From home-schooled boy to online drug lord

Benthall grew up in Houston, an only child, home-schooled by his parents, who were religious Christians. His mother, Sharon Benthall, a community college instructor, described her boy as “reserved, cautious and very bright.” His father, Larry, a software manager, would hold young Blake on his lap as he worked on a desktop computer.

By age 7, Blake was making websites for hiccup cures and his Beanie Babies collection. At 14, he started a hosting company for online games with another teen he had met on AOL Instant Messenger. He used his mother’s PayPal account to order a computer server to the family home’s doorstep and promised to pay her back with his customers’ subscription fees.

After briefly attending Florida College, a small Christian school near Tampa, Benthall moved to San Francisco in 2009 to chase his tech dreams. He worked for a start-up building a play-date-scheduling app for parents. It failed in four months.

He bounced back and forth between the Bay Area and Florida and from gig to gig, spending much of his free time going down internet rabbit holes. One of the deepest concerned bitcoin, the digital currency then worth around $US130 that allowed people to make anonymous online purchases. He read a 2013 interview with a mysterious figure calling himself the Dread Pirate Roberts who ran a site called Silk Road, a dark-web marketplace that trafficked mostly in illegal drugs. The site relied on bitcoin and Tor, a software that anonymises online identity to provide privacy to buyers and sellers — and authorities seemed helpless to do anything about it.

Benthall liked the idea of browsing the internet without his activity being linked to his computer. He downloaded Tor.

One October afternoon in 2013, Benthall was at an Equinox gym in downtown San Francisco when he saw breaking news on the overhead television: law enforcement had taken down Silk Road and arrested the Dread Pirate Roberts, whose real name was Ross Ulbricht.

Ulbricht, 29, was a fellow Texan also living in San Francisco. He was arrested at a library within walking distance of Benthall’s home in the Mission District.

Benthall quickly finished his workout and hurried home to indulge in “dark net popcorn“, as he put it.

The FBI had already taken Silk Road offline, but the site’s forum was still active. Some users were freaking out about being identified and arrested, but to Benthall’s surprise, others were already talking about starting a new drug marketplace. Believing that the chatter could be erased at any moment, Benthall used a computer program to save the forum’s posts.

Thus began Benthall’s new career. A Silk Road moderator who saw that data was being copied from the forum demanded to know who was responsible. When Benthall revealed himself over an anonymous chat service, the moderator peppered him with technical questions and eventually offered Benthall $US50,000 in bitcoin to build a new site.

Collaborating on an illicit narcotics bazaar while the authorities snooped around sounded like a bad idea, but Benthall was low on money. He was interviewing for a job at SpaceX, Elon Musk’s up-and-coming rocket manufacturer, but he didn’t have an offer. He convinced himself that the Silk Road gig was just some temporary coding.

“At 25, I didn’t understand conspiracy laws,” Benthall said. “I could be this nameless behind the scenes dev guy. It felt like very low risk.”

He spent the next three weeks coding what would become Silk Road 2.0, which opened a month after Ulbricht’s arrest.

Benthall planned to walk away, but the moderator who had hired him offered a 50 per cent split of the profits if he continued running the site’s servers.

“I was definitely aware that it was illegal,” Benthall said. But the site received 100,000 sign-ups on its first day. “It was a great feeling like, oh, people are finally using something I’ve built.”

Then he got an offer from SpaceX to start as a flight software engineer in December. He was now doubly employed.

Silk Road 2.0 grew rapidly, but Benthall’s partner, later arrested and identified as a 19-year-old who lived in England, wanted out. Benthall had to choose between shuttering the marketplace or running it alone.

“I took over full leadership,” Benthall said. “Here I am, you know, suddenly in charge of the largest website selling drugs in the world, like overnight.”

The work kept him up through the night, and he struggled to focus at his day job.

By night he was raking in money. Silk Road 2.0 took a roughly 8 per cent cut of every transaction, so he was making as much as $US500,000 a month, part of which he used to pay a dozen anonymous users to help him with customer service.

The bust

Among the anonymous users whom Benthall hired to help with customer service was Jared Der-Yeghiayan, an undercover agent from the Department of Homeland Security. Der-Yeghiayan had helped investigate the original Silk Road, posing as an eager community moderator to gain the trust of Ulbricht. Now he had to do it all over again.

Der-Yeghiayan knew Benthall only by his pseudonymous handle, Defcon, and he was impressed by Defcon’s technical acumen.

The agent burrowed into the Silk Road 2.0 operation over several months, but the breakthrough came from researchers at Carnegie Mellon University. Around this time, the researchers developed a method to expose the locations of the servers used to host dark websites that Tor had sought to obscure. Federal authorities subpoenaed their findings and were then able to tie Benthall’s name to the machines hosting Silk Road 2.0.

They put Benthall under surveillance for five months to collect more evidence. Then, on a November afternoon in 2014, as he pulled away from his house in his Tesla, three vehicles blocked him in. Federal agents emerged and put him under arrest.

