bitcoin poker

If you remember Chris Moneymaker, you probably remember April 15, 2011, colloquially known in poker communities as ‘Black Friday.’ After an indictment filed by the United States Department of Justice, poker sites such as Full Tilt, Pokerstars, and Absolute Poker shuttered their doors to US players. Poker night in America was over. Vegas and Indian Casinos were once again the only places available. Even then you had to have a bankroll. Casinos don’t have micro-stakes. 

That is, unless you had some bitcoin and a ‘Seals with Clubs’ account. 

Shortly after ‘Black Friday,’ a young poker player named Brian Micon filled the void and thirst for internet poker. And he did it with bitcoin. He launched Seals With Clubs in September of 2012. Cryptocurrency and poker enthusiasts alike flocked to Micon’s DIY poker platform.

bryan micon seals with clubs
Figure 1. Seals With Clubs founder and professional poker player Brian Micon.

An Honest Bitcoin Poker Offering

With a basic user interface and minimal options, at first, Seals With Clubs was a hangout for darknet marketeers and grinders. All bonding over their unwavering faith in the future of bitcoin. But that didn’t last long. Soon word spread and seats began to fill. Withdrawals were successfully made and Seals With Clubs began a reputation of an honest poker offering. 

In the first months after ‘Black Friday,’ internet poker had been relegated to lackluster and seemingly fraudulent Chinese applications and offshore servers. With a growing reputation Seals With Clubs quickly became a trusted alternative. Unlike sites such as Carbon Poker and others, on Seals With Clubs you deposited in bitcoin, played for bitcoin, and withdrew in bitcoin. Your BTC deposits were never converted to fiat in the process. That was a big deal. Especially for crypto-enthusiasts like myself.

As ‘Seals’ reputation grew and tables filled, daily tournaments with guaranteed prize pools began taking place. And soon other games were made available; such as Big O, Open Face Chinese, and Courchevel. The poker community began to take notice and Micon found himself the center of attention. The poker press heralded Micon and his upstart poker platform, Seals With Clubs, but in the process drew the attention of the authorities.

Seals With Clubs Shut Down

Seals With Clubs was shut down on February 11th of 2015 shortly after Micon’s house was raided. Micon pleaded guilty to operating an unlicensed interactive gaming system and avoided jail-time. Shortly after, Seals With Clubs (SwC) was purchased and re-launched under different ownership.

With the lowest rake in town and a solid reputation, Seals With Clubs 2.0 launched. Though most of the user base had fled, a few stuck around and it slowly became a haven for crypto-enthusiasts looking for something to do with their bitcoin other than just ‘buy and sell.’ 

With an average player base of about 200 at any given time it became more of a hangout. The guaranteed tournaments kept players playing and the wealth of game options kept the cash games going. But things began to grow a bit stale.

The unnamed owners who took control of SwC after Micon’s withdrawal decided to take action. Bitcoin’s meteoric rise in price had cost the platform users and stakes which were previously considered ‘micro’ were now twenty and thirty dollar poker games. New players weren’t coming and old players began cashing out. Enter Seals With Clubs 3.0.

swc30
Figure 2. Seals With Clubs 3.0

The Launch of Seals With Clubs 3.0

Released in November of 2018, Seals With Clubs 3.0 is a complete makeover of the ‘Seals’ brand and aesthetic. They even took the time to give the platform a new user interface and chat. With super low micro-stakes, no rake tables, and a new ‘Bad Beat Jackpot’, SwC is making a real attempt at a comeback. And anyone with a few Satoshis (micro bitcoin denominations) can join in the fun. I also dig the 8-bit aesthetic they used to redesign their homepage and banners. 

SwC’s stellar reputation in the cryptocurrency community speaks for itself. (They reimbursed me for both the BCH and BTCG forks and refunded bitcoin to my account after identifying a rake bug years later.) Not only do you need only a few Satoshis but you can rest assured your Satoshis are safe in the ‘Seals’ wallets. They also have a Bitcoin Talk thread to address complications, as they’re still working out a few bugs.

I’m excited to play a bit of poker, once again, with my bitcoin. I’ve never played Big O in real life nor OFC 2-7. But I’m happy to have the opportunity on SwC’s 3.0.

We recently had the opportunity to ask the owners a few questions about the re-launch of ‘Seals.’ The site operator, who goes by the name Glitch in the SwC chat, gave us some insight into their thoughts and opinions on running an internet bitcoin poker site:

Carty Sewill, Block Explorer: What brought you to re-launch? And how has Seals With Clubs’ past affected your future decisions?

Glitch, Seals With Clubs: The team decided that it was time to upgrade the software. SwC Poker spent far too long on the 2.0 platform and our players deserved a better experience. After looking at the global online poker marketplace, we found that no one else had a nice platform and treated the players fairly. Because of bitcoin, we can charge an industry-lowest rake and still make a profit. Once players see our new software and see the great deal we are offering they will start showing up in bigger numbers. We are already seeing an increase in traffic with only a few weeks of operation on the 3.0 platform.

