D Edition MENA CYBER SECURITY CONFERENCE
Understanding the Value of Darknet Markets
You can buy credit card numbers, all manner of drugs, guns, counterfeit money, stolen subscription credentials, hacked Netflix accounts and software that helps you break into other people’s computers. Buy login credentials to a $50,000 Bank of America account, counterfeit $20 bills, prepaid debit cards, or a “lifetime” Netflix premium account. Empire Market was one of the largest, longest running and most successful darknet markets. Launched in February of 2018, Empire rose to become the largest darknet market in the Western world during its time. However, by late August 2020 the dark market pivoted and exit scammed—a scheme where a dark market or fraudulent exchange ceases operation and steals all the funds in escrow and account wallets. An exiting market will either abruptly shut down or remain online with escrow payouts and withdrawals disabled, but deposits still enabled, allowing the scammers to net more funds until users catch on.
The general volatility of darknet markets has led to calls for further decentralization of transactions to protect both buyers and vendors. If cryptocurrency is held in a customer account on a darknet platform, it’s always at risk if a site shuts down. In addition to their primary role in crypto crime – the sale of illicit drugs – darknet markets (DNMs) are also involved in the laundering of proceeds from crime. Over the course of 2022, TRM Labs has witnessed a rise in international criminals using Russian-language DNMs to launder money. Parasite VASPs rely on the architecture of a larger exchange to provide digital assets trading services to users, often without the knowledge or consent of the host exchange. Criminals and sanctioned individuals may use parasite VASPs to move their illicit proceeds through the crypto ecosystem to make the transactions appear legitimate.
High-risk exchanges are significantly more exposed to illicit counterparties than regulated exchanges, according to TRM Labs research. Some high-risk exchanges also operate as parasite exchanges, and usually have lax or non-existent KYC and AML processes. This makes them attractive platforms for cybercriminals who want to launder money or fund illicit activities. Administrators of such exchanges claim to earn 0.5%-1.0% commission on the transaction volume, depending on the share of revenue allocated to advertising and affiliate marketing necessary to drive traffic to their exchange. In August 2022, OFAC sanctioned Tornado Cash, which has been used by North Korean cyber-criminals and other threat actors to launder the proceeds of hacks and other illicit activity. TRM Labs showed that North Korean cyber actors used Tornado Cash to launder over USD 1 billion of stolen funds in at least ten major cryptocurrency heists.
The concept of darknet markets has captivated both public curiosity and law enforcement efforts. These hidden online platforms facilitate the exchange of goods and services, often operating beyond the confines of mainstream regulation. One critical question arises: how much value is on the darknet markets?
They can either happen abruptly where project devs and funds suddenly disappear, or they can occur more slowly, where money is siphoned off a bit at a time and devs get less and less active. Sometimes, projects are called rugpulls by the community when they overpromise and underdeliver, though this is more difficult to outright label as fraud. This dramatic rise in drainware attacks has even led to the emergence of Drainer Templates as a Service (DTaaS), providing ready-to-launch pre-built templates and enabling attackers to launch malicious contracts at scale, as seen during the 2021 NFT boom. Some drainers also attempt to scam their criminal users, for example by sending high value NFTs or tokens to the original creator of the malicious contract and less valuable tokens to the actor wielding the drainer. This has led to the rise of an entire “scam-as-a-service” industry, offering entire malicious packages complete with a phishing website, discord server bot and smart contract.
The Size of the Darknet Economy
Scammers can create fake websites or social media accounts that resemble legitimate crypto exchanges or wallet providers. They impersonate customer support agents and reach out to unsuspecting users, offering assistance with technical issues or account problems. The users are persuaded to share their login credentials, private keys, or sensitive information, allowing the scammers to steal their funds. The new AlphaBay market’s Tor service has been unstable since its launch, with frequent 503 errors, user registration issues, and login timeouts. After almost two months of operation, the market has a handful of vendors, with only a couple of hundred listings across drugs and fraud goods.
Ulbricht’s hefty prison sentence did not appear to have the intended deterrent effect. Multiple markets emerged to fill the void and, in doing so, created a thriving ecosystem profiting from stolen personal data. First, they are an incredibly rich source of personal information that can be used to facilitate identity theft, helping criminals answer security questions for example. The Darknet Market Price Index is a series of research reports that track the average sale prices of stolen online account credentials and personal data.
The “Fentmaster,” who attended medical school before he turned into a darknet drug dealer, shipped these drugs to customers throughout the country using the U.S. He used extensive measures to conceal his identity, including software to encrypt his internet traffic and the communications sent from his cellphone. Using alter egos, he boasted online about his exploits as a darknet drug trafficker, offered advice to other drug dealers and even publishing a short story describing his criminal activities and his strategies for evading law enforcement. In 2015, drug-related products accounted for 70% of total sales in darknet markets.
The darknet economy is estimated to be worth billions of dollars. Various studies and analyses attempt to quantify its value based on transactions, user activity, and available goods.
- The total value of transactions on darknet markets is believed to be around $600 million annually.
- Some reports estimate that over 30,000 users browse these markets daily.
- Cryptocurrencies, particularly Bitcoin, dominate as a payment method, further complicating value estimation.
- Ratings are easily manipulated, and even sellers with long track records have been known to suddenly disappear with their customers’ crypto-coins, only to set up shop later under a different alias.
- They can either happen abruptly where project devs and funds suddenly disappear, or they can occur more slowly, where money is siphoned off a bit at a time and devs get less and less active.
- To stifle the source of these problems, law enforcement is constantly monitoring the Dark Web and organizing takedown operations to dismantle criminal organizations that have built illegal businesses under the cover of anonymity.
Key Factors Influencing Darknet Market Value
The value on darknet markets fluctuates based on several factors:
- Supply and Demand: Prices vary significantly based on the availability of specific items and the number of buyers.
- Law Enforcement Actions: Raids and shutdowns of major marketplaces can cause temporary dips in market value.
- Market Innovations: The rise of new technologies and methods of payment can also affect overall value.
Types of Goods and Services
Darknet markets host a wide variety of products and services, ranging from legal to illegal:
- Drugs: A substantial proportion of transactions involve illegal narcotics, often accounting for a significant percentage of market value.
- Illegal Weapons: Firearms and ammunition are also available, contributing to both financial and social implications.
- Stolen Data: Personal information, credit cards, and login credentials can be bought and sold, driving an underground economy of identity theft.
- Counterfeit Goods: Various luxury goods and documents are frequently traded on these platforms.
The Economic Impact
The economic impact of darknet markets extends beyond direct transactions:
- Job Creation: Criminal enterprises associated with darknet markets create jobs, albeit illicitly.
- Supply Chain Disruption: Legal markets may be affected by the competition posed by illicit products.
- Innovation in Cybersecurity: The presence of darknet markets forces law enforcement and IT firms to innovate and improve cybersecurity measures.
FAQs
What is the primary currency used in darknet markets?
The primary currency is usually Bitcoin, although many markets have begun accepting various other cryptocurrencies due to anonymity benefits.
What types of items are most common in darknet transactions?
The most common items traded include drugs, weapons, stolen data, and counterfeit goods. However, legal services such as hacking for hire also exist.
Are darknet markets declining in value?
While fluctuations occur, continuous innovation and changes in the marketplace, as well as user adaptation, indicate that darknet market value remains resilient in various forms.
Understanding how much value is on the darknet markets requires considering multiple variables, including types of traded goods, market trends, and user dynamics. The growing interest in cryptocurrencies and evolving technologies further complicate the landscape, making it a subject of ongoing study and concern.
