DHS Agent Believed Mark Karpeles to Be Head of Silk Road

The number two spot for the most hated man in Bitcoin has changed a lot. Currently, it might just be Josh Garza as many PayCoin investors are not happy with the results of that investment. For a while it was Butterfly Labs CEO Sonny Vleisides, and for a while it was that NewsWeek reporter. But the number one spot has never been up for debate. It has been and may always be, former Mt. Gox CEO Mark Karpeles. Losing or stealing 300 million dollars worth of Bitcoin will do that to you.

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DHS Agent Believed Mark Karpeles to Be Head of Silk Road

The number two spot for the most hated man in Bitcoin has changed a lot. Currently, it might just be Josh Garza as many PayCoin investors are not happy with the results of that investment. For a while it was Butterfly Labs CEO Sonny Vleisides, and for a while it was that NewsWeek reporter. But the number one spot has never been up for debate. It has been and may always be, former Mt. Gox CEO Mark Karpeles. Losing or stealing 300 million dollars worth of Bitcoin will do that to you.

Now, we are finding out that he may have had his hands in more things than most people ever imagined. A Department of Homeland Security (DHS) agent, testifying for the defense of Ross Ulbricht in the Silk Road trial, stated that he believed Mark Karpeles was the true leader of the Silk Road.

Mark Karpeles is infamous for being the CEO of Mt. Gox, which was the largest bitcoin exchange in the world for much of the currency's meteoric rise, and during the exchange's sudden collapse that resulted in the loss of consumer funds valued at over three hundred million dollars at the time.

Mark Karpeles

According to Wired and other media outlets, DHS agent Deryeghiayan testified that he was investigating Karpeles in 2012 and 2013 as the leader of the Silk Road. The agent also contends that Karpeles, or at least his company, was in control of thesilkroad.org domain name and that they purchased it to increase the underground site's visibility in order to boost Bitcoin's price. As the head of Mt. Gox, Karpeles held a significantly large number of bitcoins and therefore had an interest in seeing its value rise.

The DHS agent did not believe Karpeles was the public face of The Silk Road, the pseudonymous Dread Pirate Roberts, and instead had Ashley Barr, a Mt. Gox staffer and computer scientist, post public messages and otherwise act as the face of the site.

Agent Deryeghiayan reportedly testified that he asked other departments within the DHS not to contact Karpeles or let on that they were investigating him. However, against Deryeghiayan's request, the government seized US$2 million during both separate and related investigations. In 2013, according to Deryeghiayan, the government confronted Karpeles about Silk Road and he said he would lead them to the leader of the site in exchange for immunity in the case.

Ulbricht's defense attorney Joshua Dratel contended yesterday that Ulbricht was lured back to the underground site to ultimately be the fall guy for the real runners of Silk Road. Ulbricht was the ideal patsy because, as the defense admitted during the first day of its arguments, an unregulated, underground market was originally Ulbricht's idea, but he had left the site shortly after its formation.

Despite some reports to the contrary, the defense never actually named Karpeles as the mastermind behind Silk Road, but only that there appeared to be some disagreement among the authorities of who was Dread Pirate Roberts or if he was multiple people.

According to Wired, Dratel stated that he still had at least an hour's worth of questions left for Deryeghiayan when court adjourned. Presumably, he will re-take the stand the following day. It is not clear at this time if the defense will eventually paint Karpeles as the leader of the Silk Road, or if he will continue to simply point out holes in the investigation.

The prosecution, who argues Ulbricht was caught in the act when he was arrested in a Public Library, objected to some of questioning by the defense but was eventually overruled by the judge.

Mark Karpeles, for his part, has denied the accusations on Twitter. The trial will resume Friday and Ulbricht could be sentenced to a lifetime in prison if found guilty.


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