CS: What makes SwC different to other BTC poker sites (or those that claim to be)?

Glitch: SwC Poker is unique in that we offer the game purely using bitcoin, on our own network, with reliable multi-platform software, and charge industry-lowest rake. Because SwC Poker has a long history of always paying out players, new players can be confident when making deposits. 

Withdrawals on the 3.0 platform are averaging only a few hours. We know that players want fast cashouts, a variety of games, stable software, and a good value for their poker budgets. 

Our “No Rake Microstakes” tables allow players at the lowest stakes to use our platform absolutely free. No other poker site is doing that because no other poker site really cares about the players. The industry seems to always move towards higher rake and less player rewards. After our recent upgrade, we now offer low-rake Bitcoin poker in a competitive package that is set to compete with bigger traditional poker sites in 2019.

CS: How do you feel about your less-than-forthright competition and operating as a trusted entity surrounded by scam sites?

Glitch: Not sure about that question, as SwC Poker can only speak for itself. Bitcoin poker players know to do research on poker sites before putting their money on. When they research us, they find our long history of always paying out players quickly and handling any situation with high ethics.

CS: What’s the largest pot, in bitcoin, in Seals With Clubs history?

Glitch: We do not have older data, but some players have talked about 1000 BTC pots played on the 1.0 platform.

CS: You’ve all been committed for so long. What drives your passion?

Glitch: It is not the same team throughout, but the members today have the passion to make bitcoin poker very successful. We think that using bitcoin the rake can be made very low, which will help fuel a healthy poker economy.

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bitcoin history

The Bitcoin timeline has been updated for 2019.

It’s been over ten years since the beginning of Bitcoin (BTC). Here are some notable events, both good and bad, that tell the story of Bitcoin and other major cryptocurrencies. 

Before Bitcoin: B-Money and BitGold (1998)

Bitcoin is often called the first cryptocurrency, but that’s not exactly true. To understand bitcoin’s history, we need to go further back in time. 

Ten years before bitcoin was launched, a cryptographer called Wei Dai came up with b-money; an “anonymous, distributed electronic cash system.” Bitcoin’s founder Satoshi Nakamoto even referenced b-money in the famous bitcoin whitepaper.

Nick Szabo came up with a similar idea – Bit Gold – which lay the groundwork for blockchain: the technology underlying bitcoin.

Bitcoin Whitepaper Release (October 31, 2008)

Satoshi Nakamoto published the Bitcoin whitepaper on an obscure cryptography mailing list in 2008. The whitepaper proposed a new system for finance that replaced the role of banks and third-party payment processors:

“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

Bitcoin Genesis Block Mined (January 3, 2009)

Satoshi Nakamoto mined the original Genesis Block (also referred to as Block 0) on a modest computer without any competition from other miners. The original block contained 50 BTC that can’t be spent. It’s unknown whether this was by design or a programming accident. 

The Genesis Block also contained a message written by Satoshi: “The Times 03/Jan/2009 Chancellor on brink of the second bailout for banks.” The message is a timestamp, referring to a newspaper headline on January 3rd. It’s also a hint at Satoshi’s mistrust of the financial system.

To this day, people send donations to the Genesis Address: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa. 

The next block, Block 1, wasn’t mined until six days later, on January 9. Today, each block only takes around ten minutes to mine.

Bitcoin Pizza (May 22, 2010)

Yes, Laszlo Hanyecz is the man who once paid 10,000 BTC for two Papa John’s pizzas. He arranged the deal via Bitcoin Talk, a popular online forum for discussing blockchain and cryptocurrencies. 

Sure, BTC didn’t have much value back then, but prices skyrocketed afterward. What if Hanyecz had kept the BTC and decided not to buy the pizza with it? At BTC’s all-time high, Hanyecz would have had the equivalent of almost $200 million. Now, Bitcoin Pizza Day has become an annual celebration.

Mt. Gox Established (July 2010) and Hacked (2011 to 2013)

Mt. Gox was one of the world’s first cryptocurrency exchanges. At one point, it handled more than 70% of all BTC transactions making it the biggest in the world. In 2011, though, it made headlines for a large-scale hack. Experts believe this was probably caused by a compromised computer belonging to an auditor of the company. Mt. Gox’s hot wallet private keys were stolen from a wallet.dat file. 

By the time of its collapse in 2014, an estimated 850,000 BTC had been stolen from Mt. Gox. This massive failure demonstrated the need to improving wallet and exchange security. Major improvements would be made in the coming years to prevent such issues from happening on other exchanges, but we have also seen much larger hacks since then.

