US defense argues wrong man accused as Silk Road kingpin

"This hidden site has been seized" is shown on the screenshot of the illegal internet retail platform "Silk Road
"This hidden site has been seized" is shown on the screenshot of the illegal internet retail platform "Silk Road 2.0" during a press conference at the Hesse Office of Criminal Investigations in Wiesbaden, Germany, November 11, 2014

Defense lawyers for Ross Ulbricht, the alleged mastermind of online criminal enterprise Silk Road, sought to convince New York jurors that the wrong man was in the dock.

During lengthy cross-examination of the first witness, lawyer Joshua Dratel established that investigators once suspected Mark Karpeles, former chief of failed Bitcoin exchange MtGox, was the Silk Road boss.

Homeland Security agent Jared Der-Yeghiayan admitted that he had pursued Karpeles in the summer of 2013 in his search for the real identity of online alias "Dread Pirate Roberts" who ran the narcotics operation.

Der-Yeghiayan in August 2013 drafted a search warrant for email accounts of Karpeles in California and New York, where Ulbricht's trial is taking place.

In the warrant he wrote that he believed Karpeles owned and hosted the Silk Road website and argued that his background as a computer programmer made him "well-suited" to the role.

The France-born Karpeles, based in Japan, has reportedly refused to travel to the United States for questioning in connection with the collapse of MtGox in 2014.

In an interview with The Daily Beast conducted by Tokyo-based reporters, Karpeles acknowledged owning a hosting service used by part of the Silk Road network but refused to reveal any more information.

"Part of the Silk Road network,, was using a hosting service that I still own for one of my clients. I cannot disclose their name for obvious reasons," he told the website.

"I have nothing to do with Silk Road and do not condone what has been happening there. I believe Bitcoin (and its underlying technology) is not meant to help people evade the law, but to improve everyone's way of life by offering never thought before possibilities."

Ulbricht, 30, pleads not guilty to seven charges of narcotics trafficking, criminal enterprise, computer hacking and money laundering.

He faces life in prison if convicted.

Government prosecutors allege he was the Silk Road kingpin, claiming he amassed a fortune of $18 million from global drug sales from January 2011 until the FBI shut down the website in October 2013.

Ulbricht says he dreamt up the idea of the site as an "experiment" but bowed out and was set up by the real "Dread Pirate Roberts" who is still at large.

His trial has been hailed a landmark case in the shadowy world of online crime and government surveillance.

Ulbricht, wearing a crisp button-down blue shirt, appeared relaxed in court on Thursday. During a break in proceedings, he leaned over his chair to chat with family, offering a rueful smile when asked if he had a nice lunch.

The trial adjourned until Tuesday.

© 2015 AFP

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