Prosecutors in the criminal case against Ross Ulbricht, the 30-year-old accused of creating and running underground internet market Silk Road, are asking that all implications that Mark Karpeles was the real mastermind behind the site be stricken from court records.
On Thursday, Ulbricht's defense surprised the prosecution by pointing to Karpeles as the primary Dread Pirate Roberts, the site's pseudonymous operator, not Ulbricht. Karpeles, the former CEO of a failed exchange for the semi-anonymous digital currency Bitcoin, denies that he was involved in Silk Road and has never been charged with a crime related to it.
In a letter filed to Judge Katherine Forrest on Monday, attorneys Serrin Turner and Timothy Howard asked her to strike any testimony that includes evidence concerning Karpeles because it "poses serious risks of confusing and misleading the jury."
During the cross-examination of Jared DerYeghiayan, a homeland security special investigation agent who investigated Silk Road for years, Ulbricht's lawyer Joshua Dratel read emails showing the agent was convinced Karpeles was the Dread Pirate Roberts for more than a year, filing an affidavit to that effect just two months before Ulbricht's arrest.
Although Dratel stopped short of accusing Karpeles outright, it was clear he was using the government's pursuit of Karpeles to raise reasonable doubt with the jury. He also said in his opening statement that "We have the name of the real mastermind and it's not Ulbricht."
The prosecution angrily objected to the use of DerYeghiayan's investigation of Karpeles in the trial, causing Judge Katherine Forrest cut the proceedings short.
DerYeghiayan testified he said he had probable cause to believe Karpeles was behind Silk Road at the time because as the former CEO of the world's largest Bitcoin exchange, he was positioned to benefit from using the site to bolster the value of Bitcoin.
DerYeghiayan noted that silkroadmarket.org, formerly a website on the "normal internet" with directions on how to access the real Silk Road market using the anonymizing network Tor, was hosted by KalyHost.com, a service affiliated with Karpeles's company Tibanne.
I have nothing to do with Silk Road
He also said that silkroadmarket.org and bitcointalk.org (a site that was once hosted by Karpeles's company as well) ran on the same outdated version of MediaWiki software. Karpeles has vehemently denied these allegations, writing in an email to Motherboard on Thursday, "I have nothing to do with Silk Road and do not condone what has been happening there."
Karpeles sent an additional 53 pages of records from Whois, a database of domain name information, to Motherboard and five other publications to further prove he was not behind silkroadmarket.org. The records included a Bitcoin transaction for the payment of the domain, which Karpeles believed could potentially be traced to Ulbricht.
Nicholas Weaver, a researcher at the International Computer Science Institute, tracked down the transaction but said his findings were inconclusive. Commenting on these findings, Nicolas Christin, Associate Director of the Information Networking Institute at Carnegie Mellon University, said the "output," or beneficiary of the transaction is listed as "Mt. Gox and Others," which is to be expected as the site was hosted by Karpeles's company. Weaver was unable to track the input of the transaction. Christin said presumably "Mr. Richard Page," whom the site is registered under, paid for the domain, but that is likely "a fake identity" (Correction: An earlier version of this story said the input was listed as 'Mr. Richard Page' but the input, in fact, could not be traced.)
"The input (sender) of the transaction (i.e., "Mr. Richard Page" presumably) cannot be satisfactorily identified," he said in an email. "Whoever paid Mt. Gox for this page made sure the coins were reasonably clean (i.e., not immediately traceable to another entity) before sending it to them."
In the prosecution's complaint filed Monday, the prosecution claims Richard Page is, in fact, another one of Ulbricht's pseudonyms.
"Based on an examination of the defendant's laptop subsequent to his arrest, that name is known to be an alias used by the defendant," the letter stated. "Specifically, a file recovered from the defendant's computer, within a folder marked 'aliaces' [sic], reflects the name "Richard Page," along with a false address included in the contact information used to register the "silkroadmarket.org" domain name. The file further reflects that the information was used to rent a server from 'kalyhost [sic].'"
The prosecution is including this discovery and others in its request to have references from Karpeles left out of the case, calling references to the Karpeles investigation "hearsay."
"Although SA Der-Yeghiayan at one time believed that Mr. Karpeles may have been involved in Silk Road, the connections he drew between Mr. Karpeles and Silk Road evaporated in the light of subsequent investigative discoveries," the letter said.
The prosecution also said the defense cannot ask about DerYeghiayan's past beliefs because in investigations, an agent's beliefs "often rest on hearsay, hunches, or other information that is not in itself admissible."
"The line of questioning is improper insofar as it is focused on SA Der-Yeghiayan's state of mind during his investigation. That is, the defense seeks to have SA Der-Yeghiayan explain why he believed during an earlier period in time that there was reason to suspect Mr. Karpeles was involved in operating Silk Road. SA Der-Yeghiayan's beliefs are not evidence."
Judge Forrest previously said the she would consider the prosecution's objections, adding they should prove the evidence is not admissible based on similar cases in the past. She will likely issue her rulings on the complaint when proceedings resume today.