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Is It A Crime to Host a Website

Ulbricht denied the charges
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The man accused of operating Silk Road, a deep web marketplace where illegal drugs were sold, has been found guilty.

Ross Ulbricht, 30, was convicted by a Manhattan jury on all seven counts including narcotics and money laundering conspiracies.

Prosecutors said more than a million drug deals took place on Silk Road, earning Ulbricht about $18m in Bitcoins, his defence lawyers have argued he was framed for much of the site's activity and had quit the site.  The jury deliberated for less than a day before making a decision, with  Ross Ulbricht possibly facing a life sentence.

The Silk Road shut down in 2013 following raids by the FBI and other law enforcement agencies which said it was trading in illegal drugs.

But this trial was always about far more than one individual or even a website. The Silk Road, a site once seen as the epitome of the Dark web where anonymous black market e-commerce can be transacted has been destroyed and its mastermind punished.

But with millions of dollars supposedly amassed by Ulbricht in just two years, the online underworld will remain a lucrative market place. When in 2013, the Silk-Road was closed, rivals sprung up and by their very nature they are well hidden and their names are only muttered in dark alley-ways it has been likened to a  game of "whack-a-mole" for the US authorities.

 Travelling The Silk road

The only lesson these sites appear to have learnt so  far is the need for caution. Today's "darknet" administrators are more guarded in their dealings with their customers.

Defence lawyer Joshua Dratel argued in closing statements that Ulbricht had started Silk Road but quit soon after creating it. Purporting that  Ulbricht was the "perfect fall guy" for the true owners of the website. There were also protesters holding posters proclaiming “It is not a crime to host a website”

Ulbricht was arrested in October 2013 and had pleaded not guilty to seven charges of narcotics trafficking, criminal enterprise, computer hacking and money laundering.

When the verdict was announced, his father dropped his head in his hands and his mother left the courtroom complaining that the defence had been barred from producing evidence that would help her son.

In a separate trial  Bitcoin trader Charlie Shrem has been sentenced to two years in jail for indirectly helping people swap cash for bitcoins on the Silk Road marketplace.

Shrem was caught in the Silk Road raids for trading a total of $1m (£640,000) for bitcoins used on the site. His sentence also includes forfeiting $950,000 (£608,000) to the US government. Shrem was not directly involved with the Silk Road but was charged because of his association with Robert Faiella who set up an exchange that let the marketplace's customers swap cash for bitcoins. The virtual cash was the only form of currency accepted on the Silk Road.

Bitcoins are a virtual currency built around a complicated cryptographic protocol and a global network of computers that oversee and verify which coins have been spent by whom.

Prior to his arrest Shrem was a strong advocate for bitcoins and served as vice-chairman of the foundation that helped to guide the virtual currency's development. He has now resigned from this post.  Lawyers working for Shrem said his involvement stemmed from his interest in bitcoins rather than the Silk Road. The two-year sentence is less than government lawyers sought who said he should face 57 months in jail. Shrem was not a reseller although possibly a dealer, but he did not take part in the hosting of the website!

Faiella has been sentenced to four years imprisonment in New York, Faiella, otherwise known as 'BTCKing', pleaded guilty to operating an illegal money transmission business after he exchanged fiat currency for bitcoins that were then used to buy drugs on the Silk Road marketplace.

According to a Bloomberg report, Faiella said "At the time of the event, I saw no other way ... it still doesn’t mitigate that I broke the law."

Faiella, a 53 year-old Florida native, is a former plumber who claimed he had turned to the bitcoin exchange business to support his family after becoming disabled with back problems. He and Shrem were arrested in January 2014.

In a general the Bitcoin is viewed by some as an acceptable  currency, with various companies posing that bitcoins be used as a currency in Africa utilising telephone virtual  wallets  and a bitcoin Conference in Miami  North America.

Shrem has  admitted his actions had broken the law, and said his sentence was light considering the 30-year maximum he had faced, and up to 60 months even with the plea bargain.

He also had to forfeit $950,000 in profits and will have three years of supervised release after his sentence is complete.

Finnish IT company Neonella Oy (Ltd) is launching a service platform that enables the use of world's most famous virtual currency, bitcoins, as part of interactive advertising, for example in TV-programs. The service also makes bitcoin transactions possible from media companies or advertisers to consumers. Neonella is currently seeking funding for the platform through a crowdfunding campaign.