The Silk Road Launches (February 2011)

The Silk Road was an infamous marketplace on the dark web. It was created by Ross Ulbricht with a utopian vision: “People should have the right to buy and sell whatever they wanted so long as they weren’t hurting anyone else.” But it quickly descended into a hub for criminals and drug dealers. Users could buy drugs, fake documents, and all sorts of things with BTC. 

In June 2011, Gawker published an article about Silk Road, drawing mainstream attention to the site. A major investigation launched in a bid to shut it down.

Further reading: The Silk Road: A Story of Bitcoin, Drugs, and the Dark Web

The First Bitcoin Fork – Litecoin is Born (October 2011)

Today, Bitcoin forks are abundant. However, this wasn’t always the case. Back in 2011, Litecoin became the first fork of the Bitcoin core client. Various forks have been created since then in order to improve upon the design of Bitcoin. 

Many argued (and still argue) that BTC wasn’t scalable and had become a digital asset, losing the initial goal of becoming a truly global digital currency.

The trend of using “Bitcoin” in the name of Bitcoin-forked cryptocurrencies didn’t really take off until after the launch of Bitcoin Classic in February 2016. Even though Bitcoin Classic ultimately failed and ceased operations, several new forks with the name “Bitcoin” would soon follow. Bitcoin Classic, Bitcoin Gold, Bitcoin Private, and Bitcoin SV are just a few examples.

Coinbase Launches (June 2012)

When Coinbase first launched, there were very few options for trading fiat-to-crypto on the market. By working with legislative officials in various jurisdictions throughout the world, Coinbase helped the growth of cryptocurrency and turn around its negative reputation. The company also established a number of partnerships and integrations with banks, making it one of the most accessible cryptocurrency exchanges in the world. 

The company does still use centralized technologies, but some view it as an essential on-ramp to a decentralized ecosystem. In 2017, the company earned $1 billion in revenue. As of October 2018, Coinbase has a valuation of $8 billion. This is a massive upward trajectory, considering that the exchange was only valued at around $1.7 billion back in mid-2017 after Series D funding.

Ripple Founded (September 2012)

While Bitcoin remains the largest and most well-known cryptocurrency, others began to emerge in 2011 and 2012. One such project was Ripple, founded when Jed McCaleb, Chris Larsen, and Arthur Britto took over Ryan Fugger’s RipplePay project.

Ripple was founded to revolutionize the global remittances industry in order to replace older systems like SWIFT. Compared to Bitcoin, Ripple is more centralized. However, it also showed the capabilities of a more scalable blockchain. 

Ripple has since partnered with major banks like the Bank of America Merrill Lynch, Canadian Imperial Bank of Commerce, Mitsubishi UFJ Financial Group, Royal Bank of Canada, Commonwealth Bank of Australia, and more. As of December 2018, XRP is the second-ranked cryptocurrency by market cap and can handle 1,500 transactions per second.

First Bitcoin Halving Event (November 2012)

Bitcoin miners are rewarded with BTC for processing transactions and keeping the network running. When Bitcoin launched, miners were rewarded 50 BTC for every block. But after every 210,000 blocks are mined, there is a halving event. As the name suggests, the mining reward is reduced by half. 

The first of these occurred in November 2012, cutting the reward from 50 BTC to 25 BTC. The second halving event occurred in July 2016. The third event is scheduled for May 2020, barring any major changes in the mining hash rate. 

At that time, the reward will drop from 12.5 BTC to 6.25 BTC. Will this discourage miners from mining BTC? So far the answer has been “no”, but it will be interesting to see what happens in 2020.

Cyprus Bail-in (March 2013)

When banks confiscated people’s funds in wake of the Cyprus financial crisis of 2013, bitcoin gained a lot of momentum. This event also helped spark new interest in cryptocurrencies, in general, as a way to safeguard against corruption and economic downturns. 

Since then, Bitcoin and other cryptocurrencies have gained adoption in similar events. One example is the massive Venezuelan bolívar hyperinflation, which began in November 2016. 

Silk Road Shut Down, Founder Jailed for Life (October 2013)

After two years of investigation, the FBI shut down Silk Road in 2013. Founder Ross Ulbricht was arrested in a San Francisco library. He was later sentenced to a double life sentence, plus 40 years, without parole.

Soon after, Silk Road 2.0 emerged. That, too, was shut down in November 2014 by the FBI and Europol. The US government sold the BTC seized during the 2013 shutdown at a price of an estimated $334 each in a series of auctions in 2014 and 2015, making a total of around $48 million in profits.

Vitalik Buterin Writes Ethereum Whitepaper (November 2013)

Ethereum’s blockchain introduced new functionalities, previously unavailable with Bitcoin. For example, the project was the first to implement smart contracts. It also introduced a platform for other blockchain projects to create their own tokens and build additional functionalities on top of the Ethereum blockchain. This led to the rise of token sales, and a new generation of fundraising. In late 2018, ETH is the third-ranked cryptocurrency by market cap.

