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U.S. hearing postponed for accused operator of Silk Road online drug bazaar

By Noel Randewich

SAN FRANCISCO (Reuters) - A federal magistrate judge postponed a bail hearing on Friday for the alleged mastermind of the Silk Road online drug bazaar in order to give the 29-year-old's lawyer more time to prepare.

Wearing leg shackles and a red jail uniform, Ross William Ulbricht was led into the San Francisco court room, where he was represented by a public defender during the 10-minute proceeding.

U.S. Magistrate Judge Joseph Spero rescheduled the bail hearing until next Wednesday after public defender Brandon LeBlanc asked for more time. LeBlanc told reporters his client denied all charges.

The Federal Bureau of Investigation arrested Ulbricht on Tuesday and accused him of running the Silk Road website, a market place for illegal goods, under the online alias "Dread Pirate Roberts."

Authorities said they seized $3.6 million worth of the bitcoin digital currency, which was used instead of cash or credit cards to complete transactions for drugs and other illegal merchandise.

Federal prosecutors in New York have charged him with one count each of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy, according to court filings.

They also say Ulbricht tried to have someone killed who had threatened to expose the identities of thousands of Silk Road users unless Ulbricht sent him money.

For more than two years, Silk Road allowed thousands of tech-savvy sellers to post ads for drugs and other illegal products, which they shipped to customers through the mail.

Like eBay, which does not permit the sale of illegal products, sellers on Silk Road depended on positive reviews left by their customers in order to maintain good reputations and generate more sales.

Bitcoins, which provide a degree of privacy in online transactions, can be stored in "wallets" kept online or on individual personal computers.

According to the complaint, Ulbricht, whose alleged online alias comes from the Princess Bride novel and movie, operated the Silk Road site from his apartment and nearby Internet cafes in San Francisco.

The site also offered tutorials on hacking ATM machines, contact lists for black market connections and counterfeiters, and guns and hit men for sale, according to the charges.

Authorities said Ulbricht's website generated sales of more than 9.5 million bitcoins, roughly equivalent to $1.2 billion. Bitcoin exists solely in cyber form, and some devotees promote it as the future of money. Authorities have stepped up their scrutiny of the virtual currency and its possible connection to money laundering and other illegal activities.

The criminal case is U.S. v. Ulbricht 13-mg-023287.

(Reporting by Noel Randewich; Editing by Kenneth Barry)

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