2.Jared Der-Yeghiayan — Direct (Part 2)
953 linesDIRECT EXAMINATION (Resumed) BY MR. TURNER:
MR. TURNER: So, Agent Der-Yeghiayan, we left off yesterday with you explaining that Silk Road was accessible only through a special network on the Internet; do you remember that?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: Could you just remind the jury what that network is called?
JARED DER-YEGHIAYAN: It's called the Tor network, which is short for the Onion Router.
MR. TURNER: So what basic advantage does the Tor network give you as a user? Is it faster?
JARED DER-YEGHIAYAN: Not necessarily. It provides anonymity to you so it protects you, your location on the Internet.
MR. TURNER: You explained a little bit of this yesterday. But, again, what specific information about you does it protect or conceal?
JARED DER-YEGHIAYAN: It conceals your Internet protocol address, which is your IP address.
MR. TURNER: And a website operating on Tor, what is that called again?
JARED DER-YEGHIAYAN: It's called a hidden service or a dot-onion address.
MR. TURNER: And what is the advantage of operating a website as a hidden service on Tor?
JARED DER-YEGHIAYAN: Some of the advantages of doing that is it is harder to identify that website's IP address so it could also remain anonymous on the Internet.
MR. TURNER: And at a basic level, how does Tor conceal a user's IP address, if you know?
JARED DER-YEGHIAYAN: So basically it is a network on the Internet that is made up of a lot of computers, and when you're using that Tor browser that I showed you yesterday, that will allow you to enter into this network, and that network then will rout your traffic on the Internet through multiple computers, which basically protect you each step of the way. So it's hard for one computer to know who you are and vice versa until you exit the network and visit a regular website as well as if you visit a website within the network itself.
MR. TURNER: Could you turn to page -- or what has been marked as Government Exhibit 106 in your binder.
Do you recognize this exhibit?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: Is it a diagram of some kind?
MR. TURNER: Would it aid your testimony, would it help you explain these concepts by showing this exhibit to the jury?
JARED DER-YEGHIAYAN: Yes, it would.
MR. TURNER: Your Honor, the government requests to publish the exhibit as a demonstrative.
MR. DRATEL: No objection, your Honor.
THE COURT: All right. Received.
(Government's Exhibit 106 received in evidence)
BY MR. TURNER:
MR. TURNER: OK. So could you just explain what the diagram shows?
JARED DER-YEGHIAYAN: Sure.
MR. TURNER: You can use your laser pointer. That would be great.
JARED DER-YEGHIAYAN: So if you are a user with your computer, this would be the entire Tor network itself which is made up of a lot of computers on the inside of it. Basically, if you want to visit another website, even if it is a hidden service that shows it is outside of Tor, which technically is inside of Tor, you would enter into the Tor network, and what the Tor network would do then is route you between multiple computers before you actually reach that website.
MR. TURNER: What are those computers called?
JARED DER-YEGHIAYAN: So these internal computers within the system are called relays, and the ones that are on the external, on the outside, are called nodes.
MR. TURNER: OK. And I am going to use my dueling laser pointer here.
So this computer, the first node that you hit, does it know your IP address?
JARED DER-YEGHIAYAN: Yes, it does.
MR. TURNER: How about this computer here, which IP address does it know that your traffic is coming from?
JARED DER-YEGHIAYAN: It will only know the computer that it came from and the next computer that it goes to.
MR. TURNER: Could you just explain?
JARED DER-YEGHIAYAN: Let me just -- so this computer would only know this IP address, and then whenever it sends the message along, it will only know the next computer's IP address.
MR. TURNER: So just to be clear, this computer knows the -- thinks the traffic is coming from that IP address, is that right?
MR. TURNER: This computer thinks the traffic is coming from that IP address?
MR. TURNER: And so on?
JARED DER-YEGHIAYAN: Yes. Each computer has its own IP address internally within the network so it will only know the previous computer and the next computer's IP address.
MR. TURNER: So by the time that the traffic hits the hidden service at the end of the chain, what IP address does the hidden service believe the traffic is coming from?
JARED DER-YEGHIAYAN: So the hidden service will only see that last computer, that last IP.
MR. TURNER: So the original IP address is hidden by multiple layers of other computers in the chain?
MR. TURNER: OK. And you mentioned yesterday that a hidden service has a special kind of Web address?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: Would you remind the jury what those Web addresses are called?
JARED DER-YEGHIAYAN: It ends in dot-onion.
MR. TURNER: So, again, what was Silk Road's dot-onion address?
JARED DER-YEGHIAYAN: It was silkroadvb5piz3r.onion.
MR. TURNER: Was that the only dot-onion address it ever had or did it change sometimes?
JARED DER-YEGHIAYAN: It changed.
MR. TURNER: Was that the last one it had?
JARED DER-YEGHIAYAN: That was the last one it had.
MR. TURNER: So when you typed Silk Road's dot-onion address into the Tor browser -- and I should just be clear, you talked about the Tor browser yesterday, right?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: Do you have to have the Tor browser to access the network that we just saw?
JARED DER-YEGHIAYAN: Yes, you do.
MR. TURNER: So when you type the dot-onion address of Silk Road into the Tor browser, what would show you up?
JARED DER-YEGHIAYAN: The first page of the website, which should be basically a user login screen.
MR. TURNER: Sir, could you turn to what has been marked as Government Exhibit 108.
MR. TURNER: Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: I took this screenshot.
MR. TURNER: And what is it a screenshot of?
JARED DER-YEGHIAYAN: It is of the first page, the user login page for Silk Road.
MR. TURNER: The government offers Exhibit 108 into evidence, your Honor.
MR. DRATEL: Your Honor, this is of the same character as yesterday's, so --
THE COURT: 108 is received.
MR. DRATEL: Thank you, your Honor.
(Government's Exhibit 108 received in evidence)
MR. TURNER: Could you publish Government Exhibit 108, Mr. Evert.
MR. TURNER: So what is shown here, Agent Der-Yeghiayan?
JARED DER-YEGHIAYAN: So this is the first page -- when you visit the website, this is the first thing that will appear. And it prompts you to enter in a user name and a pass phrase, which is a password, as well as you have to hit in down below it, which is a CAPTCHA, C-A-P-T-C-H-A.
MR. TURNER: The user name and pass phrase, do you have to have one to enter this site?
JARED DER-YEGHIAYAN: Yes, you did.
MR. TURNER: And if you didn't have a user name and pass phrase, how could you get one?
JARED DER-YEGHIAYAN: Down below there is the green lettering which says "Click here to join," and it would then take you to another page.
MR. TURNER: Could anyone click here to join? Could anyone create an account on this site?
JARED DER-YEGHIAYAN: Yes. It was public.
MR. TURNER: What information did you have to give about yourself in order to join?
JARED DER-YEGHIAYAN: No information about yourself.
MR. TURNER: Did it matter what age you were?
MR. TURNER: Did it matter where you were from or what the laws were in your country?
MR. TURNER: Do you have to supply an email address of any kind to register your account?
JARED DER-YEGHIAYAN: No, you do not.
MR. TURNER: What did you have to do exactly?
JARED DER-YEGHIAYAN: It just asked you to create a user name and also just create a password, or pass phrase.
MR. TURNER: As long as it wasn't one that some other user had chosen before, was that it?
JARED DER-YEGHIAYAN: If it was something that already existed, then it would ask you to create another user name, something different.
MR. TURNER: So once you had an account and entered your user name and password, what would show up?
JARED DER-YEGHIAYAN: The homepage for Silk Road.
MR. TURNER: Could you take a look at Government Exhibit 109, please.
Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: It is a screenshot I took of the Silk Road.
MR. TURNER: Of the homepage specifically?
MR. TURNER: And what date did you take it on?
JARED DER-YEGHIAYAN: This was taken September 27, 2012.
MR. TURNER: The government offers Exhibit 109 into evidence.
MR. DRATEL: The same objection, your Honor.
THE COURT: All right. Government Exhibit 109 is received.
(Government's Exhibit 109 received in evidence)
MR. TURNER: Could you publish Government Exhibit 109, Mr. Evert. Could you zoom in on the central images on the screen.
MR. TURNER: OK. So what are we looking at? What are the pictures we see in the middle of the screen?
JARED DER-YEGHIAYAN: So these are listings, various listings that were available on Silk Road. They will change from time to time. And it could be any listing within the entire website but these just all happen to be drug listings.
MR. TURNER: How do these listings compare to the listings that typically appeared on the Silk Road homepage?
JARED DER-YEGHIAYAN: This is pretty consistent with what you would see when you login.
MR. TURNER: Was it typically mostly drugs or some other product?
JARED DER-YEGHIAYAN: It was mostly drugs.
MR. TURNER: So could you explain some of the specific offerings we see here, what they are, what type of drugs they reflect?
JARED DER-YEGHIAYAN: So there is marijuana that is available. There is also another type of psychedelic, called 25I-NBOMe, and as well as heroin, one gram of it. You have speed, which is amphetamine. Also have black tar heroin, one gram of high quality cocaine, testosterone. You also have some more amphetamine.
MR. TURNER: What type of drug is testosterone?
JARED DER-YEGHIAYAN: Steroid. As well as you have methylone, and then you have some marijuana as well as some ecstasy pills, and I'm not exactly sure what that is; it looks like a prescription drug.
MR. TURNER: Could you take a look at Government Exhibit 101, please.
MR. TURNER: Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: This is a screenshot I took.
MR. TURNER: Of what?
JARED DER-YEGHIAYAN: Of the Silk Road homepage.
MR. TURNER: On what date?
JARED DER-YEGHIAYAN: This is from April 2, 2012.
MR. TURNER: The government offers Exhibit 101 into evidence, your Honor.
MR. DRATEL: The same objection, your Honor.
THE COURT: Received.
(Government's Exhibit 101 received in evidence)
MR. TURNER: Could you publish the exhibit, Mr. Evert.
MR. TURNER: OK. So this was an earlier version of the site to the one we just looked at, is that right?
JARED DER-YEGHIAYAN: That is correct.
MR. TURNER: Could we zoom in on the "Shop by category" list on the left.
OK. So what are we looking at here? What was on the "Shop by category" list?
JARED DER-YEGHIAYAN: So this is the drugs category as well as subcategories for the different various drugs.
MR. TURNER: Mr. Evert, could you actually zoom out and take a look at the whole category list.
MR. TURNER: Just to be clear, what was the predominant form of goods sold on the site as of this date?
JARED DER-YEGHIAYAN: It was drugs.
MR. TURNER: And the numbers on the side of the categories, what do they reflect?
JARED DER-YEGHIAYAN: Each one of the numbers in parentheses is a listing that is in that category.
MR. TURNER: So what does it mean drugs, 2,020? 2,020 what?
JARED DER-YEGHIAYAN: It means there is 2,020 individual listings for different drugs.
MR. TURNER: By "listings," what do you mean? Advertisements? Offerings?
JARED DER-YEGHIAYAN: It's an offering, yes.
MR. TURNER: For each offering would there be only one item for sale or would there be more in quantity?
JARED DER-YEGHIAYAN: Each listing could have, for example, ten pills for that one listing available or 100 pills or multiple grams up to a kilogram or more of a drug.
MR. TURNER: OK. And these numbers, did they change over time, the quantities of listings for the various drugs on sale on the site?
JARED DER-YEGHIAYAN: Yes, they did.
MR. TURNER: And over the timeline of the site, how did they change? Did they increase? Decrease?
JARED DER-YEGHIAYAN: They increased pretty regularly or steadily.
