Ross Ulbricht, convicted creator of the legendary dark web drug marketplace Silk Road has never received much mercy from the US legal system. In 2015 he was sentenced to life in prison without parole. His appeal was rejected, as was the pardon he sought from President Trump. But a little over a year ago, it appears Ulbricht finally got a break of a different kind: The nine-figure debt he owed the U.S. government as part of his sentence will be wiped out — all thanks to the fortuitous accumulation of a hacker who was stole a huge amount of bitcoins from his market.
Last year, prosecutors quietly signed a plea deal with Ulbricht that stated a portion of the newly discovered find of Silk Road bitcoins seized by an unnamed hacker would be used to cancel more than $183 million in restitution that Ulbricht was ordered to pay as part since his 2015 conviction, a number calculated from total illegal Silk Road sales based on exchange rates during each transaction. Despite the fact that the recently revealed stash of bitcoins — now worth billions of dollars — was itself the proceeds of crime, the Justice Department appears to have struck a deal with Ulbricht to avoid any claims he may have made to the money: In exchange for Ulbricht’s right to an agreement to relinquish any ownership he may have of the bitcoins, a portion of them will be used to pay his restitution in its entirety.
“The parties agree that the net proceeds realized from the sale of [bitcoins] forfeited under this agreement will be credited toward any unpaid balance of the money judgment,” a court filing from last year said, using the phrase “money judgment” to refer to Ulbricht’s 2015 restitution order. The document, filed in February 2021, was signed by both Ulbricht and David Countryman, a prosecutor in the U.S. Asset Forfeiture Division. The U.S. Attorney’s Office for the Northern District of California did not respond to WIRED’s request for comment.
Ulbricht, of course, still faces life in prison. He has already served eight years of that sentence in prisons in New York and penitentiaries in Colorado and Arizona. But paying his restitution could mean he could earn money in prison to share with family or friends without it being confiscated or garnished to pay his debts — or even keep any previously unknown Bitcoin caches , which he may possess, as long as they are not tied to the Silk Road or other criminal sources. And if his sentence is eventually commuted, as his supporters and the long-standing Free Ross campaign have called for since before his sentencing, he will re-enter the world as a free man without hundreds of millions of dollars in debt. (Ulbricht is pursuing a “habeas petition” in federal court that would overturn his 2015 conviction based on the argument that he received ineffective representation from his attorneys.)
In a strange twist, the agreement to delete Ulbricht’s restitution payments appears to have been made without the involvement or even the knowledge of prosecutors in the Southern District of New York, the Justice Department lawyers who handled Ulbricht’s case. “This resolution was not coordinated with the SDNY,” one former DOJ official told WIRED. “To not coordinate with the prosecution that received the conviction is extremely unorthodox.”
The surprise deal to cancel Ulbricht’s restitution may have been made simply to smooth over any hurdles to a massive financial seizure by the government, says Nick Weaver, a researcher and computer scientist at the University of California, Berkeley. Weaver has been following Ulbricht’s case closely for years and even proved that Ulbricht’s bitcoins could be traced back to the Silk Road during his trial. “It was a way for the government to not deal with pointless legal issues during the forfeiture process,” Weaver says, arguing that Ulbricht could have found a lawyer to fight and delay the seizure in exchange for a small portion of any potential reward. “I’m sure Ross Ulbricht could have gotten a contingency lawyer to challenge the forfeiture, simply because a 2 percent chance of winning would still have been a several hundred million dollar payout for the lawyer.”