Satoshi Nakamoto Found? (March 2014)

Newsweek published a huge expose, claiming Dorian Nakamoto – an elderly computer engineer in California – was Bitcoin’s elusive creator. Nakamoto denies any knowledge of bitcoin. The hunt continues.

Read more: 24 Clues About Satoshi Nakamoto’s Identity

Microsoft Adopts Crypto (December 11, 2014)

Nowadays, a slew of major companies accept BTC and other cryptocurrencies as forms of payment. When Microsoft decided to start accepting BTC back in 2014, though, this wasn’t the case. The fact that one of the largest companies in the world made this move helped drive mass adoption a step forward and show that crypto had the potential to be used for major transactions. When the company added this possibility it was a surprise to nearly everyone. Since that time, Microsoft customers have been able to use BTC to buy apps, games and videos from its Windows, Windows Phone and Xbox platforms.

BitLicense Established (June 2015)

When it comes to cryptocurrency regulations, the establishment of BitLicense has been one of the most impactful to date. The New York State Department of Financial Services (NYDFS) gave companies only 45 days to apply and required them to pay a $5,000 non-refundable application fee.

With the passage of this law, crypto-related companies operating in New York state are now required to complete balance sheet updates, cash flow statements, data on profit and loss, earnings and asset holdings. They also must pass annual audits. As a result of these regulations, some crypto-related businesses (i.e. Kraken and ShapeShift) shut down operations in the state of New York and haven’t returned since.

Mt. Gox CEO Arrested (August 1, 2015)

Mark Karpeles, CEO of the disgraced Mt. Gox exchange was arrested on suspicion of embezzlement and fraud. He was charged with personally handling funds of the exchange’s client’s accounts. 

Winklevoss Twins Launch Gemini Exchange (October 2015)

The Winklevoss twins, who are rumored to own 1% of all bitcoin supply, launch a regulated bitcoin exchange, complete with FDIC insurance. The twins were among the first to take a cautious and regulatory approach to cryptocurrency trading.

Bitfinex Hacked (August 2016)

Almost 120,000 bitcoins were stolen in the hack. At the time, Bitfinex was the largest cryptocurrency exchange by volume. It triggered a 20% drop in bitcoin price. 

The DAO Fails (2016)

The DAO (decentralized autonomous organization) aimed to create a new type of organization without the need for a board of directors. In 2018 and beyond, many projects have implemented their own DAOs to realize the original vision of this project. 

However, The DAO is quite possibly the most disappointing endeavor in the history of crypto. Launching a crowd-sale that began in April 2016, The DAO suffered from a major hack caused by a security vulnerability during that summer. Around one-third of the ether that had been committed to the project was stolen. To make matters worse, the SEC ruled that DAO tokens were securities in 2017. 

First Bitcoin Exchange-Traded Fund (ETF) Rejected (March 2017)

The Winklevoss twins return, this time with an ETF proposal. An ETF is an investment tool used by millions of traders that would make it easy to get exposure to bitcoin without buying or storing the cryptocurrency directly.

It marked the first in a long string of ETF rejections. 

Bitcoin Cash Launched (August 1, 2017)

Bitcoin Cash is the biggest and most high-profile Bitcoin fork in history. It came about after years of debate over how to scale Bitcoin which has suffered with speed and congestion issues. Unable to come to a compromise, the community splintered into two and a new cryptocurrency was born.

Bitcoin Futures Launch, Gain Regulatory Approval (December 2017)

A futures contract is a trading tool used by institutional traders. It allows them to “bet” on the future price of an asset – usually stocks, bonds or commodities. 

In December 2017, the first bitcoin futures contracts were launched by CBOE Global Markets (CBOE) and the Chicago Mercantile Exchange (CME). It was the first major sign of institutional interest in cryptocurrencies and a new way to increase mainstream crypto trading. 

With the bear market of 2018, however, people began to question whether these new products had a positive or negative impact.

Either way, there are plans in the works for additional futures contracts. For example, Intercontinental Exchange (ICE) which owns the NYSE’, plans to launch bitcoin futures contracts with physical delivery in January 2019. The Vice President of Nasdaq’s media and communications department has confirmed that the company will also launch futures contracts by the first half of 2019.

Bitcoin hits (almost) $20,000 (December 2017)

Bitcoin reaches an all-time-high of $19,498, doubling in its value in little over a month.

Coincheck Exchange Hack (January 2018)

With the equivalent of over $530 million of NEM stolen, the Coincheck hack marked the largest cryptocurrency exchange hack of all time (in terms of equivalent value lost at the time of hack). Yes, there have been earlier hacks where the values of funds lost back then would be much higher than $530 million today. Nevertheless, this story is significant for a few reasons. 