MR. TURNER: So, again, what was the date of this screenshot?
JARED DER-YEGHIAYAN: This was April 2, 2012.
MR. TURNER: Could you take a look at Government Exhibit 132?
MR. TURNER: Mr. Evert, could you put that on the side, please.
MR. TURNER: Do you recognize what has been marked as Government Exhibit 132?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: It is another screenshot I took of the Silk Road homepage.
MR. TURNER: On what date?
JARED DER-YEGHIAYAN: This is from October 1, 2013.
MR. TURNER: The government offers Government Exhibit 132 into evidence.
MR. DRATEL: The same objection, your Honor.
THE COURT: Received.
(Government's Exhibit 132 received in evidence)
MR. TURNER: OK. So could you publish that, Mr. Evert, and zoom in on the category list.
MR. TURNER: So, again, what date did you take this screenshot on?
JARED DER-YEGHIAYAN: This was October 1, 2013.
MR. TURNER: And how do the numbers compare to the prior shot that you took in, what was it, April 2012?
JARED DER-YEGHIAYAN: That was April 2012. They substantially went higher in every category and as well as additional categories were added.
MR. TURNER: So in total there were 2,020 drug listings in April of 2012. By October how many?
JARED DER-YEGHIAYAN: There is 13,810.
MR. TURNER: So if you clicked on one of the links in this category list what would then show up?
JARED DER-YEGHIAYAN: If you clicked on the drug link, then it would take you into the drug listings.
MR. TURNER: So could you take a look at Government Exhibit 110, please.
Do you recognize this document?
JARED DER-YEGHIAYAN: I do.
MR. TURNER: And how do you recognize it?
JARED DER-YEGHIAYAN: This is a screenshot I took.
MR. TURNER: On what date?
JARED DER-YEGHIAYAN: This is a screenshot of the Silk Road drug page from November -- sorry, September 27, 2012.
MR. TURNER: The government offers Exhibit 110 into evidence.
MR. DRATEL: The same objection, your Honor.
THE COURT: Received.
(Government's Exhibit 110 received in evidence)
MR. TURNER: Publish it, Mr. Evert.
MR. TURNER: So what is depicted in this screenshot?
JARED DER-YEGHIAYAN: This would be on the drugs category, specifically on the stimulants subcategory of drugs.
MR. TURNER: And, Mr. Evert, could you zoom in on the first couple of listings, for example.
MR. TURNER: So the first one, it says ".5 grams high quality cocaine," and then by "seller" it says "Lloydsbrothers."
Now, was that typical for a seller name? Did sellers typically put real names there or some other type of name?
JARED DER-YEGHIAYAN: Generally it is just an obscure name.
MR. TURNER: What was that called?
JARED DER-YEGHIAYAN: It is a user name.
MR. TURNER: The user name of the vendor on that site selling that product?
MR. TURNER: And "ships from," what did that indicate?
JARED DER-YEGHIAYAN: That would be where the seller would publicly advertise where they shipped their products from.
MR. TURNER: Roughly, how many different seller user names would you say you saw during the course of your investigation? Dozens? Hundreds? Thousands?
JARED DER-YEGHIAYAN: Thousands.
MR. DRATEL: Objection to the leading, your Honor.
THE COURT: In general try not to lead, Mr. Turner.
MR. TURNER: OK.
MR. TURNER: Roughly, how many different seller user names would you say you saw during the course of your investigation?
JARED DER-YEGHIAYAN: A few thousand.
MR. TURNER: And in terms of "ships from" and the countries that the vendors would ship from, during your investigation, did you see offerings from many countries or just a few?
JARED DER-YEGHIAYAN: I saw approximately over 40 countries.
MR. TURNER: So what would happen if you click on one of those individual listings in the category list there?
JARED DER-YEGHIAYAN: If you would click on the actual individual list, it would bring up a more detailed description of the listing itself as well as just some terms basically of the purchase of it.
MR. TURNER: Could you take a look at Government Exhibit 111, please.
Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: And how do you recognize it?
JARED DER-YEGHIAYAN: It was a screenshot that I witnessed being taken.
MR. TURNER: What is it a screenshot of?
JARED DER-YEGHIAYAN: This is a screenshot of a listing that was used to buy a controlled purchase of drugs.
MR. TURNER: Does that mean like an undercover buy?
MR. TURNER: What date is this screenshot from?
JARED DER-YEGHIAYAN: I believe it was -- there is no other date on there but it was around March 6, 2013.
MR. TURNER: The government offers Government Exhibit 111 into evidence.
MR. DRATEL: The same objection, your Honor.
THE COURT: All right. Government Exhibit 111 is received.
(Government's Exhibit 111 received in evidence)
MR. TURNER: Mr. Evert, would you publish it.
MR. TURNER: OK. So what was it an offering for?
JARED DER-YEGHIAYAN: This was for .5 grams of uncut crack cocaine.
MR. TURNER: Could we zoom in on the product description all the way down to the bottom, please.
MR. TURNER: OK. It says: "Description: Uncut crack cocaine.
"Product will be send within 12 hours after order is placed.
"It is possible to ship from Belgium (ask for info).
"I destroy all your information after the order has been furnished.
"Info: I am aware of the latest stealth packaging.
"Using the best quality materials. My packaging is professional and up to date.
"Working with bitcoins only. No payments outside of escrow. Shipping worldwide."
Could we zoom out, please.
And then could you zoom in on the top half of the page.
So in the gray box there, again, could you just briefly summarize what information is displayed there?
JARED DER-YEGHIAYAN: To the right of the image?
MR. TURNER: Yes.
JARED DER-YEGHIAYAN: So it lists the seller's user name followed by their feedback rating. In this case, the name is happytimezz, with a feedback rating of 100. And it also details where that particular vendor would be shipping that product from. They're advertising they're shipping from the Netherlands. And they would also tell you where they would ship the products to. In this case this vendor is offering this product shipping worldwide. And then it is in the category, or subcategory, of crack.
MR. TURNER: And then up above, it says, "Add to cart." And there is "1.65" next to a B with a line through it. Do you see that?
JARED DER-YEGHIAYAN: I do.
MR. TURNER: What is that? What is the number?
JARED DER-YEGHIAYAN: The symbol is a symbol for bitcoins.
MR. TURNER: So what does it reflect? 1.65, what is that for?
JARED DER-YEGHIAYAN: It is a price for the items. It is 1.65 bitcoins.
MR. TURNER: So through your investigation did you become familiar with bitcoins?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: And at a general level, what are bitcoins?
JARED DER-YEGHIAYAN: Bitcoins are a -- it is a virtual currency that is used that you could use to buy and sell things and trade things electronically on the Internet.
MR. TURNER: Was there any form of payment accepted on Silk Road besides bitcoins?
JARED DER-YEGHIAYAN: No, there was not.
MR. TURNER: And what is the advantage of using bitcoins for a purchase?
JARED DER-YEGHIAYAN: Bitcoins themselves are sort of like Tor. It anonymizes you. Bitcoins also have sort of the same properties where it would be something that also helps anonymize who you are. It doesn't really lead directly back to you.
MR. TURNER: So when you paid for items on Silk Road or when you pay for items with bitcoins generally, is there any identifying information attached to those bitcoins?
JARED DER-YEGHIAYAN: No, there is not.
MR. TURNER: How does that compare to like payment with a credit card, for example, when you shop on an ordinary website?
JARED DER-YEGHIAYAN: With a credit card, if you are online and you are buying something, that usually requires that you enter information about yourself -- your name, your address, zip code -- and that information is usually checked against the credit card itself, too, and it verifies against it.
MR. TURNER: And to be clear, is there anything illegal in and of itself about using bitcoins?
JARED DER-YEGHIAYAN: No, there is not.
MR. TURNER: Did you ever conduct -- you mentioned before you conducted undercover buys on Silk Road?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: Why did you do that?
JARED DER-YEGHIAYAN: It was to match up the drugs that we were receiving in at Chicago O'Hare to try to match the envelopes that we were receiving to who we suspected were shipping those drugs.
MR. TURNER: And as part of those undercover buys did you learn how to acquire and use bitcoins?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: So how can you buy bitcoins? How can you acquire them?
JARED DER-YEGHIAYAN: There is a number of ways. Generally, you have to buy it from a Bitcoin exchanger that will basically take your real money and exchange it for bitcoins.
MR. TURNER: And where can you find an exchanger of bitcoins?
JARED DER-YEGHIAYAN: You could find it -- it is available -- readily available online. So there is numerous exchanges you can go to online that will accept your money, real money, for bitcoins.
MR. TURNER: How does buying bitcoins compare to exchanging dollars for foreign currency, for example?
JARED DER-YEGHIAYAN: It's similar in the essence that when you trade it, the actual exchanges themselves will make money on you just as a currency converter will make money on you with some commissions when you are transferring, say, dollars to Euro, dollars to pounds. Also, Bitcoin exchanges will also make commissions on you as well, so when you are buying bitcoins they will earn money off of that.
MR. TURNER: And what is the exchange rate for a Bitcoin? How much does it cost to buy a single Bitcoin?
JARED DER-YEGHIAYAN: It fluctuates pretty rapidly, usually.
MR. TURNER: How much did the price of bitcoins change over the time period at issue in this case, 2011 to 2013?
JARED DER-YEGHIAYAN: When I started my investigation, it was in October 2011. Bitcoins were roughly like 2 to $4 a bitcoin. And then by the end of -- well, throughout the investigation, even going into April 2013, bitcoins hit a value of $250 a bitcoin, and then by the time that we shut the site down in October 2013 it was about $100 -- a little bit over a $100 a bitcoin.
MR. TURNER: Do you have a document on how you would buy bitcoins as part of your undercover buys?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: Could you take a look at Government Exhibit 113, please.
There are a series of pages in this exhibit. Could you explain what they are? Do you recognize them?
JARED DER-YEGHIAYAN: I do recognize it. It's -- this is -- I'm sorry. It is a purchase of bitcoins that we did, or that I did, and it's a series of screenshots that demonstrate the different websites we had to visit in order to purchase the bitcoins as well as screenshots I took of Silk Road.
MR. TURNER: The government offers Government Exhibit 113 into evidence.
MR. DRATEL: No objection, your Honor.
THE COURT: All right. Government Exhibit 113 is received.
(Government's Exhibit 113 received in evidence)
MR. TURNER: Publish the first page of the exhibit, Mr. Evert.
MR. TURNER: So could you just walk us through slowly through each page of the exhibit and what it reflects, and you can just tell Mr. Evert what to zoom in on.
JARED DER-YEGHIAYAN: You are actually right, so if you can zoom in there, that is perfect.
So we just zoomed in on this portion from -- this is an undercover Bank of America account that we established within HSI.
MR. TURNER: HSI is your agency?
MR. TURNER: Let me just be clear, the circles in these documents, where did these come from?
JARED DER-YEGHIAYAN: I added these circles to the images.
And so this is demonstrating the first initial wire transfers, that we have $7,000 in our bank account that we are transferring to it's an online bitcoin exchange that is called Mt. Gox at the time.
MR. TURNER: So Mt. Gox is the exchanger here?
MR. TURNER: OK.
JARED DER-YEGHIAYAN: So this is showing on April 5th of 2013 we are making a wire transfer, and the information for the wire transfer is provided by Mt. Gox on their page to say to initiate a wire transfer, send it to this bank and to this routing number. And then also included in the transfer description, which is below, this is a unique -- this M03291196X is unique to our Mt. Gox profile that we had already established.
