The founder of Silk Road, Ross William Ulbricht, has been arrested. He is accused of money laundering, hacking, narcotics trafficking conspiracy and of (unsuccessfully) hiring a hitman for over $100,000. Millions of dollars in Bitcoins have been seized, and Silk Road has been shut down.
The criminal complaint reveals that over 100 undercover purchases were made by law enforcement agents, giving Silk Road dealers plenty to worry about. But the most intense panic is coming from a specific kind of Silk Road user: the offline drug dealer.
In order to buy something on Silk Road, you first have to transfer funds to your account. Since these funds are Bitcoins, and since Bitcoin transfers are final and permanent, any money held in a Silk Road account is no longer available to the users who deposited it. For most users, this is an annoyance:
For others, some of whom are congregating on Reddit's Silk Road forum, the situation is more dire.
This user, Jayman62, claims to have deposited a large sum to his account, which presumably came from people using him for his online drug connection. If he agreed to supply someone with drugs, accepted money from this person, then put that money into a Silk Road account, that money is now gone and he has nothing to show for it:
This user claims to have lost "3 grand" that was "fronted" to him:
And has a history of trouble with what appears to be a fairly serious drug dealing operation:
Neither user has responded to a request for an interview.
Just a reminder that, as silly as buying and selling drugs on Tor with Bitcoins sounds, it's still buying and selling drugs. Silk Road has processed hundreds of millions of dollars in orders in a virtual currency, so expect the ripple effects of this shutdown will be massive.
Update: One user responded to BuzzFeed, at length. "The feds shutting down the site did not help anything," he claimed. "They just made things very very bad for a lot of people."