Bitcoin creator may have ties to Silk Road founder

November 25, 2013: 11:27 AM ET
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The mysterious creator of Bitcoin has a strong connection with the founder of the Silk Road, according to computer researchers.
NEW YORK (CNNMoney)

The founder of the online black market Silk Road and the creator of virtual currency Bitcoin might be close colleagues.

That's according to a pair of Israeli computer researchers who have discovered strong connections between two of the cyber world's most mysterious figures.

One is Silk Road founder Dread Pirate Roberts, who the FBI claim is currently in their custody. The other is Satoshi Nakamoto, the still-unidentified creator of Bitcoin.

Both have gained in notoriety in recent months. In October, the FBI shut down Silk Road, commonly referred to as the eBay for drugs (and much more). It was accessible only on the deep Web via the anonymizing software known as Tor. To keep sellers and customers safe, Silk Road dealt only in bitcoins, which are difficult to trace to an actual person.

Related: How Silk Road was reborn

But the Bitcoin system maintains a public log of every transaction.

A look at rebuilt drug bazaar Silk Road

In a research paper, Weizmann Institute computer scientists and mathematicians Dorit Ron and Adi Shamir explored that log, discovering that Silk Road's founder received a substantial sum of money in March from one of the first Bitcoin accounts ever created -- likely belonging to Satoshi Nakamoto. That transfer of 1,000 bitcoins would be worth $811,100 as of Monday.

"Such a single large transfer does not represent the typical behaviour of a buyer who opens an account on Silk Road," the paper states. "It could represent large scale activity on Silk Road or some form of investment or partnership."

The discovery will add to rumors that Satoshi Nakamoto and Dread Pirate Roberts are co-conspirators -- or perhaps even the same person.

Because the findings suggest a strong connection between the virtual currency and the black market, it contributes to concerns that Bitcoin facilitates illicit transfers of money. However, critics might note that the research paper, released Sunday, was sponsored by a grant from the Citi Foundation, the charity arm of Citigroup (C), one of the world's largest banks.

The same analysis also reveals that the 144,336 bitcoins the FBI seized during its Silk Road bust represent only 22% of the black market kingpin's commissions. If true, that means Dread Pirate Roberts earned $518 million -- and the U.S. government has found only $118 million of it.

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