NEW YORK—More people were using the mail to get high, and Jared Der-Yeghiayan knew it.

"We hadn't seen ecstasy being seized in letter-class like that in a long time," said the Homeland Security special agent. "Since I'd been at O'Hare."

Der-Yeghiayan was speaking on Wednesday from the stand in a Manhattan federal courtroom, where 30-year-old Ross Ulbricht stands accused of being the mastermind in the most successful drug-dealing website of all time, the Silk Road.

On a large screen on the courtroom wall, prosecutors showed a photo of a table full of more than 20 envelopes, with a few varying kinds of labels, all used to ship drugs. "This was just one day," said Der-Yeghiayan, who pursued narcotics investigations from his office at the Chicago airport. "We hardly had seizures of ecstasy in years past."

When his team did find such pills in the mail, they were generally one-offs in a hand-addressed envelope. By 2011, though, Der-Yeghiayan began to see plenty of letters coming from Europe and elsewhere with printed labels and fake business logos, like StudyAbroad.com, as return addresses.

By October of that year, Der-Yeghiayan had opened an investigation of Silk Road. It would ultimately lead him to a long relationship with the website: first as buyer, then as seller, and ultimately as a staff member, becoming friendly with—and getting paid by—Dread Pirate Roberts (DPR), the boss behind the site. Two years after he began seizing those stunning amounts of drugs in the Chicago airport, Der-Yeghiayan came to believe that DPR was Ross Ulbricht.

Der-Yeghiayan's last chat with Dread Pirate Roberts would take place on October 1, 2013. It ended when federal agents set upon Ulbricht in a San Francisco public library, grabbing his laptop while it was still open to the chat page.

Walking a jury down the Silk Road

Testimony today was partly the narrative of Der-Yeghiayan's investigation and partly a tour of the Silk Road. It was the jury's first look at the website.

The testimony, which began yesterday and continued throughout today, touched on some things not made public until today: private messages from Dread Pirate Roberts, secret staff-only chat areas, and DPR's guide for drug dealers, covering everything from packaging to "philosophy."

Der-Yeghiayan looks to be in his early 30s, with close-cropped hair, a goatee, and a light beard. On Wednesday, he wore a conservative black suit with a dark tie. Clearly an experienced witness, he shifted his gaze from the prosecutor to the jury as he answered every question.

Shortly after the investigation opened, Homeland Security agents began to make buys from the site. They would compare the drugs they seized, or bought, to Silk Road listings they had seen—and found match after match.

Ultimately, Der-Yeghiayan and his team made 52 undercover buys from the site, from over 40 distinct Silk Road dealers in 10 countries. All but one of the 52 purchases came through with real drugs.

The jury was walked through a few examples, like a chunk of brown heroin weighing .2 grams and shipped from the Netherlands. Der-Yeghiayan intercepted the package and took photos, shown to the jury today. The packaging was pro: the vacuum-sealed pouch wasn't visible behind a bluish sheet of paper, and the heroin was within not one but several plastic bags. Another photo showed cocaine wrapped in black foil.

In April 2013, the feds did another buy—a big one. This one was walked through more slowly so the jury could understand how Der-Yeghiayan bought bitcoins—and what they were. Der-Yeghiayan told the jury how he used the now-defunct Mt. Gox exchange to turn $7,000 into 27.26610656 bitcoins, then logged into a Silk Road account he had taken over, called "dripsofacid."

At that point, the court reporter stumbled. "Sorry?" he asked.

"Drips—of—acid," Der-Yeghiayan said more slowly.

Then prosecutors ran through the various sections of Silk Road. The Silk Road "Community Forum" was divided into five sections: Security, Shipping, Drug Safety, Philosophy, and "Off Topic." The Philosophy section was held out to users as the "Home of DPR's Book Club."

"That's where they try to discuss how to use drugs safely, and just, effects of different drugs," was Der-Yeghiayan's description of the drug safety section.

