Mt Gox Bitcoin baron: I was NOT Silk Road boss Dread Pirate Roberts

Extraordinary twist in trial of alleged drugs souk mastermind

Mark Karpeles, the boss of collapsed Bitcoin exchange Mt Gox, has denied he is, or was, Dread Pirate Roberts – the anonymous mastermind of the online drugs bazaar Silk Road.

The surprise allegation, that Karpeles operated the illegal website, surfaced during the ongoing trial of Ross Ulbricht – who is charged with running Silk Road, an underworld souk hidden away in the Tor network where narcotics were swapped for Bitcoin.

In a surreal twist on Thursday, US Department of Homeland Security special agent Jared Deryeghiayan confirmed to a court in New York that Karpeles was investigated in 2012 as a possible administrator of Silk Road: a warrant was even sought to search his Gmail account as it was believed Karpeles was operating Silk Road to boost the value of Bitcoin and thus his exchange, Mt Gox, journalists covering the trial report.

"I have a wealth of evidence to prove that [Karpeles] is Dread Pirate Roberts," the special agent wrote in an affidavit, dated 2013, which was read out to the jury.

Deryeghiayan was being cross-examined by Joshua Dratel, a defense lawyer for Ulbricht – who is on trial for four narcotics charges, and one charge each of computer hacking, trafficking in fraudulent documents, and money laundering conspiracy.

Ulbricht, 30, of San Francisco, says he created the Silk Road website, but denies any wrongdoing. He was arrested in October 2013, and has been held without bail since. His lawyers say he was framed.

Shortly after today's hearing, Karpeles, who is no longer under suspicion, denied he was the man behind Silk Road.

"This is probably going to be disappointing for you, but I am not and have never been Dread Pirate Roberts," he said in a statement on Twitter.

The Bitcoin baron's name emerged as Dratel tried to sow seeds of uncertainty in the minds on the jury: it appears the attorney wanted to show there is reasonable doubt Ulbricht was Dread Pirate Roberts, that the Feds have erred in the past when pursuing suspects in the case and have done so again in fingering his client.

Ulbricht is, meanwhile, facing far more serious charges: allegedly attempting to arrange the murders of as many as six people. He is due to answer those accusations in Baltimore, Maryland, once the New York proceedings conclude.

Karpeles, a French national now residing in Japan, is best known for having run the disastrous Mt Gox, once the world's biggest BTC exchange.

Last year, Mt Gox abruptly suspended operations, and then shut down amid word the site had been the target of a massive hacking operation: some 650,000 BTC, worth $500m, vanished from its vaults, though these days the plummeting price of Bitcoin has significantly lowered that dollar figure. Tokyo cops probing the exchange's downfall believe the company was compromised from the inside.

The trial continues on Tuesday. ®

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