Last week, federal authorities made arrests in San Francisco in a sweeping move to shut down Silk Road, an infamous online drug market and forum that allowed users to buy and sell goods using internet currency, or bitcoins. According to a report published by the Washington Post last Wednesday, the government shutdown of Silk Road sent bitcoin buyers running for the hills. The currency, which had amassed a circulation value of over $1 billion over the past four years – including the entirety of Silk Road’s 2.5-year reign – plummeted in value as a result.

Part of the reason for the currency devaluation is that, quite simply, the Silk Road system took a fair chunk of the bitcoin currency with it when it was shut down. All users who had deposited any bitcoin balance in the site registry lost that money, and it is highly unlikely that any of those users will approach the government asking for a refund. The government reportedly seized about $3.6 million worth of bitcoins from the site.

Bitcoin became the default Silk Road currency because it supposedly allowed for anonymous transactions to take place. Users could log on to the site with anonymous profiles, make purchases from other users with their bitcoin balance, and then log off the site without anyone being any wiser as to their actual identity. In theory, bitcoin is a clean currency that cannot be traced, which has made it the go-to monetary solution for sites like Silk Road that harbor illegal or black market activities.

That theory didn’t do much for Ross Ulbricht, the 29-year-old mastermind of the Silk Road site, who was arrested and brought before a San Francisco judge for the first court appearance of what will likely be a long and media-intensive case. According to Wired.com, Ulbricht operated the Silk Road forums under the moniker of “Dread Pirate Roberts,” a reference to the 1987 Rob Reiner cult classic, The Princess Bride.

So what does the Silk Road fiasco mean for the bitcoin currency? Undoubtedly, Ulbricht’s arrest and the sudden elimination of the site will serve to show online criminals that even an anonymous currency like bitcoin can’t shield their illegal activities forever. The case may also give bitcoin an opportunity to earn a cleaner reputation as a currency, all while sending the drug dealers and other unsavory business people of Silk Road scurrying away to regroup and reconsider.

Regardless of what happens to bitcoin, however, there is likely little mercy waiting for Ulbricht. The Silk Road ringleader not only made it possible for drug dealers to distribute hundreds of kilograms of their goods, but also solicited a murder for hire through the site, placing a bounty on the head of another user who had threatened to expose Silk Road users if Ulbricht didn’t pay him a large sum of money.