Vendors on Incognito paid a registration fee and a 5% commission on every sale. That revenue went to fund the site’s operations, including servers and what the DOJ described as “employee” salaries. All transactions were conducted in cryptocurrency—primarily Bitcoin and Monero—allowing customers and vendors to move funds without using traditional financial rails. Monero’s privacy features in particular obscured sender, receiver, and transaction amounts, posing challenges to investigators tracing flows.
Market Features
Some are looking for illegal stuff they can’t buy elsewhere, like drugs or counterfeit documents. The evolving landscape of crypto crime in 2024 highlights a complex interplay between advancing security measures and increasingly adaptive illicit actors. While efforts to curb illegal activities have shown promising results, threat actors continue to innovate — exploiting vulnerabilities within decentralized finance, blockchain infrastructure, and emerging technologies. This incident also marked the never-before-seen attempt of its administrator, Pharoah (arrested in May 2024 and revealed to be 23 year-old Taiwanese national Rui-Siang Lin), to extort the marketplace’s users. Despite the many challenges faced by darknet marketplaces over the course of 2024, these platforms have nevertheless seen a slight increase of income compared to 2023, generating more than USD 1.7 billion. Cryptocurrency-enabled online sales of illicit drugs saw a year-on-year growth of over 19% between 2023 and 2024, nearing USD 2.4 billion.
Although the S2S network is composed only of U2U transactions, all categories of sellers (i.e, market-only, U2U-only, and market-U2U) are present in the S2S network. For instance, market-only sellers are entities classified as sellers only in markets, but that may promote U2U transactions with other sellers, hence being part of the S2S network. Therefore, the S2S network can be seen as a proxy for a distribution network of illegal products. In contrast to the other types of sellers, the median income of U2U-only sellers increases after operation Bayonet. Moreover, we observe a trend of increase in their median income relative to the value before operation Bayonet—an increase of almost six times by the end of the period of observation (see Supplementary Information S4). Further supporting this interpretation, we observe that the trading volume of the U2U network increases after Bayonet, while the trading volume of markets decreases (see Supplementary Information Section S4).
Dominant Markets
Individually, they are able to yield significant high incomes compared to other types of sellers. To access sites in the Darknet, users need to use special software such as the Tor Browser as they are on an encrypted network to hide the identities of the people running the sites and services connected to them. Abacus launched in September 2021 as ‘Alphabet Market,’ and gradually increased its popularity, especially as the number of other markets on the dark web dwindled, mostly as a result of law enforcement actions. First, it’s true that the amount of illicit activity from cryptocurrency is a tiny slice of the overall pie. “It’s a really tiny percentage, and as a percentage it’s going down all the time,” said Ormsby. Grauer – who studies the role of cryptocurrency in crime – believes that “the industry is becoming more safe overall.” This has broad consensus.
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- We use data of DWM transactions on the Bitcoin blockchain pre-processed by Chainalysis Inc.
- Fraudulent ICOs, rug pulls, and phishing attacks deceive users through false promotions and impersonation tactics.
- This figure dropped quickly in early July, to just $13,000 a day across 100 deposits, as user trust was quickly affected by withdrawal delays.
- “I do not endorse sites and I do not take payment in exchange for anything.
- Their replacements were serving punters before those nabbed served time.
The prohibited drugs were subsequently sent overseas to the US, the UK and Ireland, in order for them to be repackaged into smaller quantities. OKX removed XMR and other privacy-focused tokens including dash DASH$23.43 and ZCash (ZCH) at the end of 2023. For those who are averse to confrontation, and who are sufficiently tech-savvy, the dark web offers an alternative to the risk and violence of dealing drugs offline. Naaaah surely not.” Plus if I’m honest, my inner reprobate buzzes from it.
In fact, previous studies on DWM transaction networks have revealed crucial aspects of the ecosystem13,14,15. However, they have so far mainly focused on DWM users, without distinguishing between buyers and sellers, and neglecting the different weight that more active users may have in the system. The reason is that the operational structure of DWMs inherently hides the seller–buyer link, as all transactions are made through the marketplace.
Down The Silk Road: Where Crypto Has Always Been Used For Payments
Another influence on price is the amount of the cardholder’s personally identifiable information (PII) that comes with the card, such as street address and phone number. Most reputable online stores ask for this information upon purchase, hence why having it drives up the card price. Eventually, they got a search warrant for Robertsson’s house, raided it, and found drugs. In addition, they found debit cards issued by a Hong Kong-based cryptocurrency exchange, which he could use to withdraw fiat currency from ATMs in Sweden. After cracking his encrypted email account, the agents found over 1900 invoices for drug orders, as well as messages confirming that Robertsson’s brother, a Bitcoin and cybersecurity expert based in Asia, was also in on the scheme. Stefan and his team confirmed this finding by using to Chainalysis to trace some of the brother’s Bitcoin withdrawals in Hong Kong and Thailand.
Russian Market
Strengthening Anti-Money Laundering (AML) and Know Your Customer (KYC) measures, along with advanced blockchain analytics and AI-driven monitoring, can help mitigate illicit activities while preserving the benefits of digital finance. Additionally, The Financial Action Task Force (FATF) enforces Anti-Money Laundering (AML) and Know Your Customer (KYC) measures to enhance transparency. The Travel Rule mandates transaction disclosures, aiding law enforcement in tracking illicit funds. Regulatory bodies leverage blockchain analytics to combat money laundering and fraud, strengthening global enforcement efforts. Cryptocurrencies allow extremist organizations to bypass conventional financial limitations, leveraging pseudonymity to mobilize foreign funds.
The platform’s popularity continues to grow, attracting both new and returning customers. Indeed, one of the most recent darknet market busts was the Nemesis online market. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) specifically cited the market’s role in the fentanyl trade as a reason for the bust.
Network Structure Of Transactions
Despite consistent results, this study has limitations that may be addressed in future work. First, while the dataset is preprocessed with state-of-the-art methods, there is no ground truth for validation, and this uncertainty propagates to our findings. For instance, we cannot verify if an entity classified as seller is in fact a seller. Similarly, there is no unique choice for the classification parameters or ground truth for fitting them.
STYX Market
By the time the US district court for the Central District of California issued its warrant on Monday, Bitcoin was above $30,000, though it briefly dipped below that mark. Department of Justice attorneys who filed the complaint didn’t respond to a request for additional information on the forfeiture request, raid, or defendants. An indictment and criminal complaint merely alleges that crimes have been committed.
NFTs, DeFi, And The Next Wave Of Crypto Crimes
Additionally, analysts pointed out that some platforms continue to use dead-drop delivery models and depend on inexpensive precursor chemicals imported from China, which are essential for producing synthetic drugs. These combined factors have enabled Russian-language darknet marketplaces to maintain their dominance and succeed despite external pressures. Until 2012, there is only one active market, namely Silk Road market, and hence no multihomer activity. From 2013 until 2015, the multiseller network grows in terms of connectivity, showing an increasing number of edges spread across different markets. During 2016 and 2017, the edges are polarized by AlphaBay, the dominant market (see Fig. 3).
Drugs, Drugs And More Drugs: Crypto On The Dark Web
Overall, our study provides a first step towards a better microscopic characterisation of the DWM ecosystem, indicating a direction of investigation that may be of interest to both researchers and law enforcement agencies. The results further support the recent efforts of law enforcement agencies to focus on individual sellers43,44,45, as well as, more recently, also buyers46,47. Since the beginning of DWMs’ activity, there has been a shift in the law enforcement approach from focusing on market admins towards sellers and buyers9,13. For instance, a recent London Metropolitan Police (MET) investigation examined the transactions of a seller profile on a DWM10.
