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Image Source: https://www.flickr.com/photos/jason_benjamin/

Image Source: https://www.flickr.com/photos/jason_benjamin/

Prosecutors have added three new charges to the case against Ross Ulbricht, the man the Feds believe to be “Dread Pirate Roberts,” the mastermind behind the now-closed online black marketplace Silk Road. Ulbricht, 30, will now face additional charges of narcotics trafficking, distribution of narcotics by means of the internet, and conspiracy to traffic in fraudulent identification documents. He already faces charges for conspiracy to distribute controlled substances, computer hacking and money laundering. The Silk Road case is deeply entwined with the development and adoption of bitcoin, as the marketplace was one of the early adopters of cryptocurrency.

The new charges reflect Silk Road’s role in enabling the sale of fake ID documents, including passports and driver’s licenses. Although there is a significant argument that Silk Road is protected under “safe harbor” provisions that protect ISPs and forum-like websites from criminal liability should their users commit crimes, it’s an open question if this applies to the Silk Road, which openly encouraging of the sale of illegal goods and services. The exclusive use of bitcoin in those transactions has proven to be a major smudge on bitcoin adoption since the closure if the Silk Road in October, suggesting to many that cryptocurrency is largely used for buying drugs online.

Should Ulbricht be convicted, he faces at least a decade in prison. Of more concern to bitcoin users, Ulbricht’s cache of 144,000 BTC will likely enter the same liquidation process as other coins seized from the Silk Road. Roughly 30,000 BTC was auctioned off by the U.S. Marshal’s Service in June, wreaking havoc with bitcoin prices until it was revealed that winning bidder Tim Draper had no intention of selling the coins on the open market. The $75 million in BTC seized from Ulbricht represent nearly 40 days’ worth of bitcoin mining, and could easily cause a price crash if released all at once on bitocin exchanges at current volume.

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