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Setting aside the fact that allegedly he was doing illegal things, it's interesting to note that PGP didn't protect him. (I'm basing this on two assumptions:

Setting aside the fact that allegedly he was doing illegal things, it's interesting to note that PGP didn't protect him. (I'm basing this on two assumptions: SR encourages its users to use PGP, so therefore unless he was blindingly stupid, he, too, was using PGP; and that he never slipped up once. The second assumption is probably invalid.) Anyone have details as to how these charges came about?

uncoder0 13y ago
How did you determine that?
- sillysaurus3 13y ago
  Eh, I deserve to be downvoted. It's unsubstantiated speculation. I didn't think before I spoke. It's been on my mind a lot lately that we don't have tools to remain private. The only evidence of this is when criminals are caught, because it's rare for evidence of that fact to surface when people aren't doing criminal things, so I pay attention when it happens. I've just been thinking about what it takes to interact with other people while remaining truly private, and it's daunting.
veemjeem 13y ago
I would think that it was traced via bitcoin, not pgp.
- jordanbaucke 13y ago
  Its worth noting there was no indication that BTCKing and Mr. Shrem used PGP to encrypt their communication.
  - dobbsbob 13y ago
    From the original arrest it said he was using his work email @bitinstant to communicate with BTCKing and I don't remember anything about PGP being used. Shrem is screwed, because all those emails are highly incriminating with him actively helping BTCKing avoid being flagged in the system for laundering checks. BTCKing was originally caught because he's a drug addict supporting his habit by exchanging coins and was completely sloppy and careless with everything.
- olalonde 13y ago
  The blockchain was not even mentioned in the original FBI document. Everything was based on email/SR logs. Bitcoin makes it very difficult to associate transactions with people and I haven't yet heard of a case where the blockchain was successfully used to track down someone.
  - dobbsbob 13y ago
    Indeed, not a lot of ways to associate an address with somebody unless: - seize drives or papers with private keys - extract printer memory if they printed a private key - subpoena exchanges to hand over records to tie them to identities they have on file - search if somebody put the address in a forum sig or on IRC/elsewhere and admitted it was their address - check IP if they generated the address with an online wallet, brainwallet or some other discoverable method (not behind Tor) Otherwise all you are looking at is a big chain with coins going from address to address and no way to prove somebody is the definitive owner of it.
    - unreal37 13y ago
      Almost all business transactions are between people that know at least a little bit about each other. If Silk Road User A sends Silk Road Merchant B BTC for drugs, A has to give B a postal address to mail the drugs to. There is almost no such thing as two completely anonymous people in a financial transaction. There's always an email address, user name, a third party, or postal address to tie them. The only thing that I can think of is some type of charitable/political donation that is anonymous.
    - abruzzi 13y ago
      For 100% certainty yes, but like a murder (or any other crime) no one witnesses, a circumstantial tie to a bitcoin address is theoretically possible. Though that doesn't seem to be the case here.
Igglyboo 13y ago
It would be much easier to trace him via the blockchain than break PGP. Bitcoin is pseduoanonymous, it is possible to track coins.
- trhway 13y ago
  This complete traceability of BTC is why i don't touch it. I just don't want to happen to be in possession of a BTC that 2-3 hops back was used in a transaction that FBI/etc.. is happily looking at now.
melvinng 13y ago
He was arrested by admitting to the crime. Anyone could have done that accidentally, here is the source: http://www.cryptocoinsnews.com/news/charlie-shrem-did-nothing-wrong/2014/01/28 http://www.cryptocoinsnews.com/news/charlie-shrem-did-nothin...
awda 13y ago
I think he was selling btc for other very traceable and identity-linked forms of digital money (paypal, liberty reserve, western union, something like that). The issue was that he was operating as a money processor without following the mandatory guidelines that try to prevent laundering, etc. You can google the earlier arrest for more information on it, there are some juicy transcripts.
A_COMPUTER 13y ago
I don't know anything about the charges, but I have read from sellers that PGP turned out to be an insurmountable hurdle for Silk Road buyers, and so many, many people did not use it.
wmf 13y ago
Shrem himself didn't use Silk Road; he bypassed his own company's AML process to help a known SR user exchange BTC. Here's the criminal complaint: http://www.wired.com/images_blogs/threatlevel/2014/01/Faiella-Robert-M.-and-Charlie-Shrem-Complaint.pdf http://www.wired.com/images_blogs/threatlevel/2014/01/Faiell... There may be more detail in the indictment but I haven't seen it.

