How Did Dread Pirate Roberts Acquire and Protect his Bitcoin Wealth?
The Bitcoin scheme is the most popular and talked about alternative payment scheme. One of the most active parts of the Bitcoin ecosystem was the Silk Road marketplace, in which highly illegal substances and services were traded. It was run by a person who called himself Dread Pirate Roberts (DPR), whose bitcoin holdings are estimated to be worth hundreds of millions of dollars at today’s exchange rate. On October 1-st 2013, the FBI arrested a 29 year old person named Ross William Ulbricht, claiming that he is DPR, and seizing a small fraction of his bitcoin wealth. In this paper we use the publicly available record to trace the evolution of his holdings in order to find how he acquired and how he tried to hide them from the authorities. In particular, we trace the amounts he seemingly received and the amounts he seemingly transferred out of his accounts, and show that all his Silk Road commissions from the months of May, June and September 2013, along with numerous other amounts, were not seized by the FBI. This analysis demonstrates the power of data mining techniques in analyzing large payment systems, and especially publicly available transaction graphs of the type provided by the Bitcoin scheme.
KeywordsBitcoin Silk road Dread pirate roberts DPR
This research was supported by a research grant provided by the Citi Foundation. We would like to thank Ronen Basri, Uriel Feige, Michal Irani, Robert Krauthgamer, Boaz Nadler, Moni Naor and David Peleg from the Computer Science and Applied Mathematics Department of the Weizmann Institute of Science for many interesting and informative discussions. We would also like to thank Aharon Friedman for his help in acquiring and processing the bitcoin data base. Finally, we would like to thank all the members of the Bitcoin community that we talked to, and especially Meni Rosenfeld.
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