MR. TURNER: So you are transferring $7,000 of real currency to Mt. Gox?
MR. TURNER: Go to the next page.
JARED DER-YEGHIAYAN: So if you zoom up on the top part, this is the Mt. Gox page. So this is, again, an undercover account that we established.
And what this reflects is after the wire transfer went through, it displayed that we had $6,989.34 in our account, that our fees that are assessed in the wire transfer, that we lost some money, but what it did is it credited our Mt. Gox account online with the money that we transferred.
MR. TURNER: Do you want to go to the next page.
JARED DER-YEGHIAYAN: In the center here, now that we have our money that is in our account, we are going to try to purchase bitcoins using that money. And we want to use the entire balance that we have of cash to purchase bitcoins. And so the website -- the amount value in bitcoin fluctuated very rapidly, so we were trying to do the math very quickly to purchase the exact amount of bitcoins that would equal the amount in our balance. So this is showing us putting in a buyer request for bitcoins using that money.
MR. TURNER: All right. So you had $6,989 and you were trying to spend it all to buy as many bitcoins as you could?
MR. TURNER: Which is how many bitcoins?
JARED DER-YEGHIAYAN: It came out to 27.4306907 bitcoins.
MR. TURNER: Then you clicked "buy bitcoins"?
JARED DER-YEGHIAYAN: I'm sorry?
MR. TURNER: Then you clicked "buy bitcoins"?
JARED DER-YEGHIAYAN: Yes. As soon as you put in the information for how many you want to buy and at what value amount, then you click "buy bitcoins."
MR. TURNER: The next page, please.
JARED DER-YEGHIAYAN: This is -- it reflects up in the right-hand corner now, after the order went through for our purchase, that we received 27.26610656 of bitcoins, and we also had a balance remaining in our account of $206.52 and some extra decimals that was reflected because the value of bitcoins changed in the middle of our order when we placed it. That is how fast it changed on us.
MR. TURNER: So now you have 27.26 bitcoins. What did you do next?
JARED DER-YEGHIAYAN: After this then I logged into our Silk Road account.
MR. TURNER: Next page, please. Could you go all the way over, Mr. Evert, to capture the user name. Thank you.
MR. TURNER: All right. So this is an undercover account you had on Silk Road?
JARED DER-YEGHIAYAN: Yes. This is an account that I took over.
MR. TURNER: What was the user name of the account?
JARED DER-YEGHIAYAN: The account was "dripsofacid."
MR. TURNER: Reflected over here?
MR. TURNER: Go ahead.
JARED DER-YEGHIAYAN: So this is just showing beforehand, before we actually transferred our bitcoins, how much was in our account.
On the left-hand side I circled in red, and it shows that we had now -- I should explain this, too, is that Silk Road had the option to display to you various currencies. So it wouldn't just show in bitcoins. You could set it to show you in dollar amounts or show in Euro or show in various currencies. So this account when we took it over it was already set to display in U.S. currency. So up in the top it is showing that we had a-dollar-89 already in that account and that was in there once we took it over.
MR. TURNER: Next page, please.
JARED DER-YEGHIAYAN: And so after clicking the account but in that, where I just showed you where the 1.89 was, it would take you to a page like this where I circled -- if I wanted to make a deposit of bitcoins, you would simply have to click on those green words, "Click here to make a deposit."
MR. TURNER: Next page, please.
JARED DER-YEGHIAYAN: And then this page would come up after you click that, and down below I circled what it is telling me is once basically you are ready to send the bitcoins, send it to this bitcoin address.
MR. TURNER: We haven't heard this term before. Could you explain what a bitcoin address is?
JARED DER-YEGHIAYAN: So a bitcoin address, which is up here on the screen, it is essentially like a bank account number. You can think of it that way, where it is a unique number that is what allows basically the bitcoin network to transfer bitcoins to and from.
MR. TURNER: Is it an account at a bank?
JARED DER-YEGHIAYAN: No, it is not an account in a bank.
MR. TURNER: What is it an account on?
JARED DER-YEGHIAYAN: It is an account that exists so the bitcoin has it's called a block chain and it's what is its internal ledger that basically documents all transactions to and from. That is how it keeps track of basically who has what money where and what accounts and what money where. It is basically using these addresses, and they are all part of what's called, it is the block chain.
MR. TURNER: So let's just back up. Is bitcoin controlled by like a government? Is it a government-issued currency?
JARED DER-YEGHIAYAN: No, it is not.
MR. TURNER: Is it controlled by a single company? Is there a bitcoin.inc that controls the whole thing?
JARED DER-YEGHIAYAN: It's not one company. It is completely decentralized.
MR. TURNER: When you say "decentralized," what does that mean?
JARED DER-YEGHIAYAN: That means that it is not owned by any government or one entity.
MR. TURNER: So the computers that run the bitcoin network, who are they owned by?
JARED DER-YEGHIAYAN: It is public. It is something that you could download, and once you download the program you become a part of the network itself. And the block chain itself is contained within that program.
MR. TURNER: So if you have a transfer of money from one bank to another, who keeps tracks of that information in the ordinary financial world?
JARED DER-YEGHIAYAN: Generally the bank does.
MR. TURNER: So if you have money transferred from one bitcoin address to another, how is that information kept track of if there is no one central authority like a company or country?
JARED DER-YEGHIAYAN: So the transactions are recorded within the network. It's recorded within that block chain, and since the block chain exists on every computer that runs that program, it constantly self-updates. So every transaction it will self-update the block chain on everyone's computer, basically. So the block chain is constantly updated with every transaction.
MR. TURNER: Is there a single block chain that is used throughout the network or are there multiple ones?
JARED DER-YEGHIAYAN: It is a universal single block chain that everybody uses.
MR. TURNER: All right. So the screen says "Once you are ready send your bitcoins to this address." What did you do next?
JARED DER-YEGHIAYAN: So from this page I copied that bitcoin address, and then I went back to my Mt. Gox page that I had to initiate a wire -- initiate a transfer.
MR. TURNER: Turn to the next page, please, Mr. Evert.
Could you just walk the jury through this page?
JARED DER-YEGHIAYAN: So this is back on the Mt. Gox page. I then took that same address that Silk Road gave me to deposit the bitcoins. I entered it in to where it asked for a bitcoin address. And then I entered in the amount that I want to transfer, which is the entire balance that was in our account at the time. And we also clicked an option to pay a fee so we would have faster processing so it wouldn't remain there for -- the transaction would basically go quicker.
And then once you entered that information, you click "confirm." And what it says is the transaction -- that's what's down below in the green -- it says "Transaction is underway" and it gives you a transaction ID number.
MR. TURNER: That transaction ID number, what is that an ID number for?
JARED DER-YEGHIAYAN: The long string is a unique transaction ID number that is created and generated and it is also on the block chain as well.
MR. TURNER: OK. So you said before that every time you do a bitcoin transaction, remind me, what happens to the block chain?
JARED DER-YEGHIAYAN: The block chain updates.
MR. TURNER: So could you turn to the next page, please. What are we looking at here?
JARED DER-YEGHIAYAN: So this is a public website. It is blockchain.info. This is one of several websites that you could use to actually search the block chain. It is a way that it basically visualizes what transactions actually are on there. So from block chain all you have to simply do is search the bitcoin address that you just -- you transfer any bitcoin address and it will tell you all the transactions in it.
MR. TURNER: I'm sorry. Mr. Evert, could you actually back out of there. Could you zoom up here, please?
That's fine.
MR. TURNER: So this address right here, what is that address?
JARED DER-YEGHIAYAN: That is the same address that Silk Road provided us. And this is an example of what would display normally on blockchain.info after you searched for a bitcoin address.
MR. TURNER: So you searched for that address -- back out, please -- and do you see your transaction from Mt. Gox reflected anywhere in the block chain here?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: Which one is it?
JARED DER-YEGHIAYAN: It's -- so the second arrow from the top down, or the second arrow up in the middle there, that would be our transaction that we did that day. It is the same transaction ID number on the upper left.
MR. TURNER: There?
JARED DER-YEGHIAYAN: Yes. It is same date that we initiated the transfer, which is April 10, 2013, as well as the same bitcoin amount that is 27.26 and some change bitcoins.
MR. TURNER: So where is the address that you sent the money to?
JARED DER-YEGHIAYAN: It's where the arrow is pointing to. Blockchain.info will try to make it as user friendly as possible. So it will tell you from what account or accounts bitcoins were transferred to another account. In this instance it is showing that there are four accounts that actually made that transfer of 27 bitcoins to our Silk Road account.
MR. TURNER: So there are four addresses on the side. Who did those addresses belong to? Who are they controlled by?
JARED DER-YEGHIAYAN: Those are Mt. Gox's.
MR. TURNER: And this one was controlled by what?
JARED DER-YEGHIAYAN: This would be Silk Road.
MR. TURNER: On the block chain itself, was there any -- is there any information that ties those addresses on the left to Mt. Gox?
JARED DER-YEGHIAYAN: No, there is not.
MR. TURNER: Or this one to Silk Road?
JARED DER-YEGHIAYAN: No, there is not.
MR. TURNER: Is there any information on the block chain itself that ties any of this money to you?
JARED DER-YEGHIAYAN: No, there is not.
MR. TURNER: The next page, please.
JARED DER-YEGHIAYAN: And so this is showing, after we initiated the transfer, the account history -- there is an account history page on Silk Road that will tell us that we in this case deposited bitcoins into the address that is provided, the bitcoin address, and it is reflecting that total of 27.27 bitcoins were credited. It also rounds up on that page; it doesn't show the entire balance. And then it shows the date, which is April 10th, 2013. And up above that I also circled -- it shows what the value is in your account at the time, which is $6,522.
MR. TURNER: So by this point have all the bitcoins that you bought from Mt. Gox been transferred over to Silk Road?
MR. TURNER: Again, as part of that, has Silk Road received any identifying information about you?
JARED DER-YEGHIAYAN: No, they have not.
MR. TURNER: Next page, please.
JARED DER-YEGHIAYAN: And this is a screenshot, then, that we took of the item that we were going to try to purchase and we did purchase. It was a thousand pills of ecstasy that it was -- the cost of it, since we asked for it to display in dollars, was $5,499.99, and this was particularly coming from a vendor by the name of supertrips who was advertising that he shipped from Germany and shipped worldwide.
MR. TURNER: How did you initiate the purchase?
JARED DER-YEGHIAYAN: So once you find a product within Silk Road, such as we did here, all we had to do was click on right next to the dollar amount, the "Add to cart."
MR. TURNER: And then what happened?
MR. TURNER: Would you go to the next screen, Mr. Evert.
JARED DER-YEGHIAYAN: And then after you hit "Add to cart," on the upper right-hand side there is a -- let me use my laser pointer -- there is a shopping-cart-like image, and it is now reflecting that we have one item in our shopping cart. And if you click on that it would take you to a page such as this that then would list the product that you added to your shopping cart, and we added in this instance the thousand pills of ecstasy.
It gives you options on how you want it shipped. There is different shipping. In this case there is free worldwide shipping offered by this vendor. The only thing that we had to do is down below enter in a name and address and then a PIN number and then click "Place order."
MR. TURNER: And the name that you provided, was that a real name?
JARED DER-YEGHIAYAN: That was an undercover name.
MR. TURNER: Did users have to verify their name in any way in making Silk Road purchases?
JARED DER-YEGHIAYAN: No, they did not.
MR. TURNER: All right. The next page, please.