For example, after this event occurred, the Japanese government began to put a lot of effort toward regulating crypto exchanges to avoid another repeat scenario. After all, Mt. Gox was another Japan-based exchange that had failed and shook up the entire industry. 

Second, it also put more emphasis on the lack of available cryptocurrency insurance options. Finally, it reminded investors yet again that, while crypto fund security had improved, there was (and is) still a lot of concerns surrounding this topic.

Facebook ban cryptocurrency adverts, Google follows (January 2018)

Nervous about scams and the unregulated rise of initial coin offerings (ICOs), Facebook bans all cryptocurrency-related adverts on its platform. Google and Twitter followed a few months later.

Facebook has since relaxed the ban, but ICOs remain off limits.

Consensus Debates (Ongoing)

It’s difficult to tell when the first debate over consensus algorithms began, but it’s something that is important for the current and future outlook of cryptocurrency. For instance, BTC uses a consensus mechanism called Proof-of-Work as its method of verifying the accuracy and legitimacy of transactions.

While the vast majority of cryptos use Proof-of-Work in 2018, this is beginning to change. For example, Ethereum is transitioning from Proof-of-Work to Proof-of-Stake. There are also a variety of unique, lesser-known consensus mechanisms specific to various cryptocurrencies. These could also emerge as mainstream solutions.

There are a number of debates within communities about how certain consensus mechanisms should work. While these debates existed before, they seemed to heat up dramatically in the first half of 2018. For example, cryptocurrencies that utilize Proof-of-Work have an ongoing decision on whether to embrace ASIC miners that allow for faster transaction completions or to resist them in order to keep crypto supplies more decentralized. 

The consensus debate and other debates are interesting because many people are looking to stick with Satoshi Nakamoto’s original principles of decentralization. However, since Nakamoto is missing, it’s difficult to know who exactly will help determine how digital currencies should move forward into the future.

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bitcoin hacks

“People should have the right to buy and sell whatever they wanted so long as they weren’t hurting anyone else.”

That was Ross Ulbricht’s vision when he launched the Silk Road, but it soon turned from a utopian ideal to the world’s most notorious dark-web marketplace. What emerged was an “anonymous amazon.com” attracting drug dealers across the planet, all transacting in bitcoin.

It drew mainstream media attention to bitcoin and cryptocurrency, but ultimately the website was shut down, leading to the arrest and imprisonment of Ross Ulbricht, a 34-year-old now serving a double life sentence plus 40 years without parole.

But this story is not straightforward. It’s a story of drugs, aliases, corruption, conspiracy, and the dark web.

Outlined below are the many twists and turns on the road to justice (or injustice). Rebecca Campbell reports:

The Beginnings of Silk Road

Launched in February 2011, the Silk Road website, created by American Ross Ulbricht, was envisioned to be a “free-market economic experiment” that focused on user anonymity. 

Using two key pieces of technology, bitcoin and Tor – a network of computers that makes it impossible to trace by routing internet traffic through servers by anonymizing IP addresses, Ulbricht believed that “people should have the right to buy and sell whatever they wanted so long as they weren’t hurting anyone else.”

ross ulbricht silk road
Ross Ulbricht: the founder of Silk Road

However, while counterfeits, weapons, pedophilia and anything that could be used to defraud or harm others were prohibited, what could be listed for sale was left open to interpretation. 

As time went on many vendors began to realize that Silk Road was a safe haven for the sale of drugs. Of course, while Ulbricht may have envisioned an open market platform driven by the community, it wasn’t long before it started to gain the attention of the media.

“The Underground Website Where You Can Buy Any Drug Imaginable”

In June 2011, shortly after it was launched, an article was published on Gawker. Titled The Underground Website Where You Can Buy Any Drug Imaginable, the exclusive report detailed how Silk Road enabled people to buy drugs of any kind – cannabis, weed, hash, ecstasy – and that it was like Amazon, “if Amazon sold mind-altering chemicals.” 

Silk Road marketplace screenshot
A screen capture of the Silk Road website before it was shut down

At the time, however, while many embraced Silk Road and what it stood for, others believed that it would tarnish the emerging cryptocurrency, bitcoin, attracting the attention of the federal authorities.

Unsurprisingly, it wasn’t long before an American politician called for federal authorities to shut down Silk Road. Not long after the Gawker article was published, Senator Charles Schumer called for the Drug Enforcement Agency (DEA) and the Department of Justice to shut the site down now that it had become public knowledge.

At the time, Schumer said in a report to NBC New York: “It’s a certifiable one-stop shop for illegal drugs that represents the most brazen attempt to peddle drugs online that we have ever seen. It’s more brazen than anything else by lightyears.”

He also added that “I’d bet my bottom dollar in this instance [an investigation] is underway.”

Who is Dread Pirate Roberts?

The person operating the site did so under the pseudonym Dread Pirate Roberts, named after a character in the 1973 novel The Princess Bride. 

