Federal authorities on Wednesday shut down the notorious online drug marketplace Silk Road, which generated more than $1 billion in sales and had more than 900,000 registered users who purchased heroin, cocaine, opioid pills, LSD, Ecstasy and other drugs.

As part of its takedown operation, the FBI arrested the website's owner, Ross William Ulbricht, 29, in San Francisco on Tuesday, according to federal court records filed in Manhattan. Ulbricht was known to the site's users by the digital handle Dread Pirate Roberts -- a reference to a character in "The Princess Bride."

"Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the Internet today," FBI agent Christopher Tarbell said in the criminal complaint.

Federal prosecutors with the Department of Justice in New York charged Ulbricht with narcotics trafficking conspiracy, money laundering conspiracy and computer hacking conspiracy, the records show. Authorities allege the website facilitated the equivalent of $1.2 billion in sales using the digital currency Bitcoin during a 2 1/2-year period.

Authorities also said Ulbricht solicited a Silk Road user "to execute a murder-for-hire of another Silk Road user, who was threatening to release the identities of thousands of users of the site," according to the records.

Newsday reported exclusively last month that the website -- considered the largest online marketplace in the country for illegal drug sales -- was the subject of a federal probe and that Long Islanders were among its users.

Ulbricht was in a San Francisco library chatting online about Silk Road with a cooperating federal witness when the FBI arrested him, the FBI said.

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Ulbricht, who authorities say has an advanced degree in chemical engineering, appeared in federal court Wednesday and was ordered held without bail. A bail hearing was set for Friday. His lawyer declined to comment.

Encryption allegedly used

Authorities had struggled to track the location of Silk Road's servers, sources said, because the site could only be accessed using encryption software called Tor, which hides computers' IP addresses and allows users to surf the Web anonymously.

The FBI did not disclose how it ultimately identified Ulbricht as the site's operator, but court records highlighted the fact that U.S. Customs and Border Patrol had seized a package of apparently forged identification documents featuring Ulbricht's photograph.

The address on the package, which was taken from mail seized at the Canadian border, led to a San Francisco street where authorities found Ulbricht and identified him as the man in the photographs, the records show.

"He slipped up and made a simple mistake," said a federal law enforcement official involved in the investigation. "This outcome was inevitable."

Authorities made more than 100 undercover purchases from the site as they built a criminal case. Those buys could lead to separate prosecutions of drug dealers who sold their products on the site, the source said. The records said that the site offered thousands of illegal drugs for sale.

Silk Road's initial success had signaled the opening of a new front in the battle against illegal drugs, officials say, in which dealers and customers use technology to hide their identities and flout state and federal laws.

Among the drug buyers on the site were computer users in Nassau and Suffolk counties, as well as Manhattan, Brooklyn and Queens, sources said. The site had more than 900,000 registered users.

Users could rate products

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Silk Road's users sold drugs and other items and, like customers of legitimate shopping sites, rated delivery performance as well as the quality of the products they purchased. Other illicit items and services were also available, including forged documents, guns, murder for hire offers and how-to guides for breaking into automated teller machines, records show.

The site was used by "several thousand drug dealers" to sell "hundreds of kilograms of illegal drugs," according to the court records. Drugs on the site were typically sold at a significant markup, sometimes costing twice as much as their street price.

To ensure the money exchanged on Silk Road could not be traced back to customers, the site used a digital currency called Bitcoins, which are purchased anonymously online with real money. But investigators ultimately linked the currency to the site's illicit activities, records show, and seized $3.6 million worth of Bitcoin as part of their operation.

Sen. Charles Schumer (D-N.Y.), who first called on the federal government to shut down the site in 2011, said, "I am pleased that today they hung a 'Closed for Good' sign on Silk Road's door."