SAN FRANCISCO -- Federal authorities arrested a San Francisco man they say founded an online black market that connected drug dealers with clients in deals worth more than $1 billion.

In court papers made public Wednesday, prosecutors alleged that Ross William Ulbricht founded and operated Silk Road, using the name "Dread Pirate Roberts"; Ulbricht was arrested by FBI agents Tuesday at a public library in San Francisco, where he was using his personal laptop to chat with a cooperating witnesses about Silk Road. He made an initial appearance in a San Francisco court on Wednesday and a bail hearing was set for Friday, authorities said.

Investigators say that Silk Road offered a range of illegal drugs, as well as other illicit goods and services, with customers paying in Bitcoin and receiving their wares through the mail. Undercover agents in New York made more than 100 purchases of LSD, Ecstasy, heroin and other drugs offered on the site, and the website's listings included one vendor who offered to hack into Facebook, Twitter and other social networking accounts and another selling tutorials on how to hack into ATMs.

Under the "Forgeries" category, sellers advertised forged driver's licenses, passports, Social Security cards and other documents.


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A criminal complaint said Ulbricht "has controlled and overseen all aspects of Silk Road," and also accused the S.F. resident of attempting to purchase the services of a hitman in a dispute with a Silk Road user who threatened to release the names of thousands of the site's customers.

Silk Road managed transactions totaling 9.5 million bitcoin in its two-and-a-half years of operations and received commissions of more than 600,000 bitcoin, according to authorities. Bitcoin is a virtual currency created in 2008; while the value of a single bitcoin changes rapidly, prosecutors estimate that Silk Road executed $1.2 billion in sales and received $80 million in commissions.

Authorities further said that Ulbricht had received about $3.4 million in bitcoin through the site, "by far the largest account balance held by any Silk Road user at the time," according to the court papers.

The court papers cite a LinkedIn profile that says Ulbricht graduated from the University of Texas with a physics degree and also attended graduate school in Pennsylvania. It says he has focused on "creating economic simulation" designed to "give people a firsthand experience of what it would be like to live in a world without the systematic use of force."

As of July, there were nearly 1 million registered users of the site from the United States, Germany, Russia, Australia and elsewhere around the globe, the court papers said.

The Associated Press contributed to this report. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.