Der-Yeghiayan and Vincent D’Agostino, an FBI agent from New York who had also worked on the original Silk Road case, led him back into his house, sat the handcuffed Benthall on his bed and got to work.

During the months of surveillance, D’Agostino felt as if he had a pretty good handle on who Benthall was. He didn’t strike D’Agostino, who previously worked the organised crime beat, as a hardened criminal.

So inside Benthall’s apartment, D’Agostino and Der-Yeghiayan told Benthall that they knew he was Defcon and showed him chat logs that he thought had been long deleted. They told him they had already raided his parents’ home in Houston and urged him to cooperate.

Benthall knew he was in deep trouble. He agreed to hand over the digital keys to the site and its bitcoin wallets and huddled in his bedroom with the investigators past midnight, filling in gaps in their knowledge about how Silk Road 2.0 operated. He couldn’t name names, because everyone involved was anonymous, but he did create a tool to extract data they wanted from the site.

“There was an immediate remorse from him,” Der-Yeghiayan said, “and I felt like it was genuine.”

Working with the Feds

Benthall spent the first nights after his arrest in an Oakland jail, after a federal prosecutor, Katie Haun, argued against bail. At a hearing, a judge told him he faced a minimum of 10 years in prison. He was eventually moved to Queens Detention Centre in New York, where he would be prosecuted.

A couple of weeks after his arrival, D’Agostino checked Benthall out of the detention centre and took him to a windowless interrogation room in the FBI’s office near Chinatown. After handcuffing him to the desk, the agent put a laptop in front of him and asked him to provide technical help.

The authorities’ raid on Silk Road 2.0 was the first of dozens of seizures of dark-net marketplaces. The FBI was “drowning in data,” D’Agostino said, and needed someone with technical skills to help make sense of it.

With the blessing of federal prosecutors, the investigators began discussing a cooperation agreement with Benthall’s lawyer, Jean-Jacques Cabou. If Benthall assisted the government, a judge might, at some future point, grant him a more lenient sentence.

The meetings continued. Soon, Benthall was being left alone in the locked FBI interrogation room to work, the handcuffs off but needing a chaperone to go to the bathroom.

In July 2015, Benthall pleaded guilty to four counts, including narcotics trafficking and money laundering. He signed a cooperation agreement formalising his commitment to work for the government. After eight months of incarceration, Benthall was permitted to move to an apartment in Queens. He became a full-time, ankle-monitor-wearing cybercrime consultant, paid in freedom and a stipend that covered dollar pizza slices, toothpaste and subway rides.

Benthall helped investigate large-scale corporate hacks, traced bitcoin transactions to try to identify criminals and even conducted a training at the FBI’s office in Quantico, Virginia.

A new beginning?

Over the next five years, Benthall worked alongside some of the same agents who had taken down Silk Road and Silk Road 2.0. But as time went on, some of those government employees left for the private sector — more specifically, the crypto industry — as bitcoin went mainstream and surpassed $US10,000.

The most prominent was Haun, the federal prosecutor who had argued against Benthall’s bail. She joined the venture capital firm Andreesen Horowitz in 2018 to invest in crypto companies and raised her own $US1.5 billion fund four years later.

D’Agostino, who had started out as a bitcoin sceptic, came around to the idea that it was going to “change the world.” He set up bitcoin-mining software at his home and eventually left the FBI to join a private security firm, offering help to companies hit by ransomware attacks. Der-Yeghiayan now works for Chainalysis, a blockchain analysis company.

As the authorities around him departed, Benthall wondered how much longer he would be tethered to government service. Technically, he was out on bail, but he had not been sentenced, and there was no set end date for his penance.

The COVID-19 pandemic offered Benthall a potential escape. When everyone stopped going to the office in early 2020, Benthall asked a judge if he could live and work from his parents’ home in Houston.

The spring of the next year, hoping he had done enough, Benthall asked the court to formally sentence him for his crimes. In March 2021, he and his parents flew to Manhattan for the hearing.

Benthall received the sentence he was hoping for: Time served with three years probation, during which he was required to keep working for the government, unpaid, as needed.

He needed to pay back his parents, who had dipped into their retirement funds to cover his legal bills. Benthall also had become a father while he was cooperating with the government.

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After three job offers were rescinded, Benthall decided to start Fathom(x) in the spring of 2022. It was, he said, the fulfillment of a “lifelong dream” to be a founder — a legitimate one, this time.

Fathom(x)’s pitch is simple: It will verify whether a company has the cryptocurrency it claims to have and whether it’s clean. Its founder sees his years of government work as enhancing his credibility. He is also pleased to have D’Agostino as an investor in Fathom(x). “I made the agent who arrested me, a believer in me,” Benthall said.

When Benthall founded the start-up, he called D’Agostino for advice. The former FBI agent wanted to invest. “The person I’m talking to now is not the person I arrested 10 years ago,” D’Agostino said.

Benthall won’t reveal his customers, nor how much the start-up has raised from investors. Fathom(x) is tiny, employing just two contractors, but Benthall said it is profitable.

This article originally appeared in The New York Times.

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