US federal agents have shut down the Silk Road website, which used the privacy-protecting Tor network and Bitcoin digital currency to shield the identities of buyers and sellers around the world.
Ross William Ulbricht, also known as "Dread Pirate Roberts", was arrested in San Francisco after the website was shut down, the Justice Department said in a statement on Wednesday. His online moniker appeared to be taken from a character in the film The Princess Bride.
Prosecutors said they seized approximately $3.6 million worth of Bitcoins in the largest ever seizure of the digital currency.
"The Silk Road website has served as a sprawling black market bazaar where illegal drugs and other illicit goods and services have been regularly bought and sold by the site's users," FBI Special Agent Christopher Tarbell said in a criminal complaint filed in Federal Court.
From about January 2011, Ulbricht ran a marketplace that hawked heroin, cocaine, LSD, and methamphetamine, as well as hacker tools such as software for stealing passwords or logging keystrokes on people's machines, according to court documents.
Prosecutors also charged that in March, Ulbricht tried to hire someone to kill a Silk Road user who threatened to expose the identities of others using the website.
"The defendant deliberately set out to establish an online criminal marketplace outside the reach of law enforcement and government regulation," Tarbell said in the legal filing.
Ulbricht, 29, anonymised Silk Road transactions by using a Tor computer network designed to make it almost impossible to locate computers used to host or access websites.
He also added a Bitcoin "tumbler" to the Silk Road payment system to foil efforts to trace digital currency back to buyers, according to the criminal complaint.
"Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the internet today," the criminal complaint contended.
"The site has sought to make conducting illegal transactions as easy and frictionless as shopping online at mainstream ecommerce websites."
Prosecutors maintained that Silk Road has been used by thousands of drug dealers to distribute hundreds of kilograms of illegal wares to more than 100,000 buyers, and to launder hundreds of millions of dollars in ill-gotten profits.