"Has anyone tried MDMA from these sellers?" read a typical forum post, shown to the jury, which listed three Silk Road seller account names below the question.

On the site's wiki, jurors read about the site's built-in "tumbler."

"Instead of doing a transfer from one account to another, they put a lot of other accounts in between," Der-Yeghiayan said. "That masks who the buyers and sellers are."

"Avoid abandoned buildings or anywhere it would be suspicious to have mail delivered," read a wiki section called "Receiving packages."

"If you follow these guidelines, your chances of being detected are minimal."

From buyer to seller

Der-Yeghiayan also had access to at least one seller account, presumably from an arrest, called "SuperTrips." With that he was able to enter seller-only sections of the site.

On the Silk Road "Seller's Guide," the rules read:

Never ask clients for personal information

Under no circumstances should you save a copy of your client's address.

Publish a public encryption key in your user description on your settings page so your customers can send you their information encrypted if they wish.

No selling "out of escrow"

That last point was important. The Silk Road escrow system discouraged either side, buyer or seller, from ripping the other one off. Money was held by Silk Road until both sides were satisfied.

"Every caution must be taken to maintain the secrecy of the contents of your clients' package," advised another part of the seller's guide. "Creatively disguise it in such a way that a postal inspector might ignore it... It is your responsibility to stay up to date on the latest stealth packaging."

Sellers should print their mailing labels, not hand-write on substances, the guide insisted. When selling any substances that had an odor, "you MUST vacuum seal the package," DPR explained, not try to mask it with another pungent item like coffee.

The sellers' "contract" with Silk Road obliged them to "describe your items accurately and truthfully." Another part read like a corporate mission statement: "Treat your customers with respect. Go above and beyond for them."

Der-Yeghiayan read DPR's posts regularly. The site admin at first simply called himself "Silk Road," adopting the Dread Pirate Roberts name in February 2012, around when Homeland Security Investigations (HSI) began buying drugs off the site.

For a drug kingpin, DPR's tone was sometimes quite emotional; one imagines scenes with a therapist.

"Hey gang, really sorry for the dead time there!" the site admin wrote after an outage in June 2011. "This work is scary and exciting all at the same time, and I'm really very happy to be on this journey with you."

In another post shown to jurors, DPR waxed emotional about the success of his project:

It's great to see that my words are resonating with so many of you. It's a privilege to have a stage to speak from here. It doesn't get said enough, and it is hard to get across in this medium, but... I love you <3 Who knew that a softy could lead an international narcotics organization? Behind my wall of anonymity, I don't have to intimidate, thankfully. But yea, I love you guys. Thank you for being here. Thank you for being my comrades. Thank you for being yourselves and bringing your unique perspectives and energy. And on a personal note, thank you for giving me the best job in the world. I've never had so much fun! I know we've been at it for over a year now, but really, we are JUST getting started. I'm so excited and anxious for our future I could burst ;D

In a later message, DPR got angry responding to users who had complained about increases in the commissions he charged on each sale. He wrote:

When have I lied? When have I cheated or stolen from anyone here? When have I treated anyone unfairly? When have I lead you astray? Why do you turn on me now when I have poured my heart and soul into this community and project? 10% on $50 orders? We are talking about an extra $1.88! A $10 order? An extra 38 cents! Do you think this site built itself? Do you think it runs itself? ... Do you have any idea the risk the people operating this site are taking? Do you have any clue what we've been through to get here today? Whether you like it or not, I am the captain of this ship. You are here voluntarily and if you don't like the rules of the game, or you don't trust your captain, you can get off the boat.

From seller to admin

By July 2013, Der-Yeghiayan had managed to take over the account of someone who was not only a Silk Road seller but one of several staffers. Adopting the identity of "cirrus," Der-Yeghiayan earned 8 bitcoins a week, about $1,000 at the time, to moderate forum posts. After several weeks, he got a raise to 9 bitcoins weekly. He kept getting the salary until the Silk Road site was shut down in October 2013.

