularly by the site's users."

Prosecutors allege that over 100,000 people had visited the site and purchased illegal drugs from thousands of drug dealers, and that as of September 2013, the site contained nearly 13,000 listings for controlled substances. Hundreds of millions of dollars flowed through the site, according to prosecutors.

Silk Road made such transactions untraceable through a variety of means, including by using the Tor software for setting up anonymous networks and by employing a payment system based on Bitcoin to further obscure the identities of participating parties, according to the prosecution.

Ulbricht, who also went by online handle "Dread Pirate Roberts," took commissions on sales, potentially worth tens of millions of dollars, and kept a small staff to help him in the operations, according to the prosecution.

Defense attorney Joshua Dratel is expected to question how the U.S. Federal Bureau of Investigation (FBI) pinpointed the location of the Silk Road servers. Dratel has claimed that information was procured through ways that violated U.S. Fourth Amendment rights for search and seizure.

The FBI in turn has said it pinpointed the location of the server through a faulty CAPTCHA process that revealed the server's IP address.

Jury selection for the case started on Tuesday.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com