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Dark Web’s Top Drug Market, Evolution, Just Vanished

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  • Dark Web’s Top Drug Market, Evolution, Just Vanished

    The Dark Web’s Top Drug Market, Evolution, Just Vanished
    Jeeves privacy. Photo: Josh Valcarcel/WIREDClick to Open Overlay Gallery Josh Valcarcel/WIRED

    In the 18 months since the Silk Road online black market for narcotics was taken down by a swarm of three-letter agencies, a site known as Evolution has taken its place at the top of the dark web drug trade. Now Evolution, too, has suddenly dropped off the face of the internet. But unlike its Silk Road predecessor, there’s no indication that law enforcement took down the newer black market. Instead, it’s simply, mysteriously vanished—with rumors swirling that its own administrators may have run off with many millions of dollars of its users’ drug money.

    Over the past weekend, the massive anonymous market known as Evolution halted withdrawals of bitcoin from its website, telling users that it was dealing with technical difficulties. Then on Tuesday evening, both its market and user forum went offline, with no opportunity for drug buyers and sellers to pull out the funds they had stored in their Evolution accounts. The result has been a wave of panic that’s shaken the online black market economy as much as any of the law enforcement drug busts of the last two years.

    Late Tuesday, a Reddit user named NSWGreat who had earlier self-described as an Evolution drug dealer and “public relations” staffer —he or she had even hosted an “ask me anything” session about the job days earlier—wrote a post to Reddit’s darknet markets forum that claimed to confirm Evolution’s administrators had in fact shut down the site’s back end too, and escaped with users’ money; NSWGreat described confronting Evolution’s two pseudonymous owners, Verto and Kimble, who he or she says then admitted they were closing the market and stealing its funds. “I am so sorry, but Verto and Kimble have f–ked us all. I have over $20,000 in escrow myself from sales,” NSWGreat wrote. “I’m sorry for everyone’s loses, I’m gutted and speechless. I feel so betrayed.”

    “Don’t do this to us Evo staff please,” another user pleaded in a response on Reddit. “I owe money and I can’t pay if this is true. My lifes in danger. Please don’t be true please.”

    If Evolution’s owners did in fact steal their users’ funds stored on the site—a theory that’s still not confirmed—it’s not clear just how much they would have profited. But given the size of Evolution’s market, with nearly 20,000 drug product listings as well as thousands more items ranging from weapons to stolen credit cards, the sum could easily be millions or even tens of millions of dollars worth of bitcoin. For comparison, the FBI seized $3.6 million worth of bitcoin from the original Silk Road at the time of its October 2013 takedown, when the site was still significantly smaller than Evolution.

    For other dark web markets, technical glitches and long downtime would be routine, rather than a sign of a major scam. But since it first appeared online just over a year ago, Evolution had developed a reputation for professionalism and reliability. According to the site Dark Net Stats, the site had a 97% uptime rate, far higher than competing markets like Agora or the now-defunct Silk Road 2. The site gained users’ trust by offering a feature known as “multi-signature transactions,” designed to prevent exactly the sort of bitcoin theft its administrators are now accused of. (That system, would require at least two out of three parties in a transaction—the buyer, the seller, and Evolution’s administrators—to sign off on a deal. But due to its complexity, buyers rarely used the feature.) That relative sophistication, along with the seizure of several smaller competitors in a string of law enforcement busts late last year, contributed to Evolution’s rising position over the last year as the go-to online black market.

    But Evolution also distinguished itself from other markets by its far looser sense of morality. While other sites followed the original Silk Road’s ethos of selling only victimless contraband, Evolution also trafficked in stolen identity information. Its founder known as Verto had previously run a site known as the Tor Carder Forum, another invite-only dark web site devoted exclusively to credit card fraud. Given that criminal mindset, it may be no surprise that the site’s owners might have eventually become willing to steal from their own users, too. As one user wrote on Reddit’s dark net market forum, “[I’m] really… surprised Evo went out like this, but I mean from former carders and fraudsters; would you expect anything less?”

