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Federal agents have shut down 'Silk Road', a billion dollar "sprawling black market bazaar" on the Internet where hit men advertised their services and thousands of drug dealers hawked heroin, cocaine and methamphetamine.

Ross Ulbricht, a 29-year-old physicist, allegedly known as "Dread Pirate Roberts" and "DPR," appeared Wednesday in federal court in San Francisco to face carges of narcotics trafficking, money laundering, computer hacking and soliciting a murder-for-hire, as the alleged creator and operator of the Silk Road website.

Court documents allege that Ulbricht owned and operated since January 2011 an underground website known as "Silk Road" that gave drug dealers around the world a platform to sell heroin, cocaine, LSD and methamphetamine. Ulbricht allegedly asked a Silk Road user on March 29 to murder another user who was threatening to release the names of thousands of Silk Road users, court papers say.

"Ulbricht has been willing to pursue violent means to maintain his control of the website and the illegal proceeds it generates for him," court papers say.

Users of the site on Wednesday saw a banner announcement with the logos of the Justice Department, FBI, IRS, Homeland Security and Drug Enforcement Administration and a message: "This hidden site has been seized."

FBI Agent Christopher Tarbell in an affidavit called the Silk Road website a "sprawling black-market bazaar where illegal drugs and other illicit goods and services" are regularly bought and sold. In 30 months, the FBI estimates the site generated $1.2 billion in sales and $80 million in commissions for the operator.

The website operated on an underground computer network known as "The Onion Router" or "Tor," a special network of computers around the world that use complicated algorithms to disguise the unique internet addresses of each computer. Communications sent through computers on the network bounce through a series of encrypted relays to make it extraordinarily difficult to trace the origin of the message.

Website users conducted transactions using an anonymous form of digital currency called "Bitcoins." Bitcoins are virtual currency that can be purchased with real cash and stored in a personal account or "wallet." Like other currency, the value of each "Bitcoin" fluctuates with the market. The virtual coins allow buyers and sellers to complete online transactions without leaving a trail, as if they were simply exchanging cash for goods.

"Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the Internet today," Tarbell wrote. "The site has sought to make conducting illegal transactions on the Internet as easy and frictionless as shopping online at mainstream e-commerce websites."

Federal agents say Ulbricht, under the alias "Dread Pirate Roberts" or "DPR", a reference to a character in "The Princess Bride," controlled every aspect of the site, including the programming, maintenance, customer service and the massive profits.

Ulbricht's LinkedIn profile says he graduated in 2006 from the University of Texas with a degree in physics and then attended graduate school until 2010 at the University of Pennsylvania School of Materials Science and Engineering. He has been living with a friend in San Francisco since September 2010, the FBI investigation found.

FBI investigators say Ulbricht allegedly logged in as administrator of the Silk Road website on June 3 from an Internet cafe on Laguna Street in San Francisco, near the Hickory Street home where Ulbricht regularly used a computer to log into his Gmail account. In July, Ulbricht allegedly ordered counterfeit identity documents, the FBI said.

A posting on the Silk Road site under the alias "DPR" on Oct. 19, 2011 about a site outage explained Silk Road's operations: "We lease server space in different locations around the globe through unaware 3rd parties. We do this to hide the identities of those that run Silk Road in the event of a security breach in one of the servers. Unfortunately, that means we have to deal with some unreliable people."

In March, one Silk Road vendor known as "FriendlyChemist" in a series of emails threatened to expose the real names and addresses of 24 website vendors and 5,000 customers if "DPR" did not give him $500,000 to pay off his drug suppliers. DPR allegedly contacted one of FriendlyChemist's suppliers and offered a bounty if the supplier found him. DPR allegedly told the supplier that FriendlyChemist lived in White Rock, British Columbia with a wife and three children.

The FBI says it has no evidence that the "hit' ever occurred.

FBI and other federal agents first tapped into the site in November 2011 and have made more than 100 undercover purchases of controlled substances, including ecstasy, cocaine, heroin and LSD, on the network. The drugs came from vendors located in the United States and at least 10 other countries, court papers say. Agents also purchased hacking services, including malicious software such as password stealing programs, the court papers say.

The site included listings for "illegal drugs of nearly every variety," Tarbell said in court papers. As of Sept. 23, FBI agents counted nearly 13,000 listings for items such as marijuana, ecstasy, opioids, prescription drugs, heroin and cocaine. One seller advertised "high quality #4 heroin all rock," court papers say.

FBI agents also found 159 listings for computer hacking and other services, such as hit men for hire and stolen credit card information.

Federal investigators also gained access to the site's servers to conduct forensic analyses that could trace buyers, sellers and the operator, court papers said. In an 18-month period, analysts tracked more than 1.2 million transactions involving nearly 147,000 buyers and nearly 4,000 vendors, the FBI said. The sales generated 9.5 million in Bitcoins, which are worth $1.2 billion.

On a daily basis, FBI investigators found, Silk Road held more than $2 million worth of Bitcoin in escrow as customers completed their transactions.

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