JARED DER-YEGHIAYAN: So this is a page that we took then after the transaction was complete, and it displays an order that we placed that has been verified. It assigned us a transaction ID number, which is that TX pound number, and it also gives you a status for your order, which in this case it is processing. And then up above you could see that our account now has been debited the amount of $5,499.
MR. TURNER: So after you placed the order, would the purchase money immediately be transferred to the seller?
JARED DER-YEGHIAYAN: No, it would not.
MR. TURNER: And why not? What would happen to it?
JARED DER-YEGHIAYAN: Once an order was placed, it would go into an escrow account that Silk Road maintained.
MR. TURNER: What does "escrow" mean?
JARED DER-YEGHIAYAN: Escrow is just -- it is basically a middleman between you and the vendor, and Silk Road would act as that, the middleman.
MR. TURNER: And what was the function of putting it into escrow?
JARED DER-YEGHIAYAN: It was a way to help protect, I guess, the vendors and the buyers. So basically once that order was placed, the vendor would be notified that an order was placed and that would trigger them to ship the product, and once the actual buyer received it, then they would then tell Silk Road that they received the order and then they would release the funds basically to them. If they never got the item, then they could dispute it within Silk Road to get their money back.
MR. TURNER: And if you did get the product, what would you do to send the money to the vendor?
JARED DER-YEGHIAYAN: It's called "finalizing" on the website, that you would click a button which says "Finalize." So you have the option of doing that almost right away. You could finalize an order and give the vendor the money right away if you really trusted them, or if there is an instance where the vendor might require it, that would be something that you had the option of doing at any time.
MR. TURNER: Could you go to Government Exhibit 114, please.
Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: It is a screenshot I took.
MR. TURNER: Of what?
JARED DER-YEGHIAYAN: Actually, I'm sorry, it is a screenshot that I was present for, that I witnessed being taken.
MR. TURNER: And what is it a screenshot of?
JARED DER-YEGHIAYAN: This is a screenshot of the order page -- orders that we placed during an undercover purchase of drugs.
MR. TURNER: The government offers Government Exhibit 114 into evidence.
MR. DRATEL: No objection.
THE COURT: GX-114 is received.
(Government's Exhibit 114 received in evidence)
MR. TURNER: Could you pull the first three or four orders, Mr. Evert.
MR. TURNER: What does this page show?
JARED DER-YEGHIAYAN: These were orders that we placed during one of our undercover buys, and this reflects multiple orders that we placed all at the same time.
MR. TURNER: This includes, for example, the uncut crack cocaine that we saw before?
JARED DER-YEGHIAYAN: Yes, it does.
MR. TURNER: OK.
JARED DER-YEGHIAYAN: And this is -- so what it is showing us is each one is an individual transaction from a different vendor. And, for instance, the top one is -- we purchased one LSD blotter from a vendor by the name of fredthebaker, and the status of the order was in transit, which means that they had marked it as being shipped and mailed to us. And it was notifying us that that order went out and finalized within 17 days and that we had an option on the right-hand side to finalize or try to resolve an issue with the order.
MR. TURNER: Again, just to be clear, if the product comes, you click "Finalize"?
JARED DER-YEGHIAYAN: That would then release the funds to the vendor.
MR. TURNER: And if you click "Resolve," what happens?
JARED DER-YEGHIAYAN: The resolve option, once available, you could then go into almost like arbitration with the -- between Silk Road and the vendor, so basically you are going to try to resolve an issue that you have with the vendor.
MR. TURNER: Who were the arbitrators?
JARED DER-YEGHIAYAN: That would be Silk Road.
MR. TURNER: Was there like customer support staff that would do that?
JARED DER-YEGHIAYAN: There was customer support staff that was within Silk Road.
MR. TURNER: So if I am a buyer and I say that I don't get my drugs, what would the support staff do?
JARED DER-YEGHIAYAN: They would then do their own investigation into the transaction and review whatever history --
MR. DRATEL: I object, your Honor.
THE COURT: Sustained. You need to build a foundation for that.
MR. TURNER: Sure.
BY MR. TURNER:
MR. TURNER: Do you know what a customer support staff member would do in the event of a dispute?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you know?
JARED DER-YEGHIAYAN: I -- I was working as an administrator for a few months. I also kept routine, constant contact with other administrators that ran the customer support and would discuss those matters with them.
MR. TURNER: So based on that experience, what do you know that would happen in the event of a customer resolution dispute?
JARED DER-YEGHIAYAN: They would look into the transaction itself. They would review private messages between the buyer and the vendor, and they would try to -- they would also do, similar to what we did, which is go onto blockchain, see if everything matches, and basically see if the transaction was -- actually did occur the way it did. And then they would also probably review previous history, as well, with the vendor. If there is a history with them maybe not shipping product, then they may, you know, side against them. If there is a history of the buyer constantly claiming they never got something, then they would probably side with the vendor.
MR. TURNER: And how, if at all, would Silk Road make any money from these sales?
JARED DER-YEGHIAYAN: Silk Road made a commission on every transaction.
MR. TURNER: How do you know that?
JARED DER-YEGHIAYAN: Because it was publicly talked about by the people that -- the person that ran Silk Road as well as it was -- I tested it using a vendor account that I took over that I was able to create a listing and set a price for it, and once I looked at that same item then from a public standpoint, the value of that item went up to -- and it went up enough that matched what the advertised commission rates were.
MR. TURNER: So after a vendor would get paid, the payment would be in bitcoins, right?
MR. TURNER: What could the vendor do to then convert the bitcoins into real currency?
JARED DER-YEGHIAYAN: The vendor then would have to find an exchanger, and in almost the reverse of purchasing bitcoins, would have to then exchange the bitcoins for real currency.
MR. TURNER: And where could they do that?
JARED DER-YEGHIAYAN: The same exchange that we used, Mt. Gox, you could do that. There was various other exchangers that you could use, other companies similar to Mt. Gox. There is also options of selling the bitcoins. Even on the Silk Road site itself, you could sell them, exchange them for U.S. currency. You could exchange them for gold. You could exchange them for other things of item value. And you could even resell the bitcoins yourself on Silk Road as a vendor and exchange -- get cash in the mail.
MR. TURNER: So did you prepare any sort of flow chart to boil down how this whole payment system works that we have been talking about for the past half hour?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: Could you take a look at Government Exhibit 113A.
MR. TURNER: Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: What is it?
JARED DER-YEGHIAYAN: It's an example of how a Silk Road payment would be conducted.
MR. TURNER: Would it aid your testimony in explaining these concepts to show this chart to the jury?
JARED DER-YEGHIAYAN: Yes, it would.
MR. TURNER: We would ask to show the demonstrative to the jury, your Honor.
MR. DRATEL: No objection.
THE COURT: All right. You can go ahead and do that. It is received as a demonstrative.
(Government's Exhibit 113A received in evidence)
MR. TURNER: Mr. Evert, could you publish the exhibit.
MR. TURNER: Could you just walk us through step-by-step?
JARED DER-YEGHIAYAN: Sure. So starting up on this up here on the left-hand side, this basically reflects, again, as you saw with our example, when we have money in our bank account and you want to purchase bitcoins, if you have real currency, then you would go to an exchanger and you would exchange your money for bitcoins. And then once you exchange it, you then transfer it to your buyer account on Silk Road. And then you place an order for whatever item that you wish to buy from the website.
Once that order is placed, the bitcoins themselves are held in escrow by Silk Road. From that point, once the order is received and the buyer marks it as being finalized, he will then -- then Silk Road will get its commission rate, and then the vendor is paid their money so the bitcoins are released to the vendor.
From the vendor, then if they want to now get their money or transfer their bitcoins and make it into money, they would do something similar where they would then go to an exchanger and they would receive their cash.
(Continued on next page)
MR. TURNER: Your Honor, I have another transition point if the Court wants to take a break.
THE COURT: Let's go ahead and take a mid-morning break. Ladies and gentlemen, let me give you a sense as to how the schedule will work this morning so you'll predict when your breaks are.
We'll take a break now for about seven- to eight minutes, how ever long it takes you folks to get yourselves -- stretch your legs and then get back in order to come back into the room. Then we're going to take lunch today and every day from 12:45 until 2:00, about an hour and 15 minutes for lunch. So we won't take a break unless somebody needs to after this one this morning until we take our lunch break. Obviously, if you need to take a break at any time, make eye contact with me or Joe and we'll take an extra break if we need to.
That's the schedule. Let's take a short break now. I want to remind you not to speak to each other or anybody else about anything having to do with this case.
Thank you.
(Jury excused)
(Continued on next page)
(In open court; jury not present)
THE COURT: Let's all be seated.
I have one matter I want to raise. I want to note that for the evidentiary objections, most of the -- all of them have so far been dealt with in my motion in limine ruling and I just wanted to make sure that I had connected what the receipt of those materials connects to.
There's an exception, which is Government Exhibit 108 had not been objected to as part of the pretrial process, nevertheless, as I had indicated pretrial, if there are things which arise which change what you might not have thought was an objectionable document and it becomes an objectionable document, then I'm nonetheless willing to entertain that, but in general, I'll be following the objections lodged on the pretrial order and if it becomes important to do so or appropriate to do so, I'll be questions why there's been a change. Sometimes it's just an oversight because there's a long list of similar documents and 108 was of that type.
That is what I had wanted to put on the record. Let me just state I think that, so that's it's clear, that the listings that are coming on were referred to by the government as listings that indicated particular narcotics, etc., not as simply text on a page which had the word for those narcotics and therefore, they fall under the coconspirator exception of the hearsay rule and that's the basis for allowing them in for the truth. They're obviously directly relevant to the government's charges in this case: So that connects up to the in limine ruling which went through the rationale and case law in some more depth.
Is there anything that you folks would like to put on the record at this time or otherwise raise?
MR. TURNER: No. Thank you.
MR. DRATEL: No, your Honor. Thank you.
THE COURT: Let's take our own brief break. Thank you.
COURT CLERK: All rise.
(Recess)
(Continued on next page)
(In open court; jury present)
THE COURT: Let's be seated.
Mr. Turner, you may proceed, sir.
MR. TURNER: Thank you.
MR. TURNER: So Mr. Der-Yeghiayan, you mentioned before you did some undercover buys on Silk Road?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: Approximately how many did you do?
JARED DER-YEGHIAYAN: Over 50.
MR. TURNER: Did you focus on vendors selling from outside the United States or inside the United States?
JARED DER-YEGHIAYAN: Mostly outside the United States.
MR. TURNER: Why was that?
JARED DER-YEGHIAYAN: Being that we were working at the international mail hub and we were receiving in so many international shipments, that's what we were focused on.
MR. TURNER: Can you take a look at what's been marked as Government Exhibit 103A. Do you recognize the pages in this document? Tell me when you're there.
JARED DER-YEGHIAYAN: 103A? Yes.
MR. TURNER: How do you recognize them?
JARED DER-YEGHIAYAN: As a screen shot that I took and as well as photographs that I was -- I witnessed.
MR. TURNER: And what are they screen shots and photographs concerning?
JARED DER-YEGHIAYAN: Screen shot of a purchase of drugs that we did, undercover purchase from Silk Road and also the drug that we received.
MR. TURNER: Your Honor, the government offers Government Exhibit 103A into evidence.
MR. DRATEL: Just the previous objection.
THE COURT: All right. Government Exhibit 103A is received.
(Government's Exhibit 103A received in evidence)
MR. TURNER: Could you walk us through what these pages reflect.
JARED DER-YEGHIAYAN: So this is a screen shot from Silk Road of an item that we purchased, that I purchased that was from a seller that was from the Netherlands. The seller went by the name of uglydoll, and we were purchasing brown heroin, and it's .2 grams.