"Cirrus has always been dedicated to our community at large," Dread Pirate Roberts explained in a private message sent to cirrus and a small group of other administrators. The message was sent shortly before HSI took over the account.

It wasn't clear from testimony today how Der-Yeghiayan was able to take the identity of the trusted cirrus; it may have been the account of an arrested user, or one who otherwise made a deal with authorities.

Cirrus was part of a group of forum moderators, along with three other trusted users: "inigo," "Libertas," and "samesamebutdifferent," who also went by SSBD. Those three were identified and indicted two months after Ulbricht was arrested.

"I had admin rights," Der-Yeghiayan explained to the jury. "I could search through the database of users, and I could edit, delete, and move posts on the forums." There were other things he couldn't do; the distribution of such powers on the site was by DPR, and DPR alone.

In late August, DPR charged cirrus with moderating a new part of the marketplace's discussion boards.

"You're going to be our quality control expert on this," DPR told him in a chat message.

"So, we're going to be pretty strict about what gets through?" Der-Yeghiayan wrote back, in his undercover persona Cirrus. "So basically, the discussions have to be connected to products, not just bitching?"

"Yes," wrote DPR. Users in the special forum should be "calm, polite, etc." This wasn't the general Silk Road forum, but a different one hosted on the marketplace, that only certain users had access to. "The forums are the backyard party," explained DPR. "This is the storefront."

From admin to arrest

Der-Yeghiayan didn't know who Dread Pirate Roberts was, and even after his extensive testimony, it still isn't clear how he found out. On the stand today, he said that an IRS investigator told him Ulbricht was the suspect.

Ulbricht was easy enough to locate. By late September, Der-Yeghiayan was on his way to San Francisco, Ulbricht's adopted hometown. Around noon on October 1, Der-Yeghiayan met up with a team of federal agents in the Glen Park neighborhood. They gathered at a cafe where Ulbricht had been recently, waiting to see if he would return.

While agents physically monitored Ulbricht and his home, Der-Yeghiayan kept his laptop open on the Silk Road's staff chat channel. He had been watching DPR on the staff chat and saw that he logged off around 2:47pm local time. At that same time, "I was notified that Ulbricht had left his home and was headed in the direction of the cafe," said Der-Yeghiayan.

Ulbricht walked into the Bello Cafe, looked around and walked out, perhaps seeing how crowded it was. The Glen Park branch of the SF public library was just next door. Ulbricht went inside. At 3:08pm, Der-Yeghiayan saw DPR log on. It would be Ulbricht's last online chat for some time.

cirrus: hi cirrus: are you there dread: hey cirrus: how are you doing? dread: i'm ok, you? cirrus: good. can you check out on one of the flagged messages for me? dread: sure dread: let me log in cirrus: ok dread: you did bitcoin exchange before you started working for me, right? cirrus: yes, but just for a little bit dread: not any more than that cirrus: no. I stopped because of reporting requirements dread: damn regulators eh? dread: ok, which post? cirrus: lol yep cirrus: there was the one with the atlantis

It was a trap. When DPR typed "ok, which post?" Der-Yeghiayan knew it meant he was looking at a particular admin screen listing "flagged" posts. At that point, Der-Yeghiayan gave the signal, via e-mail. Keeping his laptop open, Der-Yeghiayan told jurors how he walked from the cafe to the library.

Testimony on Wednesday didn't go further than that; it was nearly 5:00pm and time to release the jury.

But those following the story know how this ends, of course. Ulbricht was arrested, computer open to exactly the page the undercover agent had told him to visit. The real cliffhanger isn't what happened in that library, but what happens tomorrow. That's when Ulbricht's lawyer Joshua Dratel will cross-examine Der-Yeghiayan and begin to tell the story he promised yesterday—the story of how Ulbricht wasn't the Dread Pirate Roberts but was somehow "lured back" to be a "fall guy" by the real head honcho of the site.

While the details aren't known yet, it sounds like a wild story. It's also Ulbricht's last chance to stay free.