The name is often used to refer to Ross Ulbricht, but that’s not entirely accurate. There’s good evidence to suggest that Ulbricht handed over the site to someone else, and that person is the Dread Pirate Roberts.

Ross Ulbricht
Ross Ulbricht: Ulbricht reportedly sold the Silk Road website to someone else, the infamous Dread Pirate Roberts

Ulbricht Reportedly Sells Silk Road

With the website growing, Ulbricht initially turned to Richard Bates, a college friend, who had studied computer science and was working for PayPal and eBay. According to a court transcript filed in 2015, Bates offered help with the site but distanced himself over concerns with law enforcement.

Over time, Ulbricht turned to an anonymous person he met through the site who eventually took control of it. 

This person then operated under the pseudonym Dread Pirate Roberts (DPR).

In a 2013 Q&A interview with Forbes, Dread Pirate Roberts confirmed that he was not the original owner, confirming that Ross Ulbricht had sold the site.

DPR spoke about how the torch was passed to him from Ulbricht and that Ulbricht was fairly compensated for the site. The interviewee mentioned that he had discovered a major vulnerability in Silk Road and that while Ulbricht ignored him at first, DPR eventually got his trust.

Back in 2011, Ulbricht is reported to have told Bates that he had sold the website to someone and that it was no longer in his hands to shut down.

In was in 2012, that Dread Pirate Roberts first announced his screen name on the site, which, would become the main point of interest for the authorities.

If Not Ulbricht, Who Else Could Be Dread Pirate Roberts?

French-born Mark Karpeles, former-owner of the now-defunct Mt. Gox Bitcoin exchange, was, at one time, a suspect in connection with Silk Road.

Karpeles ran a DNS registrar and a web hosting company during the time the Silk Road launched, and it was this connection that aroused suspicion.

Investigator Jared Der-Yeghiayan, who went undercover to help bring down Silk Road, discovered that www.silkroadmarket.org was registered to a domain name server (DNS) called XTA.net. 

He then discovered that this DNS was registered with Mutum Sigillum, a company owned and operated by Mark Karpeles. 

Mark Karpeles suspect in Silk Road case
Mark Karpeles: at one time, a suspect in the Silk Road case

In a report dated 6th July 2012, Der-Yeghiayan claimed: 

“I believe since KARPELES has used his [email addresses redacted] to register with a few internet companies that he may have received record of registering, paying for or owning certain aspects of the www.silkroadmarket.org website.”

Mark Karpeles has denied the accusation and the judge in the investigation asked the jury to ignore it because it was based on Der-Yeghiayan “beliefs” rather than hard evidence.

Investigators Went “Rogue”

The case was supposed to be kept as quiet as possible, in order to make sure suspects were not aware of the investigation.

However, information was ultimately leaked to two Baltimore agents – DEA agent Carl Mark Force and Secret Service agent Shaun Bridges.

Bridges then went “rogue,” according to court documents.

As part of their rogue investigation, Bridges and Force hijacked a number of Silk Road accounts and arrested one Silk Road administrator named Curtis Green. At the same time, around $350,000 disappeared from Silk Road vendors, tracing back to Green’s account.

Dread Pirate Roberts heard about the missing money, and turned to another Silk Road colleague, “Nob.” But “Nob” had also been hijacked by Carl Force.

It’s alleged that DPR asked Nob to track Green down and retrieve the stolen money. Green was still in custody at this time, but Force played along, and even pretended to kill him.

In the end, the rogue pair were discovered. Force was sentenced to 6 ½ years. Bridges was initially sentenced to nearly six years in prison; however, in 2017 he was sentenced to an additional two years after admitting to a new crime.

Ross Ulbricht on trial for Silk Road case
Ross Ulbricht in courtroom sketch during Silk Road trial. Credit: STRINGER/Reuters

Conspiracy?

As Der-Yeghiayan continued to pursue Karpeles, who he believed to be Dread Pirate Roberts, another Silk Road account by the name “notwonderful” was reportedly feeding DPR inside information about the investigation.

According to the defense, this insider information gave Dread Pirate Roberts enough time to get get a plan in place that “incriminated Mr. Ulbricht falsely.”

In other words, they claim Ross Ulbricht was set up by the new Dread Pirate Roberts.

Connecting Ross Ulbricht to Silk Road…

It wasn’t long before the government then apprehended Ulbricht. Yet, it had to provide an explanation as to why Ross was DPR. 

An IRS agent, Gary Alford, found a forum post on bitcointalk.org by a user named Altoid. It was posted in January 2011 and read:

“Has anyone seen Silk Road yet? It’s kind of like an anonymous Amazon.com.”

Alford then tracked everything written by Altoid and eventually found a post where he revealed an email address. Altoid asked for programming advice and gave the address: [email protected]

ross ulbricht altoid post on bitcointalk forum

Of course, with Ulbricht’s email and a plausible explanation linking him to Silk Road, it was only a matter of time before the authorities found him.

