Mt. Gox CEO Mark Karpeles Says He Isn't Silk Road's Secret Mastermind

Mark Karpeles, the CEO of Bitcoin exchange Mt. Gox, has denied any involvement in the online black market Silk Road.

Long before the Department of Homeland Security (DHS) scoped on Ross Ulbricht, the agency had another surprising suspect as a potential founder and supervisor of the Silk Road’s online drug market: Mark Karpeles, CEO of Mt. Gox, the world’s biggest bitcoin exchange at that time.

On Thursday, January 15^th, 2015, in response to cross-examination by the defense in Ulbricht’s trial Jared Deryeghiayan, DHS special agent, admitted that in 2012 and 2013 he had suspected Karpeles being a founder and supervisor of the Silk Road.

Besides, he had suspected Ashley Barr, Karpeles’ Mt. Gox associate, of having the voice of the Dread Pirate Roberts, the nickname of Silk Road’s founder. During the trial he told Ulbricht’s defense attorney Joshua Dratel that he suspected Ashley Barr served as something like Karpeles’ ghostwriter, “a person who shared some of the same viewpoints…who was working for him.”

Deryeghiayan said that he had even gone so far as to look for a warrant to search Karpeles’ Gmail account based on “probable cause” that the Mt. Gox CEO had secretly administered the Silk Road.

In an August 2013 testimony written by Deryeghiayan and read aloud by Dratel, the agent noticed evidence that included Karpeles’ alleged control of the website silkroadmarket.org, information received from a federal informant working with Karpeles, and Karpeles’ profile as a programmer and bitcoin king.

“I believe this evidence shows Karpeles controlled silkroadmarket.org and the tuxtele.com website and hosted them both at IP addresses he controlled,” Deryeghiayan wrote in 2013.

Reporters who presented in the courtroom took to Twitter to address Deryeghiayan’s statements, CoinDesk’s Tom Sharkey. Forbes reporter Sarah Jeong has reported about the defense’s ‘theory’ on Twitter:

DHS agent's OWN THEORY around early to mid 2013 was that Mt. Gox and Silk Road worked in tandem.

— sarah jeong (@sarahjeong) January 15, 2015

Andy Greenberg, a WIRED reporter, has closely observed the Silk Road case and presented in court on Thursday. He referenced the suspicions raised during the trial:

DHS agents strongly suspected at one point Mt. Gox CEO Mark Karpeles was Silk Road's Dread Pirate Roberts…more to come when we adjourn

— Andy Greenberg ([email protected]) (@a_greenberg) January 15, 2015

However, Mark Karpeles denied he had anything to do with Silk Road.

This is probably going to be disappointing for you, but I am not and have never been Dread Pirate Roberts.

— Mark Karpelès (@MagicalTux) January 16, 2015

Here’s his full statement provided by Motherboard:

“This is probably going to be disappointing for you, but I am not Dread Pirate Roberts. The investigation reached that conclusion already – this is why I am not the one sitting during the Silk Road trial, and I can only feel defense attorney Joshua Dratel trying everything he can to point the attention away from his client.

I have nothing to do with Silk Road and do not condone what has been happening there. I believe Bitcoin (and its underlying technology) is not meant to help people evade the law, but to improve everyone’s way of life by offering never thought before possibilities.

As for the silkroadmarket.org domain, it was registered by a KalyHost.com customer and paid in Bitcoins (KalyHost is a service of Tibanne that has been up since 2009).”

It is not yet clear whether Ulbricht’s defense is trying to convince the jury that Karpeles was in fact Silk Road’s founder and manager, or simply trying to doubt the DHS’s investigative abilities in the jury’s mind.

During the trial Dratel was forcing Deryeghiayan to admit uncertainties in the prosecution’s evidence linking Ulbricht to the Dread Pirate Roberts persona, such as the possibility that the PGP private key that the Silk Road’s owner used to “sign” private messages had been shared among several people.

On the other hand, Dratel argued that Ross Ulbricht had been set up by the “real Dread Pirate Roberts,” though he didn’t name any other candidates for that role. He admitted that Ulbricht had actually created the Silk Road, but he had quickly handed it over to others and those unknown figures raised it into a narcotics empire.

Dratel said that “real” Dread Pirate Roberts had become concerned that law enforcement knew his real name and that name is not Ross Ulbricht.