Online Drug Markets Are Alive and Thriving

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Silk Road is a black-market website on which buyers and sellers of illicit products, mostly drugs, could come together anonymously using software like Tor, which conceals web browsers’ identity. When the FBI announced this week that it had seized the site’s servers and arrested its alleged owner and operator, Ross William Ulbricht, the Internet almost immediately began speculating over the ramifications.

One possible effect of the Silk Road’s demise would be a precipitous drop in the value of the virtual currency Bitcoin, which Silk Road’s users exchanged for illicit wares. Indeed, in the hours after the news of Silk Road’s shuttering, the value of Bitcoin dropped roughly 20%. But others argued that Silk Road’s closure would actually be good for the currency. Since the main use so far for Bitcoins has been buying drugs on Silk Road, the site’s termination would relieve pressure for governments to crack down on the use of Bitcoin.

The problem with this analysis is that the government’s shutdown of Silk Road is unlikely to shut down the online drug trade overall. In fact, during the months leading up to Silk Road’s demise, the competition over the virtual drug market seemed to be heating up. One site dubbed Atlantis even launched a concerted marketing campaign aimed at eating away at Silk Road’s market share, complete with a YouTube video meant to train new users on how to access the site.

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Perhaps predictably, Atlantis announced just a few weeks ago that it had been forced to shut down for “security reasons outside its control.” There are at least two other more low-key sites—Black Market Reloaded and The Sheep Marketplace—that are alive and well, with sellers purportedly offering everything from marijuana to ecstasy and firearms. Both of these sites must be accessed using anonymizing networks like Tor, but users discuss their experiences on sites like Reddit, which has dedicated “subreddits” for both Black Market Reloaded and The Sheep Marketplace.

Though the FBI was allegedly able to identify Silk Road’s owner and then locate its servers, there’s nothing in its complaint that suggests the agency compromised the basic infrastructure that enables sites like Silk Road to exist. Here’s what Tor had to say about the incident:

“We’ve been watching carefully to try to learn if there are any flaws with Tor that we need to correct. So far, nothing about this case makes us think that there are new ways to compromise Tor (the software or the network). The FBI says that their suspect made mistakes in operational security, and was found through actual detective work.”

Indeed, according to its complaint, the FBI eventually found Ulbricht by scouring the “surface web” for hints of Ulbricht’s identity—as opposed to the deep web, which is not indexed by search engines. Ulbricht slipped up early in the process when he first began to promote Silk Road on a surface-web site forum dedicated to illegal drugs using the handle “Altoid.” Months later, according to the complaint, Ulbricht appeared on another forum under the same handle asking for information about Bitcoin and asking other readers to email him. He then listed his personal email address. These slip ups, among others, eventually allowed the FBI to close in on Ulbricht identity and the location of Silk Road’s servers.

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One of the reasons Ulbricht was eventually caught was that he purchased several fake IDs in order to rent servers to grow Silk Road’s capacity. Ulbricht had these IDs shipped from Canada, and they were discovered during a routine customs inspection.

And yet, despite the billions spent by local, state and federal governments on the drug war, Americans continue to use illegal drugs at a steady rate. While demand for illicit goods continues, there will likely be entrepreneurs—online or off—willing to supply them.

9 comments
ha.pakal
ha.pakal

The drugs laws are are ineffective and counterproductive.

ha.pakal
ha.pakal

The FBI used malware,, to hack Tor and access the names