The U.S. Government doesn’t care about your losses. They don’t care if you get scammed. What they care about is their own power, keeping it, and controlling you.
There is no better illustration of that than in the disparity in the sentences of Ross Ulbricht and Joshua Homero Garza.
It’s been three years since Garza’s actions and even longer since Ulbricht’s arrest so a recap is in order. Joshua Homero Garza, better known simply as Josh Garza was the CEO and founder of GAW Mining, which initially sold mining hardware. Eventually they started to rent out hashing power in the form of “cloud mining” the problem was, they didn’t have the mining capabilities they claimed to have.
Unlike hardware and other cloud mining solutions, Garza claimed that his “hashlets” would never become obsolete and would always be profitable. A claim anyone who has spent any time around anything technology related would tell you is impossible.
So, Garza and his band of cronies started paying out old investors with new investor money. You can probably guess what happened next. The Ponzi band-aid could only last so long before there wasn’t enough to go around so Garza started the next phase of his scheme: Paycoin.
Paycoin was billed as a Bitcoin killer. A chance for investors to get in cheap and see the kind of returns early bitcoin adopters got to enjoy. It touted partnerships with VISA, MasterCard, Amazon and Target. It got a long article on the Wall Street Journal website. It was backed by investment firm Cantor-Fitzgerald.
And perhaps most important, it was selling for 11, 12, 13 dollars during different phases of its presale and GAW Miners claimed to have 100 million backing a 20 price floor at launch. It was a can’t miss investment. Buy thousands at $11, sell when it launches for $20. Even better, Paycoin was set to launch just before Christmas of that year, so you could invest money set aside for that, make huge returns and give your children the kind of Christmas they could only dream of.
Problem was, none of it was true. Well, besides the Wall Street Journal article, that actually did happen. But, the partnerships were completely fake. The 100 million supported the price floor never existed. The Cantor-Fitzgerald backing was just the backing of one man who was possibly complicit in it. And Santa skipped hundreds of kids that year, punishment for their parent’s Paycoin investments and trust of Garza.
Paycoin dropped to pennies and Garza fled to Dubai.
The Fallout
It was later revealed in court that Garza’s victims weren’t massive Wall Street investment firms nor were they bitcoin whales or other rich people who could take a loss on the chin. The vast majority of investors seemed to be middle class and working class people. They invested tens of thousands of dollars. They invested their savings, not corporate investment accounts.
Not that Garza was picky about his marks, he wasn’t. He took money from disabled veterans. He took money from people living in the third world. He took the savings of the terminally ill, attempting to put their family in a better position before their passing. And yes, he occasionally found a whale willing to give him six figures. But the majority of it was in the 20-80k range and that indicates a group of people who have worked hard to save and were simply trying to get ahead in this increasingly competitive economy.
Instead, they were sent back to square one and made to start all over. If they even could. Families were destroyed. People were sent into depression spirals. Investors went from middle class to homeless.
And so when the long arm of the law finally caught up with Josh Garza, it looked to be long over due justice. Finally, Paycoiners and former Hashlet owners would get some closure, even if not fair retribution.
It took another two years before the case would conclude. In the meantime, there was a judgment against GAW Miners for not paying their six-figure power bill, a civil case and the sealing of several documents related to the case, presumably because scammed investors had the gall to track and comment on what was going on.
And when it finally came to sentencing, few were there to watch. But those that did, were disgusted. Garza was originally facing up to 20 years. After his plea deal, he was potentially facing six years. The government gave him less than two and with good behavior he won’t even serve that.
Months for Millions
During his sentencing the judge cited a few reasons for the light sentence. He didn’t want to take Josh, a father of three with another on the way, away from his family. He didn’t want to hurt Garza’s new, undisclosed, business. He thought Garza started with good intentions and commended on him for trying to set things right by selling off personal assets to keep Paycoin afloat.
Never mind that thousands of convicted criminals are taken from their families every year. Never mind that Garza ran a previous company GAW Internet, that scammed its customers well before GAW Miners became a thing. Never mind that the assets he sold, including exotic cars, were originally bought with money he scammed from investors or that there is no evidence he used any of those funds to pay back investors. Never mind that Paycoin itself was never designed to be a viable currency and was instead created to generate huge bags for a few insiders who could then dump on unsuspecting victims.
No, none of that was important to Judge Robert N. Chatigny, who declared that Garza was a changed man. So changed in fact that he would let him continue as a free man for the rest of 2018 and not only that, would get to pick what white collar, club-med camp he would spend roughly 18 months in.
This, he said, was the appropriate balance between not punishing the new Garza for the old Garza’s crime too much, while still deterring future scammers.
I’m not sure what scammers will be deterred by such a slap on the wrist. I will gladly do 18 months at whatever camp (that was the word used by the judge, not me) Garza picks for half the amount Garza stole (The government estimates it at $9 million but others have estimated it to be closer to $20 million).
The Silk Road Case
Now, let’s compare that to Ross Ulbricht and the Silk Road case. Ross also has a family. Ross was also young (younger than Garza) when he created the Silk Road. Ross is also a different person than when he was arrested.