MR. TURNER: Next page.
JARED DER-YEGHIAYAN: This is a photograph of an envelope that I retrieved from our undercover P.O. box that was addressed as we -- same name, same address that we put in our order. And I also know this came from the Netherlands, that's in the next photograph, based upon the stamp that's on there, and that it's also -- there was a stamp over it that shows it came from the Netherlands. The next page.
MR. TURNER: What did you find inside?
JARED DER-YEGHIAYAN: So inside of it, once we opened up the envelope, there was a blue piece of paper that was in there that was taped together. So the next photograph shows us after we cut into the blue piece of paper, and behind that or inside of it, I should say, was a vacuum-sealed clear plastic bag that also contained multiple other plastic bags that had a brown powder substance that later tested positive for heroin.
MR. TURNER: Go on to Government Exhibit 103B. Do you recognize these pages?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: What are they?
JARED DER-YEGHIAYAN: It's a screen shot that I witnessed for a control buy and then also photographs that I witnessed when we seized some drugs.
MR. TURNER: The government offers Government Exhibit 103B into evidence.
MR. DRATEL: Same objection. Can we just get a date on this?
MR. TURNER: Sure.
MR. TURNER: Do we have a time frame for these photos?
JARED DER-YEGHIAYAN: The screen shot was taken March 6, 2013 and then the photographs were taken on March 19, 2013.
THE COURT: All right. Government Exhibit 103B as in boy is received.
(Government's Exhibit 103B received in evidence)
MR. TURNER: Is this the same crack cocaine that we saw earlier?
JARED DER-YEGHIAYAN: This is the same.
MR. TURNER: Did you try to purchase the product?
JARED DER-YEGHIAYAN: Yes, we did.
MR. TURNER: What happened?
JARED DER-YEGHIAYAN: So, this order was placed. And then shortly thereafter, it was about two weeks later, we received this envelope in the mail and it came from Germany, so those are German stamps on the outside.
The vendor himself advertised actually that they would ship from the Netherlands, but what we found inside was the addressee -- I'm sorry, two screen shots, the next one -- the addressee had a German address and they're a German company. It says company Indoor Play.
MR. TURNER: Is this the return address?
JARED DER-YEGHIAYAN: This is the return address on the package on the outside. But if you turn to the next page, this is also found inside the envelope that showed that the item was mailed through Postnl, which is for the Netherlands mail system.
MR. TURNER: They used a German stamp and mailed it through the Netherlands mail system?
JARED DER-YEGHIAYAN: Yes. And it was addressed to our undercover name and our undercover P.O. box.
MR. TURNER: Next page, please.
JARED DER-YEGHIAYAN: So this is the reverse side of the envelope showing you the envelope and then the next photograph shows you just sort of size, we put a pen there that wasn't with the package, as well as what was inside of it, which was -- showed several sheets of paper. And the next shot shows us, when you open the piece of paper, there was a piece of black foil that was in there that appeared to have items inside of it.
MR. TURNER: Was this sealed in any way?
JARED DER-YEGHIAYAN: It was vacuum-sealed. And the next photograph, once you cut open into this black vacuum-sealed foil, it had a clear plastic baggie, which contained a white, crystal-like substance that later on tested, and that's the next photograph, field-tested positive for cocaine using the reagent test kit.
MR. TURNER: So how many undercover purchases in total, again, like this did you make?
JARED DER-YEGHIAYAN: Over 50.
MR. TURNER: And how many different dealers did you order from?
JARED DER-YEGHIAYAN: At least over 40.
MR. TURNER: And how many different countries were they from?
JARED DER-YEGHIAYAN: From approximately about ten or so.
MR. TURNER: And how many of the orders resulted in shipments being sent to the address you supplied?
JARED DER-YEGHIAYAN: Nearly all of them.
MR. TURNER: How many contained what appeared to be drugs?
JARED DER-YEGHIAYAN: Nearly all of them.
MR. TURNER: Did you send what you received to the lab for testing?
JARED DER-YEGHIAYAN: Yes, we did.
MR. TURNER: And how many tested positive for the drug they were supposed to be?
JARED DER-YEGHIAYAN: Nearly all with I think an exception of one or two.
MR. TURNER: Could you turn to Government Exhibit 801, please.
MR. TURNER: 801.
MR. TURNER: Your Honor, actually, this is just a stipulation.
JARED DER-YEGHIAYAN: I don't --
MR. TURNER: I'd like to read in a stipulation between the parties marked as Government Exhibit 801A. It concerns another Exhibit 801.
THE COURT: Let me just explain to the ladies and gentlemen of the jury what a stipulation is. A stipulation is an agreement reached between the government and the defendant and his counsel regarding certain facts and you can accept those facts as stated in the stipulation as true.
You may proceed, Mr. Turner.
MR. TURNER: Can you publish Government Exhibit 801A, Mr. Evert.
It is hereby stipulated and agreed by and between -- a little bigger so I can read it, thank you -- by and between the United States of America, by Preet Bharara, United States attorney for the Southern District of New York, Serrin Turner and Timothy Howard, Assistant United States Attorneys, of counsel, and Ross Ulbricht, by and through his counsel, Joshua Dratel, Esq., as follows:
If called to testify, Heather M. Miller, a senior forensic chemist with the Drug Enforcement Administration, would testify that:
1. Government Exhibit 801 is a summary chart reflecting 52 substances that were submitted for laboratory testing to the DEA North Central Laboratory in Chicago, Illinois by Homeland Security Investigations Special Agent Jared Der-Yeghiayan.
(a) The column labeled "Seizure Number" indicates the seizure number associated with the substance.
Mr. Evert, can you put up Government Exhibit 801 underneath here. Zoom in in the first few lines.
(b) The column labeled "Seizure Number" indicates the seizure number associated with the substance.
(c) The column labeled "Date Analyzed" indicates the date the substance was laboratory tested.
(d) The column labeled "Net Weight" indicates the weight of the substance submitted for testing, after removal of any packaging.
And to the next page. You can zoom in past paragraph two there. That's fine.
(e) The column labeled "Drug Detected" indicates any illegal drugs the substance was found to contain through testing a sample of the substance, using reliable laboratory procedures.
(f) The columns labeled "Purchase Date" and "Vendor" reflect information provided by Special Agent Der-Yeghiayan concerning the date when each substance was purchased from the Silk Road website and the vendor from whom the purchase was made.
2. As reflected in Government Exhibit 801, all but one of the 52 substances tested positive for illegal drugs.
So taking a look at Government Exhibit 801, can you confirm that in the second and third columns "purchase date" and "vendor" accurately reflect the dates of your purchases and the vendors you purchased them from?
JARED DER-YEGHIAYAN: They do.
MR. TURNER: So the government moves 801 and 801A into evidence, your Honor.
MR. DRATEL: No objection.
THE COURT: Received.
(Government's Exhibits 801 and 801A received in evidence)
MR. TURNER: Now, besides illegal drugs, were there any other illegal goods sold on the Silk Road website as well?
JARED DER-YEGHIAYAN: Yes, there was.
MR. TURNER: And in particular, do you know whether fake IDs were offered for sale on Silk Road?
JARED DER-YEGHIAYAN: Yes, they were.
MR. TURNER: And where were those offers found?
JARED DER-YEGHIAYAN: There was a forgeries category on Silk Road.
MR. TURNER: Can you take a look at what's been marked as Government Exhibit 116A, please.
JARED DER-YEGHIAYAN: Okay.
MR. TURNER: Do you recognize this exhibit?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: It is a screen shot that I took from the forgery section of Silk Road on August 4, 2012.
MR. TURNER: The government offers Exhibit 116A into evidence.
MR. DRATEL: The same objection.
THE COURT: Government Exhibit 116A is received.
(Government's Exhibit 116A received in evidence)
MR. TURNER: So you said this was from a forgery section of the website. Where is that located on this page?
JARED DER-YEGHIAYAN: In the upper left-hand corner under the categories list, it reflects that there's a forgery section which included fake IDs and passports.
MR. TURNER: And could you just walk us through what's reflected on the right-hand side, what sort of offerings are there?
MR. TURNER: Can you zoom in a little bit, Mr. Evert.
JARED DER-YEGHIAYAN: I can read off here, too. There's the, like, the top listing is for a UK driver's license, which also advertises that there's holograms on it and it's scannable, as well as forged prescription labels that can be customized, as well as it says 100-percent tested working, printable coupon collection, and then an official UK passport, as well as UK driver's license photo card and that comes with, it says, it advertises with a UV as well as hologram and a Polish national ID card.
MR. TURNER: How common was it for you to see listings like this for fake IDs, passports?
MR. DRATEL: Objection.
THE COURT: Why don't you restate.
MR. TURNER: Sure.
MR. TURNER: Was this the only time you saw offerings like this on the website or not?
JARED DER-YEGHIAYAN: No. From the beginning of my investigation until the end, there was a forgery section.
MR. TURNER: Did you come across -- did you ever come across any offerings relating to computer hacking on Silk Road?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: Where on the website would you see those?
JARED DER-YEGHIAYAN: Under various categories. There's a digital section as well as, like, other, like, computer equipment type of sections.
MR. TURNER: Anything else in the other sections that it would appear in?
JARED DER-YEGHIAYAN: If I had -- let's see here. I think it was digital goods and electronics.
MR. TURNER: Could you take a look at what's been marked as Government Exhibit 116B. Do you recognize this exhibit?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: It's a screen shot that I took from Silk Road of a hacking tools listing.
MR. TURNER: The government offers Government Exhibit 116B into evidence.
MR. DRATEL: The same objection.
THE COURT: Government Exhibit 116B is received.
(Government's Exhibit 116B received in evidence)
MR. TURNER: Can you zoom in up at the top, Mr. Evert.
MR. TURNER: Okay. So, it says huge hacking pack, 150 plus hacking tools and programs.
MR. TURNER: Then, Mr. Evert, can you scroll down. That's fine.
MR. TURNER: The description is huge 3GB plus action pack, it's probably the best deal on Silk Road to date, no, this is not a pack full of outdated, ineffective programs, all software files have been updated in the past two months and are guaranteed to work. I'll read a few of them account creator, admin page finder, aircracking for Windows, anonymous high orbit canon.
Can you go all the way down.
This pack includes almost every hacking-related tool available from white-hat (clean code) to black-hat (SpyEye, ZeuS, etc.) I will continuously be compiling and updating this pack. I will also be raising the price of this pack to $50 in the next month.
To the only person that gave something other than 5/5.
1/5 got virus in it.
Are you serious? You purchased a hacking pack loaded with keyloggers, RATS, banking Trojans and other various malware. If that doesn't set off AV, I don't know what will. If you're still unsure of the programs, run in a VM or Sandboxed. Please don't purchase my listings if you lack common sense. If you have any questions, feel free to send a message. sniffsniff.
Do you know, by the way, what malware means?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: What does it mean?
JARED DER-YEGHIAYAN: It's a program that it's, like, a virus basically that will be placed on a computer.
MR. TURNER: What does AV mean in this context? Do you have any idea?
JARED DER-YEGHIAYAN: I don't know -- or antivirus, I guess, actually. Sorry.
MR. DRATEL: Objection. Well --
THE COURT: Hold on. Is it withdrawn?
MR. DRATEL: Yes.
THE COURT: All right. Thank you.
You may proceed.
JARED DER-YEGHIAYAN: Sorry. Antivirus. A lot of acronyms.