uncoder0 13y ago

How did you determine that?

sillysaurus3 13y ago
Eh, I deserve to be downvoted. It's unsubstantiated speculation. I didn't think before I spoke. It's been on my mind a lot lately that we don't have tools to remain private. The only evidence of this is when criminals are caught, because it's rare for evidence of that fact to surface when people aren't doing criminal things, so I pay attention when it happens. I've just been thinking about what it takes to interact with other people while remaining truly private, and it's daunting.

veemjeem 13y ago

I would think that it was traced via bitcoin, not pgp.

jordanbaucke 13y ago
Its worth noting there was no indication that BTCKing and Mr. Shrem used PGP to encrypt their communication.
- dobbsbob 13y ago
  From the original arrest it said he was using his work email @bitinstant to communicate with BTCKing and I don't remember anything about PGP being used. Shrem is screwed, because all those emails are highly incriminating with him actively helping BTCKing avoid being flagged in the system for laundering checks. BTCKing was originally caught because he's a drug addict supporting his habit by exchanging coins and was completely sloppy and careless with everything.
olalonde 13y ago
The blockchain was not even mentioned in the original FBI document. Everything was based on email/SR logs. Bitcoin makes it very difficult to associate transactions with people and I haven't yet heard of a case where the blockchain was successfully used to track down someone.
- dobbsbob 13y ago
  Indeed, not a lot of ways to associate an address with somebody unless: - seize drives or papers with private keys - extract printer memory if they printed a private key - subpoena exchanges to hand over records to tie them to identities they have on file - search if somebody put the address in a forum sig or on IRC/elsewhere and admitted it was their address - check IP if they generated the address with an online wallet, brainwallet or some other discoverable method (not behind Tor) Otherwise all you are looking at is a big chain with coins going from address to address and no way to prove somebody is the definitive owner of it.
  - unreal37 13y ago
    Almost all business transactions are between people that know at least a little bit about each other. If Silk Road User A sends Silk Road Merchant B BTC for drugs, A has to give B a postal address to mail the drugs to. There is almost no such thing as two completely anonymous people in a financial transaction. There's always an email address, user name, a third party, or postal address to tie them. The only thing that I can think of is some type of charitable/political donation that is anonymous.
  - abruzzi 13y ago
    For 100% certainty yes, but like a murder (or any other crime) no one witnesses, a circumstantial tie to a bitcoin address is theoretically possible. Though that doesn't seem to be the case here.

Igglyboo 13y ago

It would be much easier to trace him via the blockchain than break PGP. Bitcoin is pseduoanonymous, it is possible to track coins.

trhway 13y ago
This complete traceability of BTC is why i don't touch it. I just don't want to happen to be in possession of a BTC that 2-3 hops back was used in a transaction that FBI/etc.. is happily looking at now.

melvinng 13y ago

He was arrested by admitting to the crime. Anyone could have done that accidentally, here is the source: http://www.cryptocoinsnews.com/news/charlie-shrem-did-nothing-wrong/2014/01/28 http://www.cryptocoinsnews.com/news/charlie-shrem-did-nothin...

awda 13y ago

I think he was selling btc for other very traceable and identity-linked forms of digital money (paypal, liberty reserve, western union, something like that). The issue was that he was operating as a money processor without following the mandatory guidelines that try to prevent laundering, etc. You can google the earlier arrest for more information on it, there are some juicy transcripts.

A_COMPUTER 13y ago

I don't know anything about the charges, but I have read from sellers that PGP turned out to be an insurmountable hurdle for Silk Road buyers, and so many, many people did not use it.

wmf 13y ago

Shrem himself didn't use Silk Road; he bypassed his own company's AML process to help a known SR user exchange BTC. Here's the criminal complaint: http://www.wired.com/images_blogs/threatlevel/2014/01/Faiella-Robert-M.-and-Charlie-Shrem-Complaint.pdf http://www.wired.com/images_blogs/threatlevel/2014/01/Faiell... There may be more detail in the indictment but I haven't seen it.