The Arrest of Ross Ulbricht – October 2013

Ross Ulbricht was arrested in a San Francisco library while logged in to Silk Road as the Dread Pirate Roberts admin. He was unknowingly talking to an undercover agent at the time.

Why was Ulbricht logged in as DPR even though he had allegedly sold Silk Road and moved on? The defense claims that someone convinced him to briefly get involved again. DPR then gave him access to all accounts, files, software, and records. 

When he was arrested on 1st October 2013, all this information was on his laptop, including a bitcoin wallet containing 144,000 bitcoins.

Dread Pirate Roberts Logs On Again, While Ulbricht is Locked Up…

Notably, at the time of Ulbricht’s solitary confinement, it was reported that someone accessed DPR’s Silk Road account before it was eventually taken down. 

According to Motherboard, “the logical conclusion is that someone else had access to the account that was said to belong to the mastermind of the massive Dark Web drug bazaar.”

It confirmed what many believed: Ross Ulbricht might have started Silk Road, but he wasn’t the only one operating as Dread Pirate Roberts.

Ulbricht Appears in Court

Ross’s first courtroom appearance was in front of Judge Kevin Fox, who ultimately denied his Eighth Amendment right to bail. On the 4th February 2014, Ulbricht was indicted. In another case in front of Judge Katherine Forrest, who had been recommended to the bench by Schumer, she said in her ruling that Ulbricht was acting as a “sort of godfather.”

Ross Ulbricht in court Silk Road trial
Ross Ulbricht stands trial. Credit: Wall Street Journal

At one stage during the trials, Ulbricht’s defense lawyer was to call Andreas Antonopoulos, a best-selling author and someone with the technical expertise to explain complex matters, and Steven Bellovin, Computer Science professor at Columbia University and leading expert on computer networking and internet security. However, the court precluded these two experts.

Yet, Judge Forrest was more flexible with the prosecuting side.

Two Life Sentences, with No Possibility of Bail

Before his sentencing, one hundred people who knew Ulbricht wrote to Forrest asking for her to apply the shortest sentence. In a court transcript, it said: “The district court was confused by the letters which showed Mr. Ulbricht to be a different man than the one [Forrest] thought him to be.”

Ultimately, though, Forrest gave Ulbricht two life sentences plus 40 years in prison without the possibility of parole for non-violent charges. In this case, it was not in her power to give him the death penalty.

Following the verdict, even Curtis Green tweeted: “Ross Ulbricht got a raw deal. There is so much more to the Silk Road story than people know, and I can’t yet talk about. I don’t believe Ross is dangerous or that it’s in his character to order a hit on anyone. He should never have gotten that horrible sentence.”

Seven weeks after Ulbricht’s trial, Force and Bridges were indicted for corruption. Compared to Ulbricht’s sentence, though, they got off lightly. 

An appeal was filed to a Second Circuit panel consisting of Judges Jon Newman, Gerard Lynch, and Christopher Droney in 2016. However, the Second Circuit judges decided in 2017 to deny Ulbricht’s appeal.

Last December, a petition was filed to the Supreme Court by Williams and Connolly LLP, led by Kannon Shanmugam, who was representing Ulbricht. It was arguing questions on constitutional law, focusing on the impact of the Fourth and Sixth Amendments. The petition was supported by 21 groups. On 28th June 2018, the petition was denied.

The Fight Continues

Silk Road remains a complicated story that has more twists and turns in it than a cheap garden hose. 

Corruption, deception, and intrigue are wrapped up in this case. Yet, despite the truth coming out about several of those involved in the investigation, the sentence against Ulbricht still stands.

After five years in prison and unable to communicate with the outside world, Ulbricht is speaking through his family at the @RealRossU Twitter account that was set up in June 2018. The first tweet went out in July. There is also the FreeRoss.org website that has been set up by “friends, family and supporters who are working to free Ross Ulbricht from a barbaric, double life sentence for all non-violent charges.”

A petition, which was launched by his mum, Lyn Ulbricht, has received over 100,000 signatures. The goal is to hit 150,000 as his family seeks clemency for him.

His next hope of clemency lies with the President of the United States.

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cryptocurrency communities

If it weren’t for strong cryptocurrency communities, we wouldn’t be where we are today.

There would be no debates on whether Bitcoin is better than Bitcoin Cash. Telegram wouldn’t have raised  $1.7 billion in its token sale, EOS probably still wouldn’t have launched its mainnet, and, well, it’s hard to tell for sure if crypto would even exist as we know it.

Block Explorer identified the strongest crypto communities and figured out why they were so important for the blockchain universe.  

The Strongest Crypto Community #1:  Bitcoin 

Bitcoin began as a small community of cryptography geeks and cypherpunks. They shared ideas on obscure forums and mailing lists years before it gained mainstream attention.

