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Saturday, December 13, 2014

How the Dark Web's New Favorite Drug Market Is Profiting From Silk Road 2's Demise

How the Dark Web’s New Favorite Drug Market Is Profiting From Silk Road 2’s Demise

When a major law enforcement crackdown killed the Silk Road 2 earlier this month, it scattered the Dark Web’s drug dealers. But one new and improved crypto market is welcoming and profiting from those refugees: an appropriately named website called Evolution.

Since the FBI’s and Europol’s Operation Onymous seized dozens of Dark Web sitesincluding the Silk Road 2, Evolution has more than tripled its rate of growth in new product listings, according to data collected by the non-profit Digital Citizens Alliance. That’s helped the eBay-style contraband bazaar’s drug offerings to grow more than 50 percent since September. Combined with the other products Evolution sells—a mix of counterfeit documents, weapons and stolen credit card numbers—it’s now the biggest black market on the Dark Web. It has around 22,000 product listings in total, far more than either Silk Road 2 or the original Silk Road ever offered.

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“Evolution is the new hot commodity,” says Digital Citizens Alliance (DCA) research director Dan Palumbo. “Clearly they’re benefiting from the Silk Road 2 shutdown.”

Narcotrafficking by the Numbers

Evolution was adding new product listings at a rate of between 80 and 90 a day before Operation Onymous, by the DCA’s count. Since the seizure of drug markets including Silk Road 2, Hydra, Cloud 9 and Pandora, Evolution has now been adding around 280 product listings a day. Additionally, many Evolution vendors used to list their wares on Silk Road 2 as well, but “now this will be the sole focus of their business,” says Palumbo.

Even before the Silk Road 2 was seized earlier and its alleged administrator Blake Benthall arrested, its popularity had been waning. It had been recently surpassed in size by not only Evolution, but also another drug site called Agora. As of a count of product listings by the DCA in late October, Agora was actually the top market on the collection of sites that run on the anonymity software Tor, with 18,250 listings. That was 2,000 more than the Silk Road and a few dozen more than Evolution, though Evolution’s recent boost has allowed it to outpace Agora. Silk Road 2’s plummeting market share resulted from a mixture of misfortune and incompetence: In early 2014 the site claimed it had been hacked, with $2.7 million worth of users’ bitcoins stolen from its escrow services. Since then, it had offered no escrow at all, leaving buyers dangerously vulnerable to being scammed.

Evolution doesn’t just offer an escrow, but also takes advantage of a more advanced feature built into bitcoin known as multi-signature transactions. That feature is designed to prevent both scams and seizure of escrow funds by law enforcement. It requires two out of three parties—the buyer, the user, and the site itself—to sign off on a deal before the escrowed bitcoins can be transferred. Evolution has also had much faster pageload times than competitors, most of whom run painfully slowly thanks to Tor’s process of routing web traffic among randomly chosen computers around the world. (Just how Evolution managed those speeds despite running on Tor itself isn’t clear.) And it has been online far more reliably: The website Darknet Stats counts Evolution as online 97 percent of the time, compared with 83 percent for Agora and 93.5 percent for Silk Road 2 at last check in September.

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All of that has made Evolution the go-to haven for drug dealers fleeing the Silk Road 2. Another site calling itself Silk Road 3 in a bid to win over the Silk Road’s users, by contrast, has less than a thousand listings. When someone calling himself the Dread Pirate Roberts held an “ask me anything” session in Reddit’s dark net markets forum and claimed to be the new administrator of the Silk Road, he was mocked and asked questions like, “Where do you plan on doing your upcoming stint in prison?”

Just how the new top black markets like Agora and Evolution survived the feds’ Operation Onymous, however, isn’t entirely clear. Some in the security community have speculated that the crackdown used a new de-anonymization attack against Tor, and that the only sites that were spared from that attack were those hosted in places like Russia or China, beyond western law enforcement’s reach.

Getting Smaller, Cleaner, and Darker

In fact, the cops did seize one site calling itself Evolution: a scammy clone created to trick users into handing over their bitcoins. Security researcher Nik Cubrilovic has documented how as many as a third of sites seized by Operation Onymous were scam or clone sites, particularly knockoffs of many of the top drug markets including Agora and Evolution. By clearing out those clones, law enforcement may have actually cleaned up the Dark Web, removing fraudsters and making users feel safer spending their money on reputable black markets sites like Evolution.

Evolution’s rise in the Dark Web drug trade signals perhaps the final shift away from the political roots of the original Silk Road. The Silk Road’s administrator known as the Dread Pirate Roberts, after all, espoused radical libertarian views and banned all but victimless contraband on the site. Evolution’s creator, by contrast, is a mysterious figure known as Verto who previously ran the Tor Carding Forum, a credit card fraud site. And in addition to drugs, counterfeits and guns, Evolution also sells stolen credit cards, a kind of crime never allowed on the Silk Road.“Evolution is the anti-Silk Road,” says DCA’s Palumbo. “Rather than being centered around a libertarian ideal, it’s just a business.”

