I previously remarked how I could trace payments direct from the Silk Road to Ross Ulbricht in just a couple of mouseclicks. But why bother clicking when you can have a computer do the work for you?
The analysis was simple: I wrote a program which isolated every transaction where one of the source addresses was seized by the FBI from the Silk Road server (showing that the source was Silk Road), and the destination was seized from Ulbricht's computer. The resulting list is here. Each entry consists of the date, the timestamp, the Bitcoin transaction hash (which uniquely identifies the transaction), and the value transferred from Silk Road to Ulbricht.
The result is interesting: Between July 5th and August 21st, Ulbricht received 29,000 BTC (valued at nearly $
This flow actually occurred in stages. From July 5th to the 12th, over 8000 BTC flowed from Silk Road to Ulbricht in a series of very small transactions, all less than 10 BTC. Then the transfers switched to a 10,000 BTC transfer on the 19th, two 1,000 BTC transfers on the 20th, and three transfers for a total of 8300 BTC on August 20th and 21st.
Now, Bitcoin is a "push" protocol: the sender decides what to send while the recipient has no control. But in order to send Bitcoin, you need a valid destination. Since almost all these transactions sent their Bitcoins to new addresses belonging to Ulbricht, whoever sent them had to know their destinations. Almost every transaction required generating a new address for each transfer to Ulbricht.
Click here to read about the shutdown of the illegal bazaar and its tale of online secrecy, murders-for-hire, courtroom drama and corruption.
So what does this mean? There are two significant possibilities. The first is that something changed in how Silk Road or Ross Ulbricht handled their Bitcoins, making the simple public tracing no longer effective before July 2013. Of the remaing Bitcoins, almost all of them were moved on May 1st, 2013, which thwarts this simple tracking. This move will not affect any private-key based tracing. Ulbricht's own wallet file contained Ulbricht's older keys, as this near-microscopic seizure of 0.00000001 Bitcoin demonstrates.
The second possibility is that the defense's claim that Ulbricht created Silk Road, turned it over to another, and then regained control at the end might be correct, but correct in a way which doesn't necessarily help the defense!
If Ulbricht really did give up the Silk Road and then regained control, the flow of funds would suggest it occurred before July 6th. Since the FBI arrested Ulbricht on October 2nd, this suggests that Ulbricht may have regained the mantle of the Dread Pirate for nearly three months.
This may also come back to haunt the defense in other ways. They previously asserted that the Bitcoins seized from Ulbricht were the result of his skill as a trader. When 20% of the Bitcoins are now known to originate not with savvy trading but with the Silk Road, what should we believe about the other 80%?