Satoshi Nakamoto was the one who created and envisioned bitcoin, but it gained traction because a dedicated community worked together on the development. (Note: you can read the very first community thread about bitcoin here)

In the ten years since, the bitcoin community has grown across the world. Bitcoin has suffered some huge price drops and dips in popularity, but every time, it comes back stronger. After bitcoin reached almost $1,200 in December 2013, it went down to $400 in just three months and did not grow back till the beginning of 2017.

But even in spite of all the roller coasters and bad publicity, bitcoin is still alive and thriving due to the large community of believers around. At the moment of writing, the Bitcoin Core client is the product of almost 19,000 unique code contributions from almost 600 individual developers. 

Its public Github repository also tracks so-called “forks” of the code, the copies that can be modified for any specific purpose. To this date, the developers have forked Bitcoin Core reference client over 21,000 times. That’s a massive amount of people involved. 

And let’s not forget the number of bitcoin wallets created so far – more than 30 million people have registered Blockchain wallets, and more than 20 million created Coinbase accounts. 

No, bitcoin most likely won’t be disappearing any time soon.

The Strongest Crypto Community #2:  Ethereum 

purple ethereum logo on blue background

If it wasn’t for the strong community, we can’t even imagine where Ethereum would be right now. 

Let’s recap some disasters. Remember 2016 and the imperfections of the DAO (Decentralized Autonomous Organization)? At that time more than $50 million worth of ether was stolen from the infamous DAO and transferred into its smaller version called “child DAO.”

DAO explained: A DAO is an organization or business without a central authority. Instead, it makes decisions using digital “smart contracts” and voting mechanisms on the Ethereum blockchain.

Forking the blockchain was the only way to fix it. That meant a change to Ethereum’s code that split the currency into two versions. Users had to choose between by either updating their software or not. 

It was risky. However, the fork was successful with 85% of users moving over to the new version.

Want to know more about this hack? Read our beginner’s guide to Ethereum.

What is Ethereum

 

 

 

 

 

 

 

 

In 2017, another hack breached a vulnerable Ethereum wallet, but the community quickly stepped in to re-route the funds and prevent a further theft. And, well, Ethereum is still around. 

The Strongest Crypto Community #3: EOS  

EOS was developed by Block.one, as a faster, cheaper alternative to Ethereum. EOS begins with one of the most respected minds in the industry, Dan Larimer, who also created Bitshares and co-founded Steemit. 

He has been described as a visionary and was very articulate about the need to eliminate fees in decentralized applications long before EOS appeared.

On top of the fees elimination, EOS intends to help fix the scaling problem in Ethereum. EOS implemented an alternative network that could, one day, manage millions of transactions per second and introduced a developer-friendly sandbox for creating new, fast decentralized applications (dapps). 

Also, it has a great appeal for new blockchain entrepreneurs since it suggests a simple alternative for fundraising – switching from initial coin offering (ICO) to airdrops and airgrabs.

So, it’s not surprising that in a year-long ICO, EOS raised $4 billion for its blockchain and smart contracts platform.

However, even though the project is in its early stages, it has already experienced significant shakedowns. At one point hackers managed to gain control of Block.one’s Zendesk account and used it to send persuasive phishing emails. 

Hackers could have got away with millions of dollars if it weren’t for the community to spread the word about the incident. 

Less than a week away from the EOS mainnet launch, an internet security firm from China, called Qihoo360, reported that it found several vulnerabilities in the EOS system. The holes would allow hackers to gain remote control of EOS nodes and even access private keys. 

Then, the much anticipated mainnet launch event was a disaster by itself. It was scheduled on the 2nd of June, 2018. But almost a week later the blockchain was not yet live because it required EOS token holders to vote. 

And the voting process itself was very confusing and not very friendly to a non-techy audience. But that case only demonstrated the power of the project’s community. At the time, dozens of brilliant and helpful members of the EOS ecosystem developed a bunch of handy tools for voting along with the sets of instructions and guidelines. That promptly enabled the ability of token holders to vote for the mainnet launch and the network was successfully started on the 14th of June, 2018.

The Strongest Crypto Community #4: Monero

Monero logo

Monero’s community is united around a core group of principals: privacy, security, and decentralization.

Recently, the Monero community rallied together to fund a deep audit of its new bullet-proofs technology. The audit ultimately turned up a vulnerability that could have lead to a 51% attack.

It would have been easy to ignore a security audit, but the Monero community felt strongly enough about security to fund it themselves.

Further, the Monero community actively fights against the use of mass-market mining tools (ASICs) to protect its decentralized nature. A community that puts its core principals ahead of economic gain is one worth keeping an eye on.

What’s your favorite story about the strongest crypto communities? Go ahead and share it in the comment section below.

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