TRADING UP

Wholesale illicit drug sales on the dark web are likely fueling offline markets

Obsession
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Obsession
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Silk Road, the first major illegal online marketplace on the dark web, was shut down by the Federal Bureau of Investigation (FBI) in October 2013. Since then, some 50 similar dark websites or “cryptomarkets” have cropped up and, like Silk Road, they are fueling illicit drug transactions.

In a new study on online drug transactions, researchers at the University of Manchester and the University of Montreal scraped illegal drug listings on Silk Road for the month of September 2013 as well as listings on the eight biggest cryptomarkets during January this year. They found that illicit drug transactions have tripled between 2013 and 2016.

Many of the same drugs are being sold, researchers said. “The distribution of drug types was very similar in 2016” and 2013, the researchers wrote. More orders, however, are being placed that are valued at over $1,000. This suggests, the researchers said, that “many cryptomarket customers are drug dealers sourcing stock intended for offline distribution.”

Larger orders generated one quarter of overall revenue, according to the study. “It is clear that cryptomarkets do not just cater for B2C (business to consumer) purposes,” Stijn Hoorens, an author of the study and lead researcher at RAND Europe, told Quartz in a statement. “That means that buyers seem to stock supply not for personal use, but (also) for selling or for social distribution.”

Like traditional e-commerce sites, cryptomarkets display comprehensive product details, user reviews and ratings. This transparency leads to expectations of better quality and product variety online. Vendors and buyers trade drugs and other illicit goods on the dark web because they assume it’s safer than buying them offline. Transactions are also anonymous.

Most revenue seems to be generated through intracontinental sales, the researchers noted. This means transactions were taking place within North America or within Europe; drugs sold online were not being delivered across borders most of the time. “The impact of cryptomarkets on the internationalization of drug markets is limited,” said Hoorens. Domestic transactions may be preferred to reduce the risk of interception. This also explains why the dominant consumer markets, like the US where recreation drug usage is on the rise, also have more sellers.

A month before Silk Road was taken down, monthly revenue for drugs trading on the site neared an estimated $7 million. At the start of this year, the eight cyryptomarkets, accounting for 80% of the market, together raked in more than $14.2 million.

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