Three alleged 'Silk Road' employees charged with conspiracy
Date December 21, 2013 - 11:13AM
Silk Road was seen by some as the Amazon of the drug trade.
Three alleged former employees of "Silk Road", the online marketplace prosecutors called a "sprawling black-market bazaar", were accused of conspiring to traffic in drugs, hack computers and launder money.
"During its more than 2 1/2 years in operation, Silk road was used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to well over 100,0000 thousand buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions," prosecutors said in the indictment.
The many faces of Ross William Ulbricht.
Ulbricht, who was allegedly known online as "Dread Pirate Roberts," was arrested in October and charged with running Silk Road, where anonymous users paid Bitcoin digital currency for illegal drugs, malicious software designed for computer hackers and other illegal products. He's being held without bail. While arguing against his release on bail, prosecutors in New York said he tried to arrange the murder of six people to protect his business.
The government claims Jones and Davis worked as site administrators for Silk Road. Nash was the primary moderator on Silk Road discussion forums, prosecutors said. Ulbricht paid his site administrators and forum moderators salaries ranging from $50,000 to $75,000 a year, according to the government.
The three men are charged with one count each of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy. Jones was arrested yesterday in Charles City, Virginia. Davis, of Ireland, was arrested in that country yesterday. Nash was arrested in Brisbane, Australia.
Curtis Green, another former Silk Road administrator, pleaded guilty last month to a cocaine conspiracy charge in federal court in Maryland. Green was charged with helping an undercover agent of the Drug Enforcement Administration arrange the purchase of 2.2 pounds of cocaine for about $27,000.
HKCEx claims a DDOS led to the temporary outage of their site. Since coming back online, still no users have received withdrawn funds.CCN never published any of HKCEx’s “press releases” because I was unable to verify any of their contents, ever. I have been in email contact with the supposed Marketing and PR head of HKCEx, and she has not provided any backing evidence. Instead, she has contradicted herself multiple times. (I refer to Lavin Lam as a female because of this Linkedin account .. https://www.linkedin.com/pub/lavin-lam/19/328/a85 .) Specifically, she told me that the Bitcoin ATM Network would not be up until the end of May.
HKCEx emerged from their DDOS with a new Technical Support hire: Orlando James. Emails sent by hkcex.net actually come from Yahoo in Singapore .. http://www.reputationauthority.org/lookup.php?ip=106.10.148.244&d=hotmail.com . HKCEx claims that the $25 million USD in investment was pledged funds to be spent on the exchange to buy cryptocurrencies. At the least, HKCEx has completely misrepresented themselves to the Bitcoin community. I will gladly edit this article should any new evidence come to light.
HKCEx was supposed to be an exchange that allowed trading between fiat currencies and certain cryptocurrencies; specifically, Worldcoin, Bitcoin, Litecoin, Namecoin, Novacoin, and Peercoin. [.. gee, didn't know there were so many .. ]In the press release, Lavin Lam announced that HKCEx has raised $25 million USD from “private institutions.” She claimed that together with a reported $2 million USD investment from early 2014, HKCEx had raised $27 million and was poised to become a premier Bitcoin exchange. The most popularized portion of HKCEx’s press release was the fact that they would give 8.8% deposit bonus to all cryptocurrency deposits. People started to report that their bitcoins, litecoins, and worldcoins made it into the exchange and the deposit bonus was applied. However, there was not a single credible report of any sort of withdrawal going through. Instead, dozens of users have reported .. https://twitter.com/HKCExInfo/status/466569328184147968 .. in several threads .. https://bitcointalk.org/index.php?topic=610589.0 .. that they have never seen their withdrawals. Would-be HKCEx users have reported that both fiat withdrawals and cryptocurrency withdrawals are being rejected despite all information being entered correctly. HKCEx responded on Reddit .. http://www.reddit.com/user/HKCEx .. and in email to the various cryptocurrency enthusiasts that had the misfortune to deposit funds into HKCEx. They reported that Lavin Lam had promised to release all withdrawals by the night of 5/16/14 .. https://bitcointalk.org/index.php?topic=609805.msg6781029#msg6781029 . Needless to say, this has not happened. Lavin Lam has now claimed that withdrawals will be sent out “by the end of the day.” At press time, it is past the “end of the day” in Hong Kong and still nobody has reported receiving a withdrawal.
Over the last few days, Lavin Lam has been busy patching the increasing number of holes in HKCEx’s story. As revealed on Bitcontalk.org .. https://bitcointalk.org/index.php?topic=609805.msg6805959#msg6805959 , HKCEx claimed that they had just signed a deal with Hang Seng bank in Hong Kong to the tune of $9 million USD. Furthermore, they claimed that Hang Seng bank would be operating a trading bot on HKCEx.net by Monday 5/19/14. HKCEx’s exchange didn’t yet have the API functionality to support that yet… Also, Hang Seng Bank’s majority owner is the infamous HSBC, the epitome of everything that Bitcoin stands to destroy. Banks like HSBC, and by extension Hang Seng, are not interested in supporting Bitcoin. In HKCEx’s press release, they also claimed to be working with the number one insurance company in Hong Kong, AIA, to get insurance on Bitcoin deposits. AIA and Hang Seng Bank have not responded to CCN’s inquiries as to the veracity of these claims as of press time. HKCEx was also registered with Hong Kong’s Customs and Excise Department as a licensed MSO. Another HK Bitcoin Exchange, GBL, also flashed registration with HK authorities to lure investors in the past. HKCEx goes by MG Foreign Exchange Limited. However, MG’s registration with Hong Kong’s Company Registry reveals an address at 56 Belcher St. In contrast, their MSO license lists an address at the MG Tower on 133 Hoi Bun Rd. in Kowloon, HK.
