This is an opinion editorial Aaron Daniel, appellate attorney and author of The Bitcoin Brief and William D. Mueller, appellate attorney with nationwide practice.
Ross Ulbricht, the founder and operator of Silk Road, one of the first bitcoin-only markets, was sentenced to life in prison after a weeks-long trial in Manhattan’s US District Court for the Southern District of New York. The jury deliberated for just three-and-a-half hours before convicting Ulbricht on seven counts of the US government’s indictment: drug distribution, drug distribution over the Internet, conspiracy to distribute drugs, engaging in continuing criminal activity, computer conspiracy. hacking, trafficking in false identity documents and conspiracy to commit money laundering.
For these charges, Ulbricht was sentenced to five different sentences:
- One for 20 years,
- One for 15 years,
- One for five and
- two lifetimes.
Ulbricht is serving his sentences concurrently and has no chance of parole.
The sentence handed down by a district court judge – two life sentences plus forty years – shocked the financial technology community, where many felt the sentence was disproportionate to the crime. After all, None of Ulbricht’s seven convictions involved charges of violent conduct.
Looking back a decade later, it appears that the heavy penalty demanded by the US government was, at least in part, motivated by a desire to freeze the exchange rate of the US dollar. Indeed, fiat is supported by the state’s monopoly on violence, which in Ulbricht’s case manifests itself in extreme prosecutorial power.
Bitcoin, Mixing, and Using the Network
First, it is worth looking at what factors played a role in Ulbricht’s punishment. Under applicable U.S. sentencing guidelines, three of Ulbricht’s convictions called for a mandatory minimum sentence of 20 years and the other two a maximum sentence of seven years. Since the sentences could be served concurrently, Ulbricht could theoretically be sentenced to a total of 20 years in prison. However, in the US government’s sentencing submission, prosecutors for the Southern District of New York asked the court to “impose a lengthy sentence that is significantly higher than the mandatory minimum of 20 years.”
Why? After Ulbricht’s sentencing, the U.S. Attorney for the Southern District of New York argued that the prosecution stemmed from Ulbricht’s connection to drugs and narcotics: “Make no mistake: Ulbricht was a drug dealer and criminal profiteer who exploited people’s addictions. the death of at least six young men”.
But the U.S. attorney also tried to highlight Ulbricht’s use of Bitcoin as a payment method that enhances the anonymity provided by Silk Road:
“Ulbricht deliberately operated Silk Road as an online criminal marketplace that allowed its users to buy and sell drugs and other illegal goods and services outside of law enforcement… Bitcoin based payment system This serves to facilitate illegal trading on the site, including hiding the identities and locations of users who transfer and receive money through the site.”
How much of a role did Ulbricht’s decision to introduce bitcoin and the bitcoin mixer (or tumbler) play in his sentence? It’s hard to say.
Ulbricht’s sentence should have been severe from the outset because the criminal laws under which Ulbricht was tried were applied to hold him accountable. common The amount of drugs and narcotics traded through the Silk Road. The greater the amount of drug trafficking involved, the higher the recommended initial sentence. But it should be noted that this loose interpretation of conspiracy has been criticized as a wrong application of the statute.
In a standard conspiracy, all the conspirators know each other and agree to commit the crime in a multilateral manner. Not one big multilateral agreement with Silk Road, but many separate and distinct bilateral agreements between the website and each individual seller, many separate conspiracies, in other words. This bug was accused of helping Ulbricht pass on the app, conflating the deals between each user and the website into one massive criminal conspiracy. 60,720 kg cocaine, heroin and meth.
From this starting point, the sentencing judge applied several sentencing enhancements—aggravating factors that increase the prison term recommended in the US sentencing guidelines table—including those stemming from Ulbricht’s allegations that he paid for crimes for hire related to Silk Road (sentence) The judge found that “Ulbricht there is sufficient and unequivocal evidence that he committed and paid for five murders in his efforts to protect a criminal enterprise.”). These allegations were not fully presented or proven in the prosecution phase of the New York prosecutor’s office, and therefore Ulbricht’s lawyers could challenge their admission at the sentencing phase. But the defense refused to do so, and thus the murder-for-hire evidence was admitted and became a major aggravating factor.
And Bitcoin itself was classified as an aggravating factor. Ulbricht’s hacking charges were enhanced because he used “advanced tools.” The judge said that “the use of Tor, which requires some complexity, of course, the bitcoin cup, [and] the use of secret lists” as a basis for improvement.
Those enhancements increased Ulbricht’s proposed prison sentence to the maximum amount under federal sentencing guidelines: life in prison, twice that.
Competition with the Dollar
Many of Ulbricht’s supporters consider the prison sentence disproportionate to the crime. They might have a point. Ulbricht’s sentence far exceeded the average federal sentence for drug offenders — nearly six years. Ulbricht, a first-time nonviolent offender, was sentenced eight times more than former Minneapolis police officer Derek Chauvin for fatally kneeling on George Floyd’s neck for nine and a half minutes. His double life sentence is the same as convictions for serial killers, serial rapists and child molesters.
Examining prosecutor’s testimony, judge’s rulings, federal sentencing guidelines, and average sentences for other, more reprehensible crimes, it appears that Ulbricht’s extreme sentence was at least partly due to the US government’s concern over Ulbricht’s use of bitcoin. An exclusive, pseudonymous payment system for Silk Road.
The US government’s liberal use of prosecutorial power against Ulbricht and Silk Road to prevent competition against the dollar is even more evident when considered in the context of other aggressive prosecutions of alternative currency users and promoters.
Take Bernard von NotHaus, founder of the National Organization for the Elimination of the Federal Reserve Act (NORFED). The NotHaus organization created the Liberty Dollar, a private barter money system of coins and bills backed by specific weights of gold and silver. In 2009, NotHaus was arrested and charged with conspiracy and forgery, despite selling the Liberty Dollar as a competitor to the US dollar rather than the genuine article. Prosecutors sought 14 to 17 years in prison for the septuagenarian (actually life in prison) and issued a press release criticizing private barter money as a “unique form of domestic terrorism.” Fortunately for NotHaus, cooler heads prevailed and he was sentenced by the judge to a reasonable six months of house arrest.
And just last month, bitcoin guru Mark Hopkins, known as “Dr. Bitcoin,” pleaded guilty to charges of selling bitcoins peer-to-peer without a “money transmitter license,” in violation of Financial Crimes Enforcement Network (FinCEN) regulations. . Hopkins, who is currently serving six to fifteen months in federal prison, claimed that prosecutors coerced him into a plea deal by threatening to indict his wife along with him if he did not cooperate.
These cases, including Ulbricht’s, show that the US government has been quick to use tough prosecutorial tactics for non-violent crimes against its own currency. One can only imagine the fate that awaited him if he did not have the pseudonym Satoshi Nakamoto.
This is a guest post by Aaron Daniel and William D. Mueller. The views expressed are entirely their own and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.