Defense in Silk Road Trial Says Mt. Gox CEO Was the Real Dread Pirate Roberts

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The defense team for Ross ​Ulbricht, the 30-year-old man accused of running the online black market Silk Road under the pseudonym Dread Pirate Roberts, just dropped an unexpected new theory: Mark Karpeles, the CEO of failed Bitcoin company Mt. Gox, is the real Dread Pirate Roberts.

“We have the name of the real mastermind and it’s not Ulbricht,” Joshua Dratel, Ulbricht’s lawyer, said in his opening statement in the trial. It now seems clear that he plans to argue that Karpeles framed Ulbricht.

Karpeles has ​denied the allegation in an email to Motherboard: “I am not Dread Pirate Roberts … I have nothing to do with Silk Road and do not condone what’s happening there.”

The defense is clearly trying to raise reasonable doubt by implying that someone else could have been responsible for the site, which did more than a billion dollars in underground commerce for drugs, false IDs, and more before being shut down in October of 2013.

Dratel was cross-examining Jared DerYeghiayan, a homeland security special investigation agent who opened a case into Silk Road. DerYeghiayan now says he believes Ulbricht is the culprit, but Dratel presented evidence that he once had a different theory: back in 2012, DerYeghiayan was convinced that Dread Pirate Roberts was Karpeles.

I have a wealth of evidence to prove that [Karpeles] is Dread Pirate Roberts

Karpeles, who is from France, ran what was once the world’s largest Bitcoin exchange, Mt. Gox, which was based in Tokyo. DerYeghiayan’s theory was that Karpeles wanted to create a market that used Bitcoin in order to keep the price of the semi-anonymous cryptocurrency robust, which he believed was probable cause for Karpeles’s arrest. (Mt. Gox went bankrupt in early 2014.)

“[Silk Road] would be a device for leveraging the value of Bitcoin, and if he could create a site independent of Bitcoin, you could control the value of Bitcoin,” Dratel said, reading from DerYeghiayan’s emails.

DerYeghiayan believed his evidence was so strong that he even drafted a search warrant for Karpeles’s email in May of 2013.

At the same time, a parallel investigation had opened in Baltimore. DerYeghiayan told those agents not to contact Karpeles, for fear of spooking him too early. The Baltimore investigators didn’t listen, and instead seized a site run by Karpeles that had assets of more than $3 million, according to today’s testimony.

When the Baltimore investigators asked Karpeles about Silk Road, his lawyers said he would tell them the name of the person behind the site. Correction: An earlier version of this story implied investigators spoke directly to Karpeles; they actually spoke to him through his lawyers.

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