If the new, post-crackdown Dark Web is darker, though, it’s also smaller. Although Evolution has grown in the wake of Operation Onymous, the Dark Web drug market as a whole has been pruned dramatically to a total of about 44,000 listings compared with 65,500 listings in August, according to the DCA. That brings it below even the 46,000 listings on the sites in January of this year.

But Palumbo says that given how fast the Dark Web grew over the last year, that setback isn’t likely to last. “If I had to guess, I would imagine you’ll see new sites pop up, and someone will take place of Silk Road as the third major market,” he says, “I wouldn’t be shocked at all to see them overtake the total number of listings before the takedown

Thursday, December 11, 2014

Business Is Booming Again In The 'Dark' Online Drug Market

When the well-known drug marketplace Silk Road 2.0 and other services were seized last month by a joint international law enforcement operation, many online communities that hide behind a web of anonymity via the Tor (The Onion Router) network had a virtual near-death experience. Code-named Operation Onymous, the action followed the arrest of Blake Benthall, aka Defcon, the site’s 26-year-old lead administrator. Benthall, who allegedly confessed soon after his arrest, was apprehended in San Francisco after putting a $72,000 down payment on a Tesla in bitcoins, the anonymous currency used on Silk Road.
The following day, the FBI and the Justice Department’s Criminal Division, working with 16 EU nations, released numerous press releases celebrating what seemed to some a large win in the drug war and the exploding dark-net market trend. The UK’s National Crime Agency announced, “International Law Enforcement deals major blow to dark web markets.”
Among the 27 dark-net marketplaces shut down alongside Silk Road 2.0, only Hydra, Alpaca, Cloud 9 and Cannabis Road ranked as larger active drug bazaars, with most others being known scamming markets for stolen credit card information, weapons or drugs—they do not deliver the goods or services purchased.Silk Road 3.0The Silk Road
Now, only six weeks after the high-profile Onymous seizures, business is once again brisk at the dark-net marketplaces. While actual numbers are unavailable, the official marketplace list of Deep Dot Web, which monitors in real time the safety and functionality of such sites, indicates that black market entrepreneurs have opened several brand-new marketplaces, such as Middle Earth and SilkKitien. Real Hosting, an anonymous Tor hosting service, reports numerous weekly requests from people interested in starting new ones. All of which is great news for those who believe that the dark web drug dealing promotes safety and freedom.
“There’s more of us than them. Even if it takes migrating to mesh networks built upon individual users’ mobile phones, we will have our way,” ChemicalLiberty, a UK vendor of the powerful psychedelic drug DMT, states on a forum at the Evolution marketplace. “The Internet has provided a means for the oppressed masses to build confidence and empower each other to break the reign of the wealthy ruling class. In our lifetime we will see massive revolution and redistribution of wealth and power. The unimaginable consequences of this transformation will happen faster than anyone dares predict.”
The heady rhetoric has been fairly standard among buyers and sellers even since the original incarnation of Silk Road launched in February 2011. Later that year Gawker article shone a light on it. Since then the Silk Road has been rocky. In November 2013, the marketplace was seized by the FBI, and Ross William Ulbricht was arrested on allegations of being the owner of the market. Silk Road 2.0 started up just months later under the control of Ulbricht’s second in command, who took up the Dread Pirate Roberts mantel.
Last December, federal agents arrested three of Silk Road 2.0′s admins, and the second Dread Pirate Roberts went into retirement, leaving Silk Road 2.0 in the care of his second in command, Defcon. In February, a major hack claimed $2.7 million worth of bitcoins, and Defcon vowed to re-pay the stolen amount through the commissions earned on the site. This was the beginning of the end for Silk Road 2.0.
“There’s more of us than them. Even if it takes migrating to mesh networks built upon individual users’ mobile phones, we will have our way,” says ChemicalLiberty, a UK vendor on Evolution. “The Internet has provided a means for the oppressed masses to break the reign of the ruling class. The consequences will happen faster than anyone dares predict.”
Vendors like ChemicalLiberty abandoned Silk Road 2.0 in favor of other large markets such as Evolution and Agora that provide better all-around security. These measures include an escrow service, which allows users to store their funds on the market’s server until they receive their goods or services and release the funds to the vendor. (Escrow plays an important role in creating the web of trust in dark-net marketplaces.) Agora and Evolution also offer two-factor authentication, a feature that, when activated, requires the user to decrypt a message specific to their public encryption key prior to logging in.Fake ID listings on Silk Road 2.0The Silk Road
