This material is written exclusively for educational and informational purposes, and is not propaganda of trade in illegal goods on the darknet or anywhere else.
Criminals always adapt to new technologies faster than others. Not only because of their inherent adventurism, but also because of the need to be one step ahead of law enforcement. Therefore, it is not surprising that the first real use of bitcoin was settlements in the markets of illegal goods in the deep Internet.
So, thanks to Silk Road, bitcoin was learned outside the cypher punk community, including law enforcement agencies. However, this became a double-edged sword: along with the first rise in price and popularity, bitcoin gained a reputation as a currency for drug traffickers.
To this day, despite the path already traveled, the community faces accusations that bitcoin is used exclusively for criminal purposes, although the existing offshore infrastructure is actually more suitable for money laundering and terrorist financing than a pseudo-anonymous decentralized payment network. To respond to calls to ban bitcoin due to the fact that it is used by criminals, you can only say the words of the creator of Telegram Pavel Durov:
"I propose to ban words. There is information that terrorists communicate with the help of them."
Bitcoin on Silk Road has taken the darknet economy to a new level, but in recent years, marketplaces on the deep Internet have disappeared one by one. What is the reason for the extinction of such a profitable, albeit illegal business?
ForkLog offers you an adapted translation of an article by Aaron van Wirdum, published in Bitcoin Magazine, about the end of another era in the history of darknet markets.
Major markets on the deep internet come and go, and circumstances indicate that another era is coming to an end.
The two largest darknet marketplaces were on the verge of extinction at the same time. Of course, it is quite difficult to find reliable information about the activities of such illegal enterprises, but entries on the Dread forum and in the specialized media (Deep Dot Web) indicate a complete cessation of trading on the Dream Market and the confiscation of users' funds on the Wall Street Market.
Darknet marketplaces for the sale of illegal goods and services that use connection anonymization technologies and bitcoin (or altcoins) for settlements have been around since 2011. It was then that Ross Ulbricht created Silk Road, the place of which was subsequently occupied by many markets, but all of them were closed in one way or another. And once again there is a situation in which the leaders of the sector can cease to exist.
Dream Market is the oldest [six years] and probably the largest operating market in recent years. It was he who faced the problems first. According to Deep Dot Web,the site of the marketplace, apparently, was subjected to a large-scale DDoS attack, because of which users could not carry out the usual activities. Hackers could exploit a vulnerability in the Tor browser, which would allow them to minimize costs.
It remains unclear who was behind the attacks, but the operator of the Dread forum under the pseudonym HugBunter suggested that the purpose of the hackers was to get a ransom from the operator of the Dream Market under the nickname Speedstepper..
"Commenting on a separate attack on the Dread forum, HugBunter added that the hackers demanded a ransom of $ 400,000 from the administrator of the Dream Market, but he refused," the Deep Dot Web report said.
Some users have suggested that law enforcement agencies or competitors may be involved in market problems, but these hypotheses have not yet been found to be actually confirmed.
Over the past month, after seven weeks of DDoS attacks, trading on the Dream Market has been completely stopped. The administration of the market could not continue the fight against hackers, Deep Dot Web reported, citing an informed source.
Users found the following ad in their accounts:
"This market will close on April 30, in the future the services will be provided by a partner company with the onion address weroidjkazxqds2l.onion,which is stilloffline."
No information about the fate of dream Market was no longer received and users do not know which partner company was meant. According to HugBunter,the market is rebranding, but there are still no confirming details. In addition, Speedstepper did not comment on the situation.
Despite the disabling of trading and the inability to make a deposit, users can withdraw funds.
Probably, the light on the problems of Dream Market can be shed by the arrest of three representatives of the criminal group Sinmed, which was the leading seller of narcotic substances in this market tor.
The arrest was made by the Manhattan District Attorney's Office with the support of the U.S. Secret Service, the U.S. Postal Service, and the U.S. Department of Homeland Security. Drug traffickers were caught at the stage of cashing out funds through an ATM.
Since March 2016, Ronald McCarthy, Chester Anderson and Jared Cod have allegedly purchased about 500 kg of microcrystalline cellulose for the production of tablets containing narcotic substances. In addition, they founded the company Next Level Research and Development and purchased equipment for the production of tablets.
According to prosecutors, the trio delivered more than 1,000 orders to customers in 43 states, having washed $ 2.3 million in cryptocurrencies. During the search, law enforcement officers also seized a large consignment of drugs from them.
Wall Street Market and the end of an era?
As soon as problems arose with dream Market, users began to look for worthy alternatives and probably ended up in the Wall Street Market, the second largest market.
Nevertheless, on Dread and Deep Dot Web there were rumors that this marketplace intends to arrange an exit call and appropriate all the funds of users. Given the flow of new customers from dream Market, their combined losses as a result of the alleged fraud could reach $ 30 million. Some also reported that one of the site's administrators blackmailed them, threatening to merge personal data with law enforcement officers.
This isn't the first time key market tor have closed at the same time. After the fall of Silk Road in 2013, a similar fate befell its successors Silk Road 2.0, Cloud 9 and Hydra in November 2014 as part of the international operation"Onymous". The baton was intercepted by the market tor Agora, which voluntarily ceased operations in 2015, and then AlphaBay, which dominated during 2015-2016. The latter was shut down by law enforcement in 2017.
Then users were forced to migrate to the Hansa market, which at that time was already controlled by the Dutch police. As part of OperationBayonet,passwords and other information about arriving users were collected, after which the Hansa website was also closed, and the first place in the deep Internet was again freed up.
At the moment, it is unclear whether law enforcement agencies are involved in the situation around Dream Market and Wall Street Market. Nothing is known about the arrests of administrators or market tor owners, and the sites are still technically online, although the functionality is not available.
The growth and spread of the darknet
Despite the active actions of law enforcement officers and the closure of the largest players, this did not lead to the disappearance of trade in the deep Internet. According to a report by analytics firm Chainalysis, darknet trading activity doubled in 2018 alone. After the downturn due to the closure of AlphaBay and Hansa, annual trading volume almost reached new all-time highs of $600 million in BTC equivalent.
Bitcoin remains the main currency of market tor, but the share of this illegal business from the total number of transactions is extremely small - below 1%, although in the days of Silk Road (2012-2013) it was as much as 7%.
It is not yet clear whether the collapse of today's darknet trade leaders will lead to the emergence of similar services, or whether criminals will create a kind of peer-to-peer platforms to eliminate intermediaries and single points of refusal, but it is more likely that the trade in illegal goods will not go anywhere and will continue to adapt to changing conditions.