MR. TURNER: So you said -- we covered all transactions on Silk Road had to be paid for in bitcoins. And I think you mentioned earlier that -- well, I'll just ask you, was there anywhere on Silk Road that you could go to in order to exchange bitcoins for cash or currency?
JARED DER-YEGHIAYAN: Yes, there was.
MR. TURNER: And where were those exchange services offered on the site?
JARED DER-YEGHIAYAN: There was a money section on Silk Road.
MR. TURNER: So, take a look at what's been marked as Government Exhibit 116C, please. Do you recognize this exhibit?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: It's a screen shot that I took of the money section, money category of Silk Road.
MR. TURNER: Time period do you have?
JARED DER-YEGHIAYAN: It's from August 4, 2012.
MR. TURNER: The government offers Government Exhibit 116C into evidence.
MR. DRATEL: Same objection, your Honor.
THE COURT: Government Exhibit 116C is received.
(Government's Exhibit 116C received in evidence)
MR. TURNER: Can you show us where the money categories is reflected here?
JARED DER-YEGHIAYAN: Again, on the upper left-hand side of the category, it shows that there's money, as well as subcategories within the money section of bullion, digital currencies and loans.
MR. TURNER: And can you zoom in, Mr. Evert, on the first two.
MR. TURNER: So did you look at the descriptions of offerings like these?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: And what sort of offerings -- what sort of things did they offer?
JARED DER-YEGHIAYAN: Well, for instance, this top listing here it says 20-dollar bill and that's -- essentially they'll -- you're buying a 20-dollar bill of bitcoins, so basically you're exchanging out your bitcoins for 20-dollar bills being mailed to you and the other --
MR. TURNER: To be clear, was it one 20-dollar bill being offered or could you just order as many as you like?
JARED DER-YEGHIAYAN: You can order as many as you like, but the price set was 2.35 bitcoins per 20-dollar bill, so you can buy multiple. There's an option to put multiple numbers when you're buying your listing depending on how many is available, of course.
MR. TURNER: And the next listings says "I will buy your extra bitcoins." To be clear, what's on the side there, what kind of coins?
JARED DER-YEGHIAYAN: The image is really hard to see here.
MR. TURNER: Are they actual bitcoins?
JARED DER-YEGHIAYAN: No, they're not.
MR. TURNER: Bitcoins are purely digital, right?
MR. TURNER: So it says "I will buy your extra bitcoins." What did offerings like that offer?
JARED DER-YEGHIAYAN: So this is a vendor that's offering to purchase bitcoins. So if there's any extra bitcoins remaining in someone's account after they boxed something and they don't want them anymore or they don't -- they can't use it to buy something else, then they could go to a vendor like this on Silk Road and basically transfer their bitcoins and they'd give them something of equivalent cash or something through the mail.
MR. TURNER: So if you're a drug dealer on Silk Road, what did offerings like this allow you to do?
JARED DER-YEGHIAYAN: So something like this would allow you to basically liquidate or launder your own proceeds that you were making as a vendor on Silk Road.
MR. DRATEL: Objection.
THE COURT: Sustained.
MR. TURNER: Without using legal characterizations, what did offerings like this allow a drug dealer on the site to do?
MR. DRATEL: Objection.
THE COURT: Sustained.
You can approach it differently, but you can't approach it that way.
MR. TURNER: Okay.
MR. TURNER: If you're a vendor on the site and you have a lot of bitcoins from your activity on the site, what did these offerings allow you to do with those bitcoins?
MR. DRATEL: I still object.
THE COURT: I'll allow this.
JARED DER-YEGHIAYAN: So, as a vendor on the site, a listing like this would be utilized to, if you earned bitcoin proceeds, to -- which every transaction is bitcoins, so all the money you're receiving for your drugs, you could then, instead of taking it offline off Silk Road and moving it to an exchange, you could just simply find a vendor like this on Silk Road and give them your bitcoins and they would then give you cash. You never really have to take your money off the website.
THE COURT: Let me just ask you whether or not you ever exchanged bitcoins for cash using Silk Road?
JARED DER-YEGHIAYAN: I never used it, but my other -- there are people that we -- accounts we took over that were doing that.
THE COURT: So in the course of performing your duties and responsibilities, you became familiar with the exchange of bitcoins for cash through Silk Road?
THE COURT: You may proceed.
MR. TURNER: Just to elaborate on that a little more, you took over an account that was engaged in this sort of activity?
JARED DER-YEGHIAYAN: Took over several accounts that were doing this.
MR. TURNER: And did you review the private -- did you review the activity reflected in that account after taking it over?
JARED DER-YEGHIAYAN: Yes, we fully recorded the account.
MR. TURNER: And how could you tell they were engaged in this sort of activity?
JARED DER-YEGHIAYAN: So, a few of the vendors that we took over, they had either direct listings that they would do things such as this or they would be buying from other vendors that were offering to purchase bitcoins, and we could see the transactions occur directly right on the site through their history as well as through their -- there's, like, private messages that they have.
MR. TURNER: Let's talk about those private messages. Besides enabling users to purchase items on the site, did Silk Road have any features that allowed users to communicate with one another?
JARED DER-YEGHIAYAN: Yes, there was.
MR. TURNER: And what was that system called?
JARED DER-YEGHIAYAN: It was called the private message system.
MR. TURNER: And how did it work?
JARED DER-YEGHIAYAN: It was a internal messaging, sort of similar to, like, emailing or sending messages between users.
MR. TURNER: Can you take a look at what's been marked as Government Exhibit 117A.
JARED DER-YEGHIAYAN: Okay.
MR. TURNER: Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: It's a screen shot that I took of an account that I took over on Silk Road.
MR. TURNER: What part of the account?
JARED DER-YEGHIAYAN: This is the overview of and the in box of that user's messaging -- the messaging system.
MR. TURNER: The government offers Government Exhibit 117A into evidence.
MR. DRATEL: No objection.
THE COURT: Government Exhibit 117A is received.
(Government's Exhibit 117A received in evidence)
MR. TURNER: Actually, let me clarify. You talked about taking over accounts, right?
MR. TURNER: And among the accounts you took over were vendor accounts?
MR. TURNER: And what did you do with those vendor accounts that you took over?
JARED DER-YEGHIAYAN: When we took over the vendor accounts, we'd fully document them, so we'd go through all of the different available options and all of the information, the history that was on the account. Sometimes we'd leave it up for a day or two, but we wouldn't actually -- after that, we would then shut it down.
MR. TURNER: You never used the accounts actually to sell drugs in an undercover capacity?
JARED DER-YEGHIAYAN: No, we did not.
MR. TURNER: All right. Could you explain what is reflected in Government Exhibit 117A.
MR. TURNER: Mr. Evert, can you zoom in a little bit and include the in box on the side there. Thank you.
JARED DER-YEGHIAYAN: So on the left-hand side, it's bold, sort of hard to see. The in box, it just reflects that we're in an in box right now. There was also a section for unread messages and those are usually highlighted bold as well on your in box. And then there was a sent section, as well as a bulk reply section. So if you want to reply to multiple users at the same time, you could reply to multiple users.
MR. TURNER: And if you clicked on one of the messages, what would show up?
JARED DER-YEGHIAYAN: On this instance, if you click on the message, the message that was sent from that user would appear.
MR. TURNER: Take a look at Government Exhibit 117B. Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: As a screen shot that I took, again, in the same account that I took over from May 17, 2013.
MR. TURNER: The government offers Government Exhibit 117B into evidence.
MR. DRATEL: The same objection.
THE COURT: Government Exhibit 117B is received.
(Government's Exhibit 117B received in evidence)
MR. TURNER: What's reflected here?
JARED DER-YEGHIAYAN: This is logged in as that same user that was on the previous.
MR. TURNER: To be clear, where is that username located?
JARED DER-YEGHIAYAN: On the upper right-hand corner it says hi and then the username in bold. This is -- once clicked into one of the messages, this one in particular on the upper left-hand corner it says from the user SuperTrips, so this is a dialogue between that user account and SuperTrips.
And basically, there's a dialogue box that you can enter your message and then there's a history of messages below it. And the history is basically from the most recent received which is at the top down to the oldest message at the bottom.
MR. TURNER: It's like an email chain basically?
JARED DER-YEGHIAYAN: It's like an email chain; yes.
MR. TURNER: Can you zoom out.
MR. TURNER: And if you want to reply to the email chain, what do you do?
JARED DER-YEGHIAYAN: In the dialogue box up above, you would just simply enter a message and then click the button go.
MR. TURNER: In what other ways did Silk Road use to communicate with one another?
JARED DER-YEGHIAYAN: There was also the forum that were available from Silk Road.
MR. TURNER: And what do you mean by forums?
JARED DER-YEGHIAYAN: So there was a totally separate website that was a forum, an online forum where you could post messages and threads and you could discuss anything basically with other users.
MR. TURNER: What do you mean by threads? Can you just explain to the jury what that concept is.
JARED DER-YEGHIAYAN: So basically, as a user on an online forum, you could sign up to become a user. And if you ever wanted to post a message to everybody, it's called a thread. So you basically start a dialogue box with the entire community and so you create a thread. You can say whatever you want and then any user could reply to that thread in what's referred to usually as posts. So posts would follow in a thread.
MR. TURNER: So your public conversation?
MR. TURNER: How would you get to these forums?
JARED DER-YEGHIAYAN: The forums, there was a link on the marketplace to get to it at the bottom.
MR. TURNER: So when you say marketplace, what do you mean?
JARED DER-YEGHIAYAN: Silk Road itself generally referred to as marketplace and then the Silk Road forums were referred to as Silk Road forums.
MR. TURNER: The marketplace -- let's take a look back at Government Exhibit 132.
Is this the marketplace?
JARED DER-YEGHIAYAN: This is the marketplace.
MR. TURNER: Why don't you just -- up in the top left corner there's a green camel sort of logo. Was that affiliated with Silk Road?
JARED DER-YEGHIAYAN: Yes, it was.
MR. TURNER: Was it on every page of their website?
JARED DER-YEGHIAYAN: Yes, it was.
MR. TURNER: And where is the link to the community forums, the discussion forums?
JARED DER-YEGHIAYAN: Bottom right-hand corner that says community forums and that would be a link to take you to the forums, which were also another hidden service on Tor. It's another dot-onion URL.
MR. TURNER: Can you take a look at what's been marked as Government Exhibit 118, please.
JARED DER-YEGHIAYAN: Okay.
MR. TURNER: Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: It's a screen shot that I took of the Silk Road forums.
MR. TURNER: What date?
JARED DER-YEGHIAYAN: From December 27, 2012.
MR. TURNER: The government offers Government Exhibit 118 into evidence, your Honor.
MR. DRATEL: The same objection, your Honor.
THE COURT: Government Exhibit 118 is received.
(Government's Exhibit 118 received in evidence)
MR. TURNER: So what's reflected here?
JARED DER-YEGHIAYAN: So this is -- these are the forums and each one of those yellow lists or yellow categories is a separate subforum. So the first one is Silk Road discussion and there are subforums on security, subforums on shipping, drug safety and so on. And these -- each one of those subforums would contain the threads that users wanted to post in that -- in those particular arenas.
MR. TURNER: And was membership on the forums included when you signed up for an account on the Silk Road marketplace or did you have to create a separate account on the forums?
JARED DER-YEGHIAYAN: The forums themselves weren't connected to the marketplace by username. You would have to create another username and password to access the forums.
MR. TURNER: And did you yourself have any accounts in the forums during your investigation?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: Did you familiarize yourself with the sort of postings that appeared there?