But this gain in security has come at the loss in credibility, according to critics. The Evolution marketplace, which has tripled its sales over the past five months, accepts stolen credit card information and credit card dumps, a service widely viewed as immoral and contrary to the standard “victimless crime” mentality that Silk Road started with. “It’s moved well beyond victimless crime,” a researcher for the nonprofit Digital Citizens Alliance told Wired magazine. “The libertarian ideals behind Silk Road were about giving everyone free choice. Now it’s gone past drugs to fraud. It’s just about making money.”
Some Evolution members see credit-card fraud differently. “I personally believe if you’re going after credit cards that at the end of the day it falls on the bank’s part. It’s cool. No problemo with that. Yes, it’s inconvenient for people, but they don’t lose anything in the end,” posted hdmi on Evolution’s forum.
Evolution does, however, draw some moral red lines, outlawing child pornography, murder/assassination/terrorism, sex and/or prostitution, Ponzi schemes and investment opportunities, lotteries and raffles. Agora keeps closer to the original Silk Road philosophies and bans stolen credit card information, although it does allow the sale of account information from PayPal and other online financial institutes.
Veteran users of the hidden services may have abandoned Silk Road, but the name and brand have not been abandoned. A small marketplace called Diabolous quickly re-branded itself as Silk Road 3.0 Reloaded in an attempt to capitalize on the legend’s name. The transformation included the adoption of Silk Road’s infamous logo of a nomad riding a green camel and the head admin’s adopting the moniker Dread Pirate Roberts.
But Deep Dot Web has banned the listing of the market due to the re-use of the “Silk Road” name, and many users recommend avoiding the new Silk Road. “It does not matter who is running the site, the SilkRoad dream is done. It’s time to move on,” comments dark net frequenter RR. “I’m happy remembering SilkRoad 1.0 in its full glory and not as the site that just didn’t know when to admit defeat. If we keep rebuilding a site and naming it the same thing faces the full force of the law enforcement departments who now hold a grudge against the name. It’s time for something fresh and it needs to be kept more of a secret. Throwing it in the spotlight is the beginning of the end for these sites.”
It is too early to signal all-clear at the dark-web drug bazaars. The dark web is only possible with Tor, which is the most sophisticated means for hiding your physical location while browsing the web and also allows for the creation of hidden sites running off of servers that may not even “know” the sites are even there. Otherwise, Internet drug marketplaces are shut down quickly and easily, and a federal subpoena will reveal the records of whoever rents the server space.
“As further site closures are achieved, the surviving cryptomarkets will adapt and improve site security,” James Martin said in an email. “Unless there is a follow-up operation sometime soon, particularly one that results in a large number of arrests, then cryptomarkets will continue to grow and diversify.”
If the feds have figured out how to de-anonymize Tor, the markets are done. (The I2P Anonymous Network, the only comparable network, is infamously flawed.) The Tor Project acknowledges that the implications of Operation Onymous remain uncertain. “As you can see, we still don’t know what happened, and it’s hard to give concrete suggestions blindly,” an announcement on their website reads.
There may be vulnerabilities in Tor’s infrastructure. It is also worth nothing that the many mistakes in Silk Road 2.0′s security may have enabled the FBI to uncover a server that hosted a variety of the now-defunct hidden services. According to the official affidavit against Benthall, the 26-year-old was almost comically inept. The lack of protocols has since been a hot topic of discussion on Kingdom, a general dark-net marketplace forum.
One vendor known as MarrakeshXpress says of Benthall’s character, “Defcon is a jerk.…He was a terrible admin. I can’t remember a single promise or deadline that he ever kept. He posted rarely and when he did, his posts had an air of superiority, like he thought he was too good to post to the community he was supposed to be leading.”
James Martin, an Australian criminologist and author of Lost on the Silk Road, a study of how online communication technology is transforming crime, believes that dark-web commerce is sustainable over the long term. “As further site closures are achieved, the surviving cryptomarkets will adapt and improve site security,” he said in an email. “Unless there is a follow-up operation sometime soon, particularly one that results in a large number of arrests—something that Onymous did not achieve—then cryptomarkets will continue to grow and diversify.”
Dark net user Jack Harkness agrees, albeit in the high-flying rhetoric typical of his ilk: “This is an ongoing conflict, and it is almost certain no market will survive forever. However, for each that falls more will arise, many of them wiser and more resilient. This is evolution in action. And the genus of these enterprises is still very young. Whatever method is being employed by these agencies can be circumvented.”
Whether or not such faith in evolution—or Evolution—on the dark web is misplaced, it is too early to tell. But one thing is certain: The human appetite for drugs, and for making money off of drugs, has proved, at least until now, stronger than any form of prohibition.