The Silk Road was an underground marketplace where willing participants could use bitcoin to buy things, primarily illegal drugs but occasionally other items as well. Ross Ulbricht was tried and convicted of creating and running the Silk Road. He has admitted to creating it and running it for a time but insists that the site was run by someone else for some years.
Regardless of all that, let’s just assume that the government’s assertion that Mr. Ulbricht was the only Dread Pirate Roberts (the pseudonym of the Silk Road’s administrator) is correct. Ross Ulbricht ran a website. One that only included willing participants.
Despite hyperbolic main stream media claims that hitmen and weapons were commonly purchased on the Silk Road, it doesn’t appear that was commonplace. Guns were banned from the Silk Road soon after the first listings appeared. They were split off to a sister site called Armory, but that site shut down due to lack of business. Ulbricht was never accused of running that site.
A few other sites attempted to start the online, underground gun market, but it never caught on because guns are difficult to send through the mail, unlike drugs. Furthermore, obtaining guns in the “real world” is easier and safer than sending them through the postal service.
Another misconception was that the Silk Road was used to hire hitmen. Ulbricht himself was originally accused of ordering six hits, allegedly to keep potential snitches from talking. All of those charges were dropped before being brought to trial because the government lacked any evidence that they occurred. The closest they got to proving that he ordered these hits was when one of the corrupt agents in the case supposedly staged a murder Ulbricht ordered. But that instance was also never brought to trial and the agent involved is currently in prison for his actions during the investigation.
In total, there have been zero confirmed cases of someone being murdered through an online darknet marketplace, be it the Silk Road or its successors. In fact, it appears the only ordered hits have been through the government’s own honey pots and scammers who never deliver the promised services.
In the case against Ulbricht, there were exactly zero victims named. Regardless of how you feel about “the drugs” the fact is, drug use is going to happen whether or not the online marketplaces exist. The only thing the Silk Road did was get the drug trade off of our streets. While I have no doubt that some of the profits from the Silk Road went to organized crime of some sort, there are no gang wars online.
The biggest problem with drug violence is that it spills out into our streets and innocent bystanders are caught in the crossfire. But there isn’t any “turf” to protect online. There aren’t any blocks for dealers to post up on and defend. If people are buying drugs online rather than the street, then that equates to less innocent death due to drug-related gang violence. It also likely means fewer deaths due to overdose. Product on darkweb sites should be more consistent because dealers and their product are publicly reviewed by their customers and inconsistent product quality in street drugs is a major contributor to overdoses.
And finally, online drug sales were a thing before the Silk Road and continue to be after it. Not just because copycat sites popped up during its run and after its demise but because drug sales are surprisingly common on the regular web, including sites like Instagram.
The Silk Road was illegal, no doubt. And drugs, including the types sold on the Silk Road, have absolutely destroyed families and ended lives. There is no doubt about that. But those people joined willingly, they can’t be called victims.
Ross Ulbricht was sent to prison for the rest of his life with no possibility of parole.
The State’s Concern Level Compared
One person purposefully went into the world and robbed people, ruining their lives. The other acted as a middle man for people who would be doing the same thing, except in person, if the Silk Road didn’t exist.
The reason for the disparity in sentencing isn’t due to the harm these two men did to the people affected by them. It can’t be because one did no harm and arguably improved the situation, while the other, by every measure, intentionally hurt people to benefit himself. Again, one had victims and one didn’t.
The disparity has to be for a different reason. An argument can be made that prisons are meant to protect the society. In both cases the respective judge cited deterrence as the primary reason for the sentencing. To deter people you have to make the potential crime not worth the potential punishment while also considering the affect on the victims and society as a whole.
Nine million dollars is plenty motive to commit a crime. So the reward is similar. Scamming people is decidedly easier than setting up, securing and hiding an online underground marketplace So Garza’s crime required less effort. Garza affected his victims greatly and Ulbricht didn’t have any. So the only conclusion left is that they think Ulbricht’s crime is more dangerous to society than Garza’s.
But dangerous to whose society? Not the citizens who are most impacted by the effects of the drug war. They arguably benefited from Ulbricht’s contributions. Not the middle class, who were overwhelmingly scammed by Garza. Not the cryptocurrency community who sees Ulbricht as a hero and Garza as a villain. Not the drug users who found a safer method of dealing with their addictions than on the streets.
The only people who were negatively impacted by Ulbricht’s contributions is the ruling class in our society. The parasites who feed off of the negative consequences of our ill-fated drug war. The military contractors who sell surplus to our police. The prison industrial complex that needs an ever growing population to keep its stock up. The DEA who needs to justify their budget. Every war has its profiteers and the drug war is no different.
The Silk Road had a chance to affect their society. It had a chance to lessen their control and lower their profits. It had a chance to normalize and humanize drug use and change the way we deal with the medical issue that is addiction. And that scared the shit out of them.
Compared to that, what did Garza do? Scam a few hundred or thousand peasants out of their pittance? Move on, we have a hurricane to ignore.
That’s why Garza is free right now and will only spend at most 21 months in whatever camp he decides to go to and Ulbricht is locked up for life. Because they don’t care about the industry, they don’t care about your losses and they certainly don’t care about you.
If you want to learn more about Ross Ulbricht and his fight for freedom, please visit FreeRoss.org.