JARED DER-YEGHIAYAN: Yes, I did.
MR. TURNER: So just explain a little more. What sort of things would people post about in these various categories?
JARED DER-YEGHIAYAN: So, for instance, like, the Silk Road discussion forum would have general discussions about the Silk Road, anything that had to do with the market for the most part, any type of gossip that revolved around the market, there would be pretty much an overview type of discussion, or anything that was really popular, that's where you'd generally find a lot of the dialogue, in that forum.
And the security subforum, you'd find topics or as it says in there about Tor, about bitcoins, about trying to keep your computer secure in the sense of trying to still remain anonymous while operating online.
There's also a shipping category where you'd find a lot of different threads talking about how to ship things safely to your house or how to not be detected, different ways to conceal packages, different ways to avoid Customs, different ways to avoid law enforcement, what to do if law enforcement does deliver something to you and how to react.
And then there was also a drug safety forum where they try to discuss how to use drugs safely and how to -- just different affects of different types of drugs.
As well as a philosophy section, and it's economics and law where there was a lot of different philosophical discussions, all based around different things.
And then an off-topic section where there were a lot of posts about -- and threads about pretty much anything. Anything pretty much was okay there.
MR. TURNER: Can you scroll down, please.
THE COURT: Can you date when this screen shot was taken?
JARED DER-YEGHIAYAN: Yes, your Honor. It was December 27, 2012.
THE COURT: All right. Where do you get that information from?
JARED DER-YEGHIAYAN: It's from the meta data that's on the next page on the right-hand side, so the picture properties.
THE COURT: All right. Thank you.
MR. TURNER: Just briefly, let's take product offers in the middle, what was posted there?
JARED DER-YEGHIAYAN: In product offers, the vendors from Silk Road, a lot of them had accounts on here on the forums that would post different products that they would either have for sale, they'd write up their own reviews, they'd discuss them on there, they liked to have threads that are up there for people to ask questions about.
MR. TURNER: Can you take a look at Government Exhibit 118A. Do you recognize this document?
JARED DER-YEGHIAYAN: This is another screen shot I took of the forums. This is inside the product offers subcategory or subforum taken December 27, 2012.
MR. TURNER: The government offers Government Exhibit 118A into evidence.
MR. DRATEL: Same objection, your Honor.
THE COURT: All right. Government Exhibit 118A is received.
(Government's Exhibit 118A received in evidence)
MR. TURNER: Briefly, could you explain how the structure of the forums worked here. Where are we in the forums?
MR. TURNER: Go ahead, Mr. Evert.
JARED DER-YEGHIAYAN: This would be after clicking into one of the subforums. If we clicked on the product offer forum, it would take us to a page that would look like this that then would display the most recent threads from top to bottom.
And so, if a user would post a message on any particular thread, that thread would automatically go to the top of the page. There were threads that were referred to as being sticky, which then were stuck to the top and in this instance, that was reflected in the yellow color. So that first thread that's up on there, it says "to list offers in product offered section of forums," that was a sticky thread by one of the moderators of the forum; and then there was also -- then all of the threads underneath it were ones that were the most recent threads.
MR. TURNER: So then you click on a thread, then what happens?
JARED DER-YEGHIAYAN: You click on a thread and it opens up and there would be the first initial post of the thread. And you can read through and if there's multiple pages, it would be indicated sort of -- on this page, too, you can see "1, 2, 3...14," that means there's 14 pages of posts in that particular thread.
MR. TURNER: Let's look at Government Exhibit 118B, please.
THE COURT: Before we leave Government Exhibit 118A, did you yourself click on some of these threads.
JARED DER-YEGHIAYAN: Yes, I did.
THE COURT: And they performed as you stated?
JARED DER-YEGHIAYAN: Yes, I did.
THE COURT: And if you turn back to Government Exhibit -- I'm sorry. That was Government Exhibit 118A. If you turn back to Government Exhibit 118, did you, in fact, determine whether or not the content of any of these topical references, in fact, contained words that were consistent with that content?
JARED DER-YEGHIAYAN: Yes, I did, your Honor.
THE COURT: All right. Thank you.
Now, you can proceed, Mr. Turner.
MR. TURNER: Along those lines, how many hours would you say you spent on the Silk Road forums?
JARED DER-YEGHIAYAN: Probably thousands.
MR. TURNER: Can you take a look at Government Exhibit 118B, please. Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: It is a screen shot that I took of a thread that was in the rumor mill section of the forum.
MR. TURNER: We offer Government Exhibit 118B into evidence.
MR. DRATEL: Objection also, your Honor, with respect to the date.
THE COURT: Yes. Let's hold on 118B. Can you come back to that, Mr. Turner, or we can take a side bar if it's going to be difficult for you to do that.
MR. TURNER: Sure.
(Continued on next page)
(At the side bar)
THE COURT: For a number of the most recent exhibits, which I was going to take up at the break there actually haven't been objection that had been noted on the pretrial order. So you've been saying objection, same objection, but, for instance, for 116A, for 116B, for 117A and for 117B there hadn't been objections on the pretrial order.
MR. DRATEL: Right.
THE COURT: So we can talk about if you have a new objection.
MR. DRATEL: I didn't want to --
THE COURT: -- at a break.
MR. DRATEL: That's fine.
THE COURT: Now, which brings me to 118B, which hadn't been part of what I had reviewed as part of the pretrial order. So I had not had an opportunity to go over this particular document yet or to discuss what the issues might be. It's a little bit different from some of the others because from my very quick glance, it appears to have additional discussion, so I need to evaluate whether or not there are any hearsay issues or each if there's a hearsay objection.
MR. TURNER: To be clear, we're not offering any of it for the truth. All we're doing is providing a tour of the website so the jury understands what we're going to be talking about later when we talk about forum posts of the Dread Pirate Roberts. So we would be fine with your Honor instructing the jury that this has not been offered for the truth.
THE COURT: All right.
Mr. Dratel, tell me the nature of your objection so we have it on the record.
MR. DRATEL: One is what your Honor recognizes, that is, we don't know whether any of these people are coconspirators who are posting in it, so there's a hearsay objection. The other is the date is markedly different on this one. This one is actually from 2015 on meta data.
MR. TURNER: Maybe because it was transferred to different drive. We can get it from the original and correct it.
MR. DRATEL: Or if he just testifies to that.
MR. TURNER: Sure.
MR. DRATEL: If it's the same time as the December 12, you know, that's fine, just so that it's --
MR. TURNER: It may be different -- this is one of the ones we updated.
MR. DRATEL: Okay.
MR. HOWARD: I'm sorry if you didn't get that copy.
MR. DRATEL: I'm working off a disk.
THE COURT: Hold on. Is the only remaining objection a hearsay objection?
MR. DRATEL: Yes, that's correct.
THE COURT: Okay. So having reviewed this, I can, I believe, properly instruct the jury this is not offered for the truth. And I'll instruct the jury they're not the take it for whether or not so and so, in fact, tested a particular product or, in fact, received the particular product, just for the fact people are saying these things.
MR. DRATEL: What appears on the site.
THE COURT: Let's go back. Thank you.
(Continued on next page)
(In open court)
THE COURT: I apologize for that interruption. I try to do side bars as infrequently as possible with counsel because I do understand it takes time.
Here I wanted to work out just where things stood with respect to a particular document. So, the government has offered Government Exhibit 118B. I'm going to receive that document into evidence. I'm going to give you a particular instruction on this.
On this document, you'll see there are a bunch of words about people saying a variety of things: I have only tested X, Y or Z.
This document is not being offered for the truth as to whether or not any particular person, in fact, tested or did any of the things that they're saying; it's for the fact that somebody wrote the words onto the page. So it's to give you a sense of what's on the forum. Whether or not these people did what they're saying they did is not the purpose of the document. So it's received for that purpose only.
You may proceed, Mr. Turner.
MR. TURNER: Thank you.
(Government's Exhibit 118B received in evidence)
MR. TURNER: We would move the exhibit into evidence.
THE COURT: Yes. It's received in the manner that I suggested.
MR. TURNER: Thank you.
Can you publish, Mr. Evert. Can you zoom into the first post with the category included, actually. That's good. Thank you.
MR. TURNER: So, is this an example of how a post would appear on the forum?
JARED DER-YEGHIAYAN: Yes, it is.
MR. TURNER: And where does the thread -- the discussion thread start?
JARED DER-YEGHIAYAN: It starts at the top, so there's the very first post is the beginning of the new thread.
MR. TURNER: And what section of the forum are we in here?
JARED DER-YEGHIAYAN: Right now, it's in the rumor mill subforum.
MR. TURNER: So the subject of this post is what?
JARED DER-YEGHIAYAN: It's "MDMA quality, from sellers on SR, please post reviews."
MR. TURNER: And who is the author of the post?
JARED DER-YEGHIAYAN: It's on the left-hand side, it's a user -- by the username of kuddo, K-U-D-D-O.
MR. TURNER: And under that it says newbie. What does that mean?
JARED DER-YEGHIAYAN: It was a ranking system that was built into Silk Road and the forum software.
MR. TURNER: And then over here under the subject, there's a date and time. What does that reflect?
JARED DER-YEGHIAYAN: So this shows that that thread was created on July 17, 2011 at 2:52 p.m. and that was usually consistent with UTC time.
MR. TURNER: Besides enabling users to post public messages to one another, did the discussion forums allow users to communicate in any other fashion?
JARED DER-YEGHIAYAN: Yes, it did.
MR. TURNER: How so?
JARED DER-YEGHIAYAN: There were also on the option besides posting public threads like this and having a discussion, that you could send private messages between one user and another.
MR. TURNER: Let's take a look at an example of that. Could you take a look at Government Exhibit 118C, please.
JARED DER-YEGHIAYAN: Okay.
MR. TURNER: Do you recognize this document?
JARED DER-YEGHIAYAN: Yes. It's a screen shot that I took from Silk Road forums of an account that I operated that was from the private messaging to private message overview. It was taken on August 20, 2013.
MR. TURNER: The government moves Exhibit 118C into evidence for the same purpose, your Honor.
MR. DRATEL: With the same limiting instruction.
THE COURT: Ladies and gentlemen, the Court is going to receive Government Exhibit 118C.
Similar to the document that you just saw in 118B, the words are not being offered for the truth of whether or not these people, in fact, did whatever it is they're talking about on 118C, just for the fact that somebody is posting those words.
All right. You may proceed, Mr. Turner.
MR. TURNER: Can you post the exhibit, Mr. Evert.
MR. TURNER: Okay. Can you zoom into the top left.
What does this reflect?
JARED DER-YEGHIAYAN: This reflects being logged in, I was logged in under the username cirrus, and it shows a different -- the different features that are available to me.
MR. TURNER: And it says "my messages" here?
MR. TURNER: Can you back out please, take a look at the in box, top half.
MR. TURNER: Briefly, what does this reflect?
JARED DER-YEGHIAYAN: We're currently looking at the in box for my private messages and those are the individual -- each one of them is an individual message, if you will.
MR. TURNER: And just to be clear, is this the same private message system that we were looking at earlier or is it a different private messaging system?
JARED DER-YEGHIAYAN: This message system was built into the forums. This is separate from what was on the marketplace.
MR. TURNER: So can we agree to call the one from the marketplace the marketplace private message system and this one the forum private message system?
JARED DER-YEGHIAYAN: That would be accurate.
MR. TURNER: Okay. And then down below, what's reflected in this half?
