Alleged Operator of Silk Road 2.0 Awaits Trial

A San Francisco computer programmer accused of running a resurrected version of a black market website known as Silk Road agreed in federal court in the city today to be transferred in custody to New York to face the charges there.

Blake Benthall, 26, was arrested in San Francisco Wednesday by FBI and Homeland Security Department agents and has been in custody since then.

Federal prosecutors claim in a criminal complaint filed in U.S. District Court in Manhattan on Oct. 29 that between late December and his arrest, Benthall ran an online marketplace known as Silk Road 2.0 that enabled users to buy illegal drugs, false identification, computer hacking tools and money laundering services.

The site — now shut down by the FBI — was “one of the most extensive, sophisticated and widely used criminal marketplaces on the Internet today,” FBI Agent Vincent D’Agostino alleged in the complaint.

The site was allegedly the successor to the first Silk Road website, whose alleged operator, Ross Ulbricht, was also arrested in San Francisco, 13 months ago.

Ulbricht, 30, was arrested in the science fiction section of the Glen Park branch of the San Francisco Public Library on Oct. 1, 2013. He is awaiting a trial in New York in January.

Benthall is charged in the Oct. 29 criminal complaint with four counts of conspiring to commit drug trafficking, conspiring to commit computer hacking, conspiring to traffic in fraudulent identification, and conspiring to carry out money laundering.

He was brought to federal court in San Francisco this morning for an initial appearance before U.S. Magistrate Jacqueline Scott Corley, at which he acknowledged his identity as the person sought in the complaint.

At a second hearing before Corley in early afternoon, Benthall waived a detention hearing, thus clearing the way for his transfer to New York while in custody.

Corley ordered the U.S. Marshals Service to transport him “forthwith.”

Outside of court, Assistant Federal Public Defender Daniel Blank, assigned this morning to serve as Benthall’s defense lawyer while he is in California, said that he hopes Benthall will be moved quickly, but it may take several days for marshals to arrange a flight.

Blank said Benthall will seek release on bail after he arrives in New York.

“Once he gets to New York, he’ll be able to make a better pitch as to why he should be released,” the attorney said.

Benthall did not speak during the hearing.

The original Silk Road was shut down after Ulbricht’s arrest, but the complaint alleges that five weeks later, another individual launched a new version of the site with an announcement to users that “Silk Road has risen from the ashes.”

The new operator used the same pseudonym as Ulbricht, Dread Pirate Roberts, and was dubbed DPR2 by the FBI.

D’Agostino wrote that Benthall, using the moniker “Defcon,” emerged as an administrator a week later and took over the site on or around Dec. 28.

The complaint alleges that Benthall maintained the hardware and software for the website, managed a small team of online administrators and collected “massive profits generated from the business.”

The site was generating at least $8 million per month in sales and $400,000 in the 5 percent commissions charged as of October, according to the complaint.

The website operated on the Tor network, which makes tracking Internet users extremely difficult by redirecting information through a relay network, according to the FBI.

The system allows for the creation of websites hidden from anyone not using the Tor network. Silk Road and Silk Road 2.0 used Bitcoin, an anonymous electronic currency, for payments, according to the FBI.

D’Agostino wrote that during the investigation, an underground homeland security agent infiltrated the support staff of the site, gained access to private areas of the website and allegedly interacted directly with Benthall on a regular basis.

If convicted of the narcotics trafficking conspiracy charge, Benthall could face a sentence of up to life in prison. The other charges carry maximum sentences of five to 20 years in prison.

Over the past three years, Benthall has worked as a software engineer for three different California technology companies, according to executives for those companies. One of the jobs, for a space transport company, overlapped with part of the time that Benthall is alleged to have worked on Silk Road 2.0.

John Taylor, a spokesman for Space Exploration Technologies Corp., also known as SpaceX, of Hawthorne in Southern California, confirmed that Benthall worked there from Dec. 9, 2013, to Feb. 21, 2014.

Earlier, Benthall worked from December 2012 to March 2013 for Carbon Five, a San Francisco-based web design company, according to CEO Michael Wynholds.

Benthall also worked for RPX Corp., a patent risk management company, for a period of time ending in 2012, according to spokesman Allan Whitescarver. Benthall’s LinkedIn resume lists that time period as August 2011 until November 2012.

A Facebook site appearing to belong to Benthall says he is from Houston, Tex. The LinkedIn site says his first programming job was working as a volunteer webmaster between the ages of 10 and 16 for Texas Odyssey of the Mind, a nonprofit problem-solving competition for students.

The LinkedIn page says Benthall was also a touring singer and keyboardist with a college rock band while attending Florida College, a small Christian college in a Tampa suburb, between September 2007 and July 2008.

Julia Cheever and Scott Morris

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