    Others pointed out that competing black markets like Agora, which briefly held the top spot as the most popular dark web market before Evolution, will likely absorb the refugees from Evolution’s vanished market. But even so, the Evolution staffers’ theft of millions of dollars from their users—if it’s confirmed—would put a temporary but serious dent in the internet’s underground drug economy. “I am guessing [Evolution’s owners] have new identities and a nice remote beachside mansion all lined up, probably there already,” one user wrote on Reddit. “Damn, sounds like a movie, except real people lost real money.”
    The Dark Web's Top Drug Market, Evolution, Just Vanished | WIRED
    To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway

  • #2
    None of those who dealt with Evolution are likely to go to the Feds. This is such a smartly executed project. OTOH, could this be the work of the Feds themselves? Rumor is piratebay is a Fed honeypot.
    Politicians are elected to serve...far too many don't see it that way - Albany Rifles! || Loyalty to country always. Loyalty to government, when it deserves it - Mark Twain! || I am a far left millennial!

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    • #3
      Bette to deal with the corner drug dealer then a bunch of nerds.

      Why ‘Dark Web’ drug markets will keep on imploding
      By Henry Farrell March 19
      Why ‘Dark Web’ drug markets will keep on imploding - The Washington Post
      (Daniel Acker/Bloomberg)

      A couple of months after the conviction of Ross Ulbricht, the “Dread Pirate Roberts” behind the creation of the Silk Road online drug market, another online drug market, “Evolution” has imploded. Like the Silk Road, Evolution used “Tor Hidden Services,” to hide the true location of their Web site, providing the owners, and drug buyers and sellers with some degree of anonymity. But this Web site didn’t go down thanks to the feds. It went down because its owners took it down.

      So what happened?

      The anonymous owners of the Evolution drug market pulled what’s called an ‘exit scam.’ They pretended that the site was having technical difficulties, making it difficult for users of the market to withdraw funds. Then they pulled the site down and absconded with the money. Some people are claiming that they made off with around $12 million – but it’s hard to be sure how much money they had (especially since the money they stole is Bitcoin, an artificial currency which has a wildly fluctuating exchange rate with regular currencies).

      How did they get away with it?

      If you want a detailed account of how drug markets work on the “Dark Web” (the archipelago of sites hidden behind Tor’s network), I’ve already written one here for Aeon magazine. But the principle is simple. Drug dealers and drug buyers are not noted for being particularly trustworthy people. They also want to avoid the attention of law enforcement. The “Dark Web” allows them to trade anonymously with each other. But it also means that it’s even harder for them to trust each other, exactly because the trade is anonymous (if you get ripped off by someone with an untraceable pseudonym, it’s hard to retaliate against them).

      This has created a market for trustworthy intermediaries. Drug markets, such as Evolution and Silk Road and Agora (which is still in existence), provide an online site where buyers and sellers can meet each other. They also provide information (a little like eBay’s rating system) that allow buyers to evaluate the quality of sellers. But most importantly, they provide an escrow service, allowing buyers to put money into escrow, and only release it to sellers when they get their drugs through the mail. This doesn’t perfectly guarantee trustworthiness, and well-established sellers can demand that buyers ‘settle early’ as a condition of trade. But it certainly helps.

      The obvious problem is that this only works if the owners of the drug market, who operate the escrow service, are themselves trustworthy. If they are not trustworthy, they can take all of the money in escrow and run. That’s what appears to have happened at Evolution.

      Can online drug dealers avoid the problem of untrustworthy site owners?

