Complex sentence: Tor is a protocol which encrypts data sent online through intermediary servers before reaching a final destination; by hosting his market as a Tor site, Ulbricht could conceal its IP address.
Split into simpler sentences: Tor is a protocol which encrypts data and routes internet traffic through intermediary servers which anonymize IP addresses before reaching a final destination. By hosting his market as a Tor site, Ulbricht could conceal its IP address.