JARED DER-YEGHIAYAN: This reflects that -- one of the messages being open, which is the top message that was on the message list and it's the, again, the most recent message followed by to the oldest message.
MR. TURNER: So the chain starts at the bottom?
JARED DER-YEGHIAYAN: It starts at the bottom and then the most recent messages at the top.
MR. TURNER: Again, just to walk the jury how to read through it, can you zoom back in, Mr. Evert.
MR. TURNER: So the bottom message, who is it from?
JARED DER-YEGHIAYAN: This message was sent from a username astor.
MR. TURNER: What was the subject?
JARED DER-YEGHIAYAN: The subject? There was no subject.
MR. TURNER: And it was sent to who?
JARED DER-YEGHIAYAN: It was sent to my account, to cirrus.
MR. TURNER: The time and date of the message? Where is that reflected?
JARED DER-YEGHIAYAN: It's sent on August 3, 2013, at 8:35 a.m. UTC.
MR. TURNER: Can we go back to Government Exhibit 132, please. Can we zoom into the bottom-right corner.
So we look at the community forums and there's this link, Wiki. What did that link to?
JARED DER-YEGHIAYAN: It led to a Wiki page that was available for Silk Road.
MR. TURNER: And what is a Wiki page?
JARED DER-YEGHIAYAN: A Wiki page is -- it's similar to, like, Wikipedia. It's an online reference. It's like an encyclopedia type of thing where the Silk Road built its own Wiki page, which is a tutorial effort that you can ask questions, it had guides, it had ethical information on it for users and for vendors.
MR. TURNER: Can you look at Government Exhibit 119, please.
JARED DER-YEGHIAYAN: Okay.
MR. TURNER: Do you recognize this document?
JARED DER-YEGHIAYAN: Yes, I co.
MR. TURNER: How do you recognize it?
JARED DER-YEGHIAYAN: It is a screen shot that I took on August 4, 2012 of the Silk Road Wiki page.
MR. TURNER: And what part of the Wiki page exactly?
JARED DER-YEGHIAYAN: This one is on the buyer's guide.
(Continued on next page)
MR. TURNER: And what sort of guidance did the buyer's guide offer?
JARED DER-YEGHIAYAN: The buyer's guide was something available to all users that would provide information on various things, such as like how to connect to the website as well as how to get bitcoins, and sort of step-by-step tutorials on how to navigate the site such as getting to the shopping cart, placing your order, payment.
MR. TURNER: The government would move Government Exhibit 119 into evidence, your Honor.
MR. DRATEL: No objection.
THE COURT: All right. Government Exhibit 119 is received.
(Government's Exhibit 119 received in evidence)
BY MR. TURNER:
MR. TURNER: I would like to read from some of this document.
So it starts: "Buyer's guide. The currency used to buy stuff on Silk Road are bitcoin. Bitcoin uses encryption and a system of peer-to-peer double-checking to create a completely digital currency. No personal information is associated with your bitcoins at all, making them ideal for anonymous transactions. Additionally, Silk Road employs a built-in tumbler that mixes all incoming bitcoins through a series of dummy transactions before they ever leave. Click here for instructions on how to get bitcoins, or visit bitcoin.org to learn more."
Are you familiar with the term "tumbler" in the context of bitcoins?
JARED DER-YEGHIAYAN: Yes, I am.
MR. TURNER: How are you familiar with it?
JARED DER-YEGHIAYAN: I tested it out, trying to trace transactions that I put into Silk Road and out of Silk Road.
MR. TURNER: So what is a tumbler? What is a bitcoin tumbler?
JARED DER-YEGHIAYAN: A tumbler is, sort of as is described there, where it is a way to try to mask your transactions on the block chain. Instead of being just a one transfer from one account to another, they try to put a lot of accounts in between that to try to throw you off from being able to see one transaction to another, basically.
MR. TURNER: Just to be clear, if I have a bitcoin address and I want to transfer to your bitcoin address and don't do it through a tumbler, how does it appear on the block chain?
JARED DER-YEGHIAYAN: It would be just a direct transfer. It would be from your account to my account.
MR. TURNER: So it would just be like one green arrow like we saw earlier on the block chain?
MR. TURNER: If we run it through a tumbler, how does it appear on the block chain?
JARED DER-YEGHIAYAN: Instead of going from your account to mine, it would be split up. So the money would split up and go to multiple other accounts and then split up again go to multiple other accounts. This could basically balloon out to a lot of accounts before it starts coming back in together again and eventually hits my account. So it had a lot of accounts in between it, basically.
MR. TURNER: What is the advantage of using a tumbler?
JARED DER-YEGHIAYAN: It allows in this instance with law enforcement that I would know that --
MR. DRATEL: Objection.
MR. TURNER: I can rephrase, your Honor.
THE COURT: Rephrase.
MR. TURNER: Let's say that law enforcement -- as a law enforcement officer, you know a bitcoin address that I happen to be associated with and you know a bitcoin address of somebody else who I am sending bitcoins to. How does a tumbler affect your ability to trace my transfer of money to the other bitcoin address?
JARED DER-YEGHIAYAN: As I demonstrated earlier, the block chain is public. Everything is public. All transactions are public. You could see that by going to a website like blockchain.info. I could go to a website like blockchain.info that I could view those transactions between one account and another account, and if there was a tumbler in between it, I wouldn't know who it's going to. I wouldn't be able to trace the money as easily.
MR. TURNER: OK. Let's keep reading.
"Silk Road employs a escrow system for all transactions. This means that when you make a order, the bitcoins are deducted from your wallet, moves into a temporary escrow account, and after the vendor sends the order they confirm it being sent. When you receive the package, you confirm it being received, and the vendor receives the coin.
"If for whatever reason you do not receive the package, you can send the order into resolution, where you and the vendor can resolve the problem, or should that not work, Silk Road will step in and resolve the issue. Keep in mind, this system is to prevent fraud on both the end of the seller and the buyer."
Can you scroll down, please.
"Connecting to hidden services.
"If you are reading this now, you have at least figured out how to access a Tor hidden service, good job. You have either installed for and configured your browser to use it, or you are using a proxy such as tor2web."
Let me keep scrolling down, please.
Let me read, "Receiving address."
"From the moment you submit your order, to the moment it is displayed to your vendor, the information is fully encrypted and totally unreadable. Then, as soon as your vendor marks your package with the address and confirms shipment, the address is deleted forever and is not retrievable. For the extra cautious, you can encrypt your information yourself with your vendor's public key so that even we at Silk Road would be unable to view it even if we wanted to. See below for more ways to be safe."
Keep scrolling down, please.
Stop.
"Tumbler. Just when you thought Silk Road couldn't be more secure, we went one step further. The tumbler sends all payments through a complex, semi-random series of dummy transactions, each with a new, one-use receiving address, making it nearly impossible to link your payment with any coins leaving the site. The quantity, frequency, and number of transactions are all varied chaotically in a way that mimics the transactions of the bitcoin economy as a whole."
Is this what you were referring to earlier in terms of the effect of the tumbler?
MR. TURNER: OK. Could you scroll down, please.
MR. TURNER: "Receiving packages.
"Use a different, unrelated address than the one where your item will be kept, such as a friend's house or P.O. box. Once the item arrives, transport it discreetly to its final destination. Avoid abandoned buildings or anyplace where it would be suspicious to have mail delivered.
"Do not sign for your package. If you are expecting a package from us, do not answer the door for the postman, let him leave it there and then transport it as described above. Do not use your real name. This tactic doesn't work in some places because deliveries won't be made to names not registered with the address. If you think this is a problem, send yourself a test letter with a fake name and see if it arrives.
If you follow these guidelines, your chances of being detected are minimal. In the event that you are detected, deny requesting the package. Anyone can send anyone else anything in the mail."
Besides the buyer's guide, did Silk Road also have a guide for sellers?
JARED DER-YEGHIAYAN: Yes, it did.
MR. TURNER: Could you look at Government Exhibit 120, please?
MR. TURNER: Do you recognize this document, this set of documents?
JARED DER-YEGHIAYAN: Yes, I do.
MR. TURNER: What are they?
JARED DER-YEGHIAYAN: A series of screenshots that I took of the seller's guide from a vendor account that I took over.
MR. TURNER: And the date you took those screenshots is what?
JARED DER-YEGHIAYAN: It was September 18, 2012.
MR. TURNER: The government submits or offers Government Exhibit 120 into evidence.
MR. DRATEL: No objection.
THE COURT: Received.
(Government's Exhibit 120 received in evidence)
MR. TURNER: Could you zoom in a little bit, please.
MR. TURNER: "Seller's guide.
"Client anonymity.
"You and you alone will have your client's shipping address. This information must be destroyed as soon as it is used to label their package. When you click 'confirm shipment,' the address will be deleted forever and irretrievable. Never ask your clients for personal information. Under no circumstances should you save a copy of your client's address. Publish a public encryption key in your user description on your settings page so that customers can send you their info encrypted if they wish."
Briefly, what does "encrypted" mean?
JARED DER-YEGHIAYAN: Encrypted means just protected, basically.
MR. TURNER: In what way?
JARED DER-YEGHIAYAN: From being read by anyone except for the user that it is intended to read it.
MR. TURNER: Then underneath that, it says: "Listing.
"Choose the category that most specifically matches your listing, as this makes it much easier for your customers to find your listing. Your listing will appear in this, and all parent categories above it, though these pages are cached so it can take up to an hour for your listings to appear.
"If you think your item could belong in more than one category, choose the one that suits it best and let us know about the ambiguity. We may be able to reorganize the categories in a more clear
"way. If your listing doesn't fit in any of the categories, it may be on our restricted items list. See below for details."
Then it says: "Notice: Do not create listings that instruct customers to pay outside of escrow, or are used for any" other "purpose" -- excuse me, "or are used for any purpose other than to list an item to be sold for the listed price using the site checkout system. If you instruct your buyers to pay you in any other way, or to contact you off-site, your seller privileges will be revoked. You may provide backup contact methods in the case of site failure."
Are you familiar with the phrase "selling out of escrow"?
JARED DER-YEGHIAYAN: Yes, I am.
MR. TURNER: As used in Silk Road?
JARED DER-YEGHIAYAN: Yes, I am.
MR. TURNER: And what does selling out of escrow mean?
JARED DER-YEGHIAYAN: Selling out of escrow would basically be instead of using Silk Road as your platform to buy from one vendor, that you would do the order basically off line, that you wouldn't go through Silk Road.
MR. TURNER: So what does that mean if I'm a seller and I sell you drugs, let's say, out of escrow on Silk Road, how would that work?
JARED DER-YEGHIAYAN: So, for instance, if a user sees an item advertised that they want to buy off Silk Road, they would hypothetically contact that vendor, send him a message and say --
MR. TURNER: How could they send him a message?
JARED DER-YEGHIAYAN: Through private messaging that is built into the marketplace or the forum, and contact him and say I'll buy this item from you. Will you give me a lower rate if I just send you the money directly without doing it through Silk Road, and the vendor could comply with that --
MR. TURNER: What would be in it for them if they did that?
JARED DER-YEGHIAYAN: The buyer can obviously pay less than what the price is because they are not paying the commissions from Silk Road. The vendor then can also then benefit by getting more customers and be able to undercut prices from other vendors because they don't have to pay -- their product doesn't have the commissions on top of it.
MR. TURNER: And this rule against selling out of escrow, is this the only time you saw that rule, or was that a regular feature of the site?
JARED DER-YEGHIAYAN: That was talked about quite a bit on the forums, and it was something that came up quite a bit as discussion.