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Bitcoin’s biggest black market shuts down, values dip

Bitcoin is a digital currency with the dark underbelly that comes with any unregulated corner of the world, fully exposed this week with a major arrest and a shut down of the currency’s largest black market.

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Bitcoin and the Silk Road

Bitcoin’s generally untarnished reputation sharply took a hit Tuesday when Silk Road founder, Ross Ulbricht was arrested by the FBI on charges of drug trafficking, money laundering, and hiring a hit man for a site user. Silk Road, an underground marketplace for typically banned substances, was shut down Tuesday night, taking $3.6 million in Bitcoin with it, according to a Southern District of New York federal complaint.

Once news hit, Bitcoin values dropped from $139 per coin to $113, a loss of more than 18 percent in one day. There have been numerous discussions this year of the government’s plan to begin regulating Bitcoin and the digital currency industry, and various critics have long decried the currency’s capability of being used for nefarious acts. The FBI’s reported two-year investigation into Silk Road is the first major link to a negative association with Bitcoin and many investors are now rushing to sell the currency that they have as values continue to drop.

Murder for hire plot took the Silk Road down

Ulbricht, nicknamed “Dread Pirate Roberts,” is 29 years old from Austin, Texas, and was arrested in San Francisco. Silk Road is believed to have come into existence in January of 2011 and maintained operations through September of this year. The federal complaint notes that in March of 2013, Ulbricht allegedly solicited a Silk Road user to do a murder-for-hire on another user for a fee for $150,000, the reason being that this user planned to expose the identities of a large group of users of the marketplace. However, there is no evidence that this was ever carried out.

All eyes will be on Bitcoin values over the next few days as investors determine their next course of action on deciding whether to stick with the currency or sell. There are numerous other instances of Bitcoin expanding its popularity and growth including introduction into several crowdfunding platforms and planned roll outs of a handful of Bitcoin ATMs, therefore it will be interesting to see to what effect Silk Road will further impact this momentum.

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Destiny Bennett is a journalist who has earned double communications' degrees in Journalism and Public Relations, as well as a certification in Business from The University of Texas at Austin. She has written stories for AustinWoman Magazine as well as various University of Texas publications and enjoys the art of telling a story. Her interests include finance, technology, social media...and watching HGTV religiously.

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