A federal agent who infiltrated the Silk Road drug website testified on Wednesday that just before Californian Ross Ulbricht was arrested in 2013 his alleged online avatar complained in a lighthearted chat about government intrusions in the bitcoin market.
Appearing in Manhattan federal court, undercover investigator Jared Der-Yeghiayan said he used the online identity "Cirrus" to work as a site administrator for "Dread Pirate Roberts" -- the alleged pseudonym of Ulbricht -- for three months in 2013, taking his pay in online transfers of bitcoin.
He told jurors that when investigators concluded that "Dread Pirate Roberts" was Ulbricht, they set up a sting to try to arrest him during an Internet chat at a public location using the online identity and to grab his laptop before he could exit the chat.
On Oct. 1, 2013, Der-Yeghiayan said, he struck up a chat with his online boss when agents saw Ulbricht enter the Glen Park, California, public library, near his residence. "Dread Pirate Roberts" asked "Cirrus" if he was still a bitcoin trader.
The agent answered that he had stopped because of increased reporting requirements. "Damned regulators, eh?" answered the Silk Road boss. Seconds later, agents grabbed Ulbricht and the chat went dead.
The government says Silk Road hosted at least $200 million in drug sales at an encrypted website, and the case is an important test of law enforcement's ability to prosecute sophisticated cybercrime.
Ulbricht says he was set up by Silk Road's real villains, and has complained that the case threatens Internet freedom. The trial began Tuesday and is expected to last six weeks.