      In theory yes, but in practice it’s hard. It’s possible to use a different escrow system with Bitcoin called Multi Party Signature, which would prevent the market owners from taking the money and running, unless they colluded with either the buyers or the sellers. Evolution reportedly had some version of Multi Party Signature although it’s not clear how well it worked. However, this is much more complicated and tedious than ordinary escrow, and also carries other risks. It is publicly visible, and could serve as an enormous clue to law enforcement that a criminal transaction is taking place — there are few legitimate online transactions where people distrust each other so much that they have to rely on such a complicated system. People think of Bitcoin as a truly anonymous currency but it is not – all transactions are recorded on a publicly shared ‘blockchain’ making it possible to track many transactions with some luck and ingenuity. Using Multi Party Signature would help law enforcement identify dubious transactions.

      So what happens next?

      This is not the first online drug market to evaporate when the founders decided to split with the money of their outraged customers. But there’s some social scientific reason to suspect that it will not be the last. Consider the incentives of the people running the market. Drug dealers are not notable for altruism; they’re mostly in it for the money. The fundamental question they face is the following. Is it more profitable to keep running the market, and taking a steady percentage from the deals that everyone is making? Or is it more profitable to collapse the market and grab what they can? Basic game theory would suggest that their decision is going to depend on the ratio between long term expected profits (discounted over time) and the short term benefits of cheating. If they get a high enough long term payoff, they will stay honest and keep the market running. If the long term payoff is outweighed by the short term benefits of cheating, they’re going to take the money and run.

      What I suspect is happening is that the perceived long run vs. short run tradeoffs are changing after the arrest and conviction of Ulbricht. Law enforcement authorities are using informants to penetrate the markets, and may have exploited short term vulnerabilities to de-anonymize users of the Tor network. This has consequences for the perceived value of building drug markets for the long haul. If you think that law enforcement has a good chance of breaking your site’s security, and perhaps catching you and convicting you, then you aren’t going to place a high value on long term profits, since there’s a very good chance that you won’t have any. If you’re rational and selfish, you’ll instead be more likely to get out while the going is good, taking as much money with you as you can.

      This suggests that law enforcement’s job is somewhat easier than many think it is. To be effective, law enforcement agencies don’t have to break all the drug markets. They just have to break enough of them that other market owners believe that the risks are too high to be tolerable, so that they’re tempted to cheat their users and abscond with the proceeds. There may be other possible ways that drug market owners could try to insulate themselves (e.g. by operating from countries that are unlikely to extradite people to the United States or elsewhere), but it may be hard to do this (it’s surprisingly easy to get state protection in some countries if you are just ripping off the credit cards of rich Westerners, but rather harder if you are a self-avowed drug dealer).

      As many researchers (myself included) have argued, online drug markets rely on quite fragile trust relations. As law enforcement authorities learn better how to disrupt trust, they can enormously increase the impact of their enforcement efforts.
      Henry Farrell is associate professor of political science and international affairs at George Washington University. He works on a variety of topics, including trust, the politics of the Internet and international and comparative political economy.

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      dc_director
      3/19/2015 12:43 PM EST
      "Drug dealers and drug buyers are not noted for being particularly trustworthy people."

      This shows a fundamental lack of understanding of how sites like Silk Road operate. For the uninitiated, think of it like eBay, where buyers leave feedback and ratings based upon service. Those that are "untrustworthy" don't last long on these sites. In fact, it's in the seller's best interest to be "trustworthy," because it increases their profits.

      It's also, I think, important to distinguish between the sellers and the ones who run these sites. Painting them with the same brush is lazy, disingenuous and foolish.
      mrnebrot
      3/19/2015 11:20 PM EST [Edited]
      agreed, along the same lines:

      "To be effective, law enforcement agencies don’t have to break all the drug markets. They just have to break enough of them that other market owners believe that the risks are too high to be tolerable, so that they’re tempted to cheat their users and abscond with the proceeds."

      So this carefully researched and backed by quality peer reviewed references provided to us readers in the new articel, certainly is another great way to illustrate the mind boggling successes and victories the War On Drugs, Fight against Piracy and alcohol prohibitions have produced. /s

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      To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway

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