## Facts

- A grand jury charged Ross William Ulbricht with narcotics trafficking conspiracy, continuing criminal enterprise (CCE), computer hacking conspiracy, and money laundering conspiracy.
- The indictment alleged Ulbricht designed, launched, and operated “Silk Road,” a Tor-accessible website intended to facilitate illegal transactions.
- Silk Road allegedly operated like an online marketplace, but with categories and features aimed at selling illegal drugs, hacking tools, and money laundering services.
- Transactions on the site allegedly required payment in Bitcoin, and the site’s design allegedly increased user anonymity and impeded law-enforcement detection.
- Ulbricht allegedly controlled access to the site, set and enforced rules, resolved disputes, collected commissions on sales, and profited from the marketplace’s illegal activity.
- Ulbricht moved to dismiss the indictment (in whole or part), arguing the counts were legally deficient, including on theories that he ran a platform rather than joined any conspiracy and that Bitcoin fell outside the money-laundering statute.

## Issues

1. Whether the indictment sufficiently alleged an agreement supporting conspiracy liability between Ulbricht and Silk Road users, rather than mere operation of a platform or a buyer–seller/landlord-type relationship.
2. Whether the CCE count was inadequately pleaded or improperly duplicative of the narcotics conspiracy count.
3. Whether alleged Bitcoin-based transfers can constitute “financial transactions” involving “funds” under 18 U.S.C. § 1956, making the money-laundering conspiracy charge legally viable.
4. Whether buyer–seller and related limiting doctrines required dismissal of the narcotics conspiracy charge at the pleading stage.

## Decision

- The court denied the motion to dismiss all counts.
- Accepting the indictment’s allegations as true for Rule 12 purposes, the court held the conspiracy counts were adequately alleged based on the marketplace’s alleged purpose-built illegal design and Ulbricht’s alleged managerial control and commission-based profit.
- The court held buyer–seller and similar doctrines did not defeat the conspiracy allegations on the face of the indictment and were largely factual matters for later proceedings.
- The court held the CCE count was sufficiently alleged, including that Ulbricht acted in concert with five or more persons and functioned as an organizer, supervisor, or manager.
- The court held Bitcoin transactions could qualify as “financial transactions” involving “funds” under § 1956, so the money-laundering conspiracy count was not subject to dismissal.

## Legal Principles

- On a motion to dismiss an indictment, the court assumes the truth of the indictment’s factual allegations and asks whether they state the essential elements of the charged offenses.
- A platform operator may be charged as a conspirator where the allegations plausibly show knowing and intentional participation in a shared unlawful objective, including through purposeful design, control, and profiting from illegal transactions.
- Buyer–seller limitations generally do not require dismissal at the pleading stage when the indictment alleges coordinated, ongoing criminal activity beyond isolated purchases or sales.
- A CCE charge is adequately pleaded where the indictment alleges a continuing narcotics enterprise, concerted action with at least five persons, and the defendant’s managerial or supervisory role.
- For § 1956, “financial transactions” and “funds” are construed broadly and can include digital-currency transfers alleged to move, conceal, or disguise proceeds of unlawful activity.

## Conclusion

The court held the indictment plausibly alleged that Ulbricht intentionally operated a purpose-built illegal marketplace and joined conspiracies with its participants, that the CCE charge was sufficiently pleaded, and that Bitcoin-based transactions may constitute “financial transactions” involving “funds” under the federal money-laundering statute, warranting denial of dismissal on all counts.


United States v. Ulbricht, 31 F. Supp. 3d 540 (S.D.N.Y. 2014)