Fake ATMs And Lack Of Transparency: The Warning Signs
HKCEx first popped up on people’s radar on 1/31/14 when their press release announcing the end of the initial $2 million USD round of funding was widely reported by the likes of Coindesk .. http://www.coindesk.com/new-hong-kong-bitcoin-exchange-welcomes-mainland-customers/ . When the South China Morning Post .. http://www.scmp.com/business/banking-finance/article/1418849/bitcoin-firm-hong-kong-crypto-exchange-mum-backers .. reached out to HKCEx to try and identify/verify the investors’ existence, HKCEx’s supposed CEO Pheng Cheah claimed that non-disclosure agreements prevented him from naming the investors. If you go to HKCEx’ s Crunchbase profile you’ll find find the investor of $25 million (not 27=2+25) is “Bitcoin .. http://www.crunchbase.com/organization/hkcex-2 .” If the first $2 million USD in investments couldn’t be verified… Then it might be fair to call the other $25 million USD into question as well. HKCEx’s management team consisted of a list of allstars with fancy European degrees. The entire team does not have any Social Media Profiles. In fact, the only person supposedly associated with HKCEx with a Linkedin profile is Lavin Lam. There is no proof that the Lavin Lam found on Linkedin is the Lavin Lam writing from contact@hkcex.net. Furthermore, in HKCEx’s team page .. http://webcache.googleusercontent.com/search?q=cache:55P-OfxR0F0J:https://www.hkcex.net/about/management-team+&cd=1&hl=en&ct=clnk&gl=us , Lavin Lam is mysteriously missing. Purposefully excluding the Head of Marketing from the “official” website is a tactic often used by these large scale Bitcoin scammers. We saw it with LSM Labs and now we’ve seen it here. Also, the headshot provided for Director Peng Tsou, when reverse google image searched, shows that it might have been taken from a Singaporean website .. http://tiny.cc/4s7vhx . Again, the fact that none of HKCEx’s supposed employees list any previous jobs should be a large warning sign.
As mentioned earlier in this article, Technode also incorrectly reported that HKCEx had successfully installed 10 Bitcoin ATMs in Hong Kong at key locations in malls. HKCEx provided Technode with these pictures, which were passed on to the public as real ATMs. Upon further investigation, it is clear that the pictures provided by HKCEx show the 3D-rendered model of the HKCEx Bitcoin ATM photoshopped into the image. HKCEx bought this ATM Kiosk design from cgtrader .. http://www.cgtrader.com/3d-models/electronics/computer/3d-model-detailed-atm-machine-kiosk , rendered it all pretty, then “put them in malls.” Pictures of malls, that is. All this, only publicized by Technode, was engineered by HKCEx to explain the use of the first $2 million USD in investment from their 1/31/14 press release. The cgtrader design costs $49 but the man-hours and computer-hours needed to make it look like that might cost a few thousand more. Very simply, HKCEx would have you believe that they have set up ATMs months ago; however, HKCEx is not operating a line of Cryptocurrency ATMs in Hong Kong.
Police are investigating the disappearance of tens of thousands of dollars worth of the virtual currency bitcoin in a move that could open the floodgates for more potential victims to come forward.
Scrutiny has fallen on the conduct of industry newcomer Hong Kong Crypto Exchange (HKCex), whose operation appears to have ground to a halt. Customers said they have been unable to reach the company, which opened for business last month, and its website returns an error message.
The inquiry comes as Hong Kong hosts its first major conference on bitcoins starting tomorrow.
Dominic Rivers, 34, a former IT engineer, reported that he had lost HK$67,000.
A police spokeswoman said: "The informant reported that he stored some virtual currency … in a company providing services on storage and trading in virtual currency in mid-May but discovered later he was unable to retrieve money from the company. Investigations are under way."
It is understood there may be more potential victims on the mainland.
Welcoming the probe, Rivers said he hoped that the authorities would take internet fraud seriously. "I fear that to them it's just new-fangled technology, and they are behind the times so they don't know how to deal with it, don't understand it and so ignore it," he said.
HKCex spokesman Lavin Lam, in an e-mail last month, said: "We are an honest and transparent business [and] have all the necessary permits and licences to conduct this activity." Attempts to contact the company again in recent days have failed.
The rising value of bitcoins over the past month puts Rivers' loss nearer HK$80,000.
A Post inspection of the company's claimed address at 56 Belcher Street in Kennedy Town found no links to the firm.
When HKCex announced it had secured investment on two occasions totalling US$27 million, it remained secretive about its anonymous backers, going against the industry trend.
This article appeared in the South China Morning Post print edition as Bitcoin firm HXCex is probed over lost money
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