When Manhattan’s district attorney received a tip-off about suspicious ATM withdrawals in 2017, authorities never expected to unravel a sophisticated dark net drug operation on such an astonishing scale.
A painstaking two-year investigation involving multiple authorities uncovered a multi-million-dollar drug empire being run by three men out of a New Jersey property.
“Not only is this the first time state prosecutors in New York have taken down a dark web storefront, this takedown represents the largest pill seizure in New Jersey’s history,” Manhattan district attorney Cyrus Vance said in a statement.
Buckets containing more than half-a-million counterfeit Alprazolam — sold as Xanax — were seized along with large quantities of fentanyl-laced heroin, methamphetamine and other drugs once destined for online customers across the United States.
The trio were arrested earlier this month and are alleged to have been running one of the biggest online drug stalls — Sinmed — on the dark web’s preeminent online drug bazaar: Dream Market.
Their downfall comes as a multinational operation carried out by the FBI, Europol and others known as Operation SaboTor announced that it had nabbed 61 individuals and shut down 50 dark net accounts in March.
While authorities did not explicitly call out Dream Market, they did release a video report detailing the operation and showing authorities scrolling through the dark net market giant.
In the same week, Dream Market itself — the dark net’s biggest and longest-running market — halted trade and put out an announcement that it was voluntarily going to go offline at the end of the month.
Usually after a big seizure like when AlphaBay was shut in 2017 or the first Silk Road in 2013, vendors and consumers merely shift operations to a new marketplace and continue business as usual resulting in a whack-a-mole situation for authorities.
But this time, no real viable alternative has emerged amid growing anxiety that all platforms might be compromised, sparking a frenzy of rumours as to what exactly is going on and what it could mean for the future of online drug markets.
‘This is completely different to its predecessors’
The ease and anonymity provided by dark web marketplaces have proved to be a fertile ground for the illicit drug trade.
When the pioneer website of online illicit drug sales Silk Road was shut down in 2013 and its operator Ross Ulbricht later jailed for life, instead of stymying the trade it catalysed a boom in dark net drug trading sites.
“It’s been dubbed the hydra effect from that sort of mythical monster where you cut one head off and two grow back in its place,” said James Martin, dark net researcher and associate professor from Swinburne University in Melbourne.
“After every market takedown there’s a little sort of blip in trading activity and then we see much greater levels of dark net trading than there was previously.”
But there is an uneasiness brewing among netizens over Dream Market’s sudden departure as uncertainty lingers about why it is exiting the market and what will replace it.
In late March after months of sustained DDoS (Distributed Denial of Service) attacks — which disrupt services by overwhelming it with traffic — and site failures, a notice appeared on Dream Market’s pages alerting its users that all trade was being halted and that it would be shutting down and migrating to a new URL.
That same day Europol, FBI, and DEA officials announced tens of arrests and a massive crackdown on dark web drug trafficking — although authorities made no direct link to the dark net market giant.
A statement alleged to be written by Dream Market’s administrator said that it was shutting down due to constant DDoS attacks from cyber criminals trying to extort money, while adding that a new more secure site would come anytime soon.
Unusually this closure appears, at least on the surface, to be voluntary.
But more paranoid corners of the internet are abuzz with rumours of a clandestine law enforcement takeover of the site with the intention of gathering more information and data about the site’s visitors — a tactic known as a ‘honeypot’.
Honeypots, exit scams and cryptocurrency trails
Dark web expert and author of The Darkest Web Eileen Ormsby says there are a few other factors fuelling the rumours of a honeypot in motion.
“[The closure announcement] was not signed by the administrator of the site — he did not PGP sign it,” she said.
A PGP (Pretty Good Privacy) sign is a way of verifying the authenticity of a post using a private encryption code that only one user tends to have — something Dream Market’s administrator would normally do.
The site also allowed some vendors to withdraw their bitcoin but then inexplicably stopped, leaving the users in limbo.
“That could be a sign of a law enforcement operation trying to follow the bitcoin, the great weakness for the big sellers is when they try to cash out bitcoin,” Ms Ormsby said.
In other words — law enforcement could be allowing the withdrawals to then try and follow the trail to real currency conversion — the same trail investigators followed to ensnare Sinmed’s operators earlier this month.
It’s a tactic commonly deployed by authorities.
When AlphaBay was knocked offline in 2017, users migrated to Hansa marketplace not realising it had already been taken over by Dutch police who continued to operate the site and mine information.
According to Ms Ormsby, the effects of the Hansa honeypot are still being felt today and are helping fuel the prevailing paranoia around Dream Market’s demise.
“They’re still making arrests from that now — everybody trusted Hansa — that caused a lot of people to freak out and it took a long time for anyone to trust Dream Market for example,” she said.
Whoever is responsible for the shutdown, what comes next has in the past usually been somewhat predictable.
A new website — as Dream Market has promised — normally appears and most users will migrate there, but years of eroding trust and more sophisticated operations by law enforcement have left users wondering: is it worth it or is it time for something new?
As of now, the would-be successor to Dream Market, Wall Street, appears to have already performed the infamous ‘exit scam’ — shutting down and absconding with users’ funds.
The site’s administrators are believed to have gotten away with over $US30 million ($43 million), which if true would make it the biggest exit scam since Evolution marketplace made off with $US12 million ($17 million) in 2016.
Meanwhile, another potential alternative ironically titled Nightmare Market — which claims enhanced security and a wide array of supported cryptocurrencies beyond bitcoin — is being approached by users with hesitation due to the repetitive patterns witnessed over the last few years.
What’s next: A change to dark net trading or another market?
If no viable alternative surfaces, many netizens are speculating whether the recent era of dark net marketplaces might be coming to an end and what the future of dark net sales might be.
Over the years, many market vendors have built a strong reputation for themselves after migrating from Silk Road to Silk Road 2.0 to Agora to AlphaBay to Dream Market, and some observers believe that direct peer-to-peer sales via the dark net might be the new frontier.
“Encrypted messaging apps — that’s the main place drugs are being bought and sold on the internet — the markets are more an introduction service,” Ms Ormsby said.
“You find a vendor that you like and then start dealing with that vendor directly.”
Tracking and shutting down peer-to-peer sales over encrypted networks presents a new and complex challenge for authorities.
Without a central hub to infiltrate — law enforcement will instead have to crack into thousands and thousands of individual trades taking place across multiple platforms and networks.
Other peer-to-peer apps like Wickr and Telegram that protect users’ identities are also continuing to gain traction among drug buyers and sellers alike.
Regardless, the demand for illicit drugs shows no signs of easing, meaning whether it’s on the dark net or not, users will continue to search for and find their fix.
And should a viable alternative market emerge in the near future, it’s likely that after a period of hesitation, the dark net trade will migrate there and the cycle of closures and openings will continue.
But the main question for now is: when Dream Market goes down on sometime Today, will law enforcement move to try to take the site’s users and vendors down with it? Or are dark net markets simply preparing for the next phase of trading?