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Digital Citizens News

Illegal Drug Market Operators’ Scam Sends Shockwaves Across DarkNet

Published Wednesday, March 18, 2015

Evolution Marketplace – and as much as $15 million in bitcoin – disappears

Washington, DC - Evolution Marketplace, reportedly shuttered by its operators in a multi-million dollar scam, had nearly 20,000 drug listings this past Monday. Researchers from the Digital Citizens Alliance visited the site at the beginning of the week and recorded a total of 34,000 listings, which also included stolen credit cards, personal information, and deadly weapons. The online black market had over 6,000 more drug listings than Silk Road at its peak. Evolution’s total listings (most of which were for illegal and illicit items) were double that of Silk Road’s which numbered just more than 17,000 at the time of its seizure.

Reports indicate that Evolution Marketplace’s operators may have walked away with somewhere between $12 million and $15 million dollars worth of bitcoins.

“If a market leader like Coca-Cola pulled every coke from store shelves or if Google suddenly shut down its search engine you would notice,” said Dan Palumbo, Research Director for the Digital Citizens Alliance. “Of course, this is not just about the change to what is available in the marketplace, but it’s about the con and how it effects the psychology of the buyers and sellers. Even other criminals don’t like seeing someone walk away with their money, and Evolution Marketplace’s operators just took tens of millions of dollars out of the pockets of customers and vendors.

“So far, the DarkNet drug market has been resilient, but you do wonder if these high- profile scams and shutdowns could drive dealers to create their own individual vendor shops and abandon the larger markets. Such shops utilize Tor’s hidden services much like the larger markets, but allow vendors to connect directly with customers without the risk of the middle man running off with their bitcoin.”

After law enforcement’s massive sting, Operation Onymous, took down sites like Silk Road and Pandora back in November of 2014, Evolution Marketplace became the clear leader in the ‘industry.’ Our research from this past week showed Evolution’s total listings were up 55 percent since Operation Onymous and drug listings were up 65 percent. Digital Citizens most recent research from this week showed Evolution had a market share of 48 percent of the drug listings and 50 percent of total listings.

Palumbo said Evolution has transformed the DarkNet drug dens. “They changed the business model by bringing together illegal drugs with stolen credit cards, personal information, and even deadly weapons on a scale that no one had seen before. Evolution also upped the bar for all the drug sites with a more efficient, streamlined user experience. The site was easier to navigate than any of the previous incarnations of Silk Road and other competitors.”

Evolution was also by far the leader in fraud related activity with a large section devoted to credit card fraud and identity theft. In the new examination, which was being prepared for a release next week, two sites - Evolution and Agora Marketplace - combined to control 82 percent of all non-drug listings.

“In the world of DarkNet Drug Marketplaces, we have to measure these things like dog years because the life span is so short. That said, Evolution Marketplace’s short life had a profound impact on the DarkNet’s drug community. It made it a darker DarkNet. And that is not just a trend now; it is the new industry standard. Newer marketplaces that stand to benefit from Evolution’s downfall – like, Nucleus Marketplace, Abraxas Market, AlphaBay Market, Middle Earth Marketplace, and BlackBank Bitcoin Market – all utilize the same business model.”

Digital Citizens will be tracking the movements of other DarkNet marketplaces to see where dealers and customers land in a post-Evolution market.

“These sites are like digital ponzi schemes,” Palumbo said. “Instead of defrauding investors, they are ripping off drug dealers and their customers. There are a lot of dangerous characters on these sites and there is no good reason for law-abiding consumers to shop on any of them.”

Previous Digital Citizens research into DarkNet Marketplaces:

December 17, 2014: DarkNet Marketplace Watch, Q4, 2014

August 22, 2014: DarkNet Marketplace Watch, Q3 2014

April 30, 2014: Busted, but not Broken: The State of Silk Road and the DarkNet Marketplaces

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