Some details on the Karpeles revelations in day 3 of the Silk Road trial.
Mark Karpeles, the operator of the now defunct Bitcoin exchange Mt. Gox, was mentioned extensively today during the defense’s cross examination of the prosecution’s first witness, Jared DerYeghiayan. Mr. DerYeghiayan, an agent for Homeland Security, stated that at one time during the course of the Silk Road investigation he suspected that Mark Karpeles was the mastermind behind Silk Road and that Ashley Barr, an associate of Karpeles, is Dread Pirate Roberts. The reasons why the agent came to suspect Mr. Karpeles were delved into during cross examination by defense council Joshua Dratel before the prosecution team, appearing flustered and unprepared for this line of questioning, began objecting to some of Dratel’s questions on the grounds of hearsay.
Mr. DerYeghiayan said that Mr. Karpeles’ English did not appear to be proficient enough to match the level of English demonstrated by the online postings and communications of DPR. Ashley Barr is a Canadian computer scientist who posses the experience and skill level to possibly be DPR. Mr. Dratel then asked if Mr. Karpeles had bragged about his own hacking abilities, to which Mr. DerYeghiayan replied that he had.
Agent DerYeghiayan discovered that Karpeles’ name was attached to the whois registration of the domain silkroadmarket.org. This was a web page that could be accessed with an ordinary browser that would provide instructions on how to access the hidden Silk Road site using Tor. Mr. DerYeghiayan, who works out of the Chicago office of Homeland Security, also revealed that he had been frustrated with the Baltimore Homeland Security office who seized a website called Mutum Sigillum that was also owned by Mark Karpeles. DerYeghiayan didn’t want to tip Karpeles off that law enforcement was pursuing an investigation on him. The seizure went ahead despite Mr. DerYeghiayan’s objections.
Mr. Dratel pointed out and Mr. DerYeghiayan agreed that Mt. Gox was bought by Karpeles one month before Silk Road launched. DerYeghiayan stated that he thought Silk Road could be used as leverage for the value of bitcoin. The defense was trying to point out that it made more sense to operate a Bitcoin exchange if people have a reason to buy and sell bitcoins, something a site like Silk Road could provide.
Dratel asked when DerYeghiayan started investigating Silk Road and when Ross Ulbricht, the defendant, first came up. He stated that his investigation started in the summer of 2011 and that Mr. Ulbricht’s name first came up in September of 2013 or about a month before his arrest.
What really set the prosecution off was when Mr. Dratel asked Mr. DerYeghiayan if Mr. Karpeles’ attorneys had offered to reveal whom he thought DPR was in exchange for immunity from a number charges Mr. Karpeles was under investigation for including running an illegal exchange and money laundering on top of the seizure of the site Mutum Sigillum. Mr. Dratel said that hearsay did not apply because of rule 807. You can look up the rule yourself here http://www.law.cornell.edu/rules/fre/rule_807 . Mr. Dratel also wanted to ask about the Bitcoin Talk forums and about whether Mr. Karpeles created them but that question was objected to as well for the same reason. Council then proceeded to make arguments about the merits of this objection both during a sidebar and after the jury had been removed.
The defense seemed to be saying that hearsay does not apply because it is one government agent reporting what another government agent had said to him unless the government is saying that their own agents are unreliable witnesses. The defense was also saying that this agent had been testifying about his findings in this case during direct and therefore it was fair game to question him about his findings under cross. The prosecution seemed adamant about not letting this line of questioning continue. The judge, who up until now seemed to be favoring the prosecution in my opinion, appeared skeptical of the prosecution’s reasoning for the objection. The prosecution seemed unsure of how exactly to word why they are objecting. The prosecutor, Mr. Turner, said that the defense is trying to say that Mr. Ulbricht is not the real DPR because Mr. Karpeles is the real DPR but the defendant can only try to show that he is not DPR and not try to convict someone else. I’m not a legal expert but this reasoning sounds like hogwash to me because it is impossible to prove a negative which is why the defense doesn’t need to show that Ulbricht is not DPR and only raise reasonable doubt. The judge raised that same point saying that the defendant is only trying to show reasonable doubt.
Mr. Dratel said that asking about alternate suspects and law enforcement conduct was fair game for the defense. The judge asked the prosecution to find a case as precedent for her to sustain the objection so that cross examination can resume Tuesday. The judge also asked Mr. Dratel to reveal where his cross examination was leading so that if there are any other issues, they can be addresses by the prosecution during the holiday weekend break. Mr. Dratel revealed what questions he is planning on asking and asked the judge to remind the prosecution that their witness cannot be prepped for these questions. The judge said that they can talk to the witness but not prep him.
Mr. Dratel revealed that he would ask the witness about the software that was used to create the Bitcoin Talk forums and if it is exactly the same software that was used to create the Silk Road forums. Dratel also wanted to ask the agent if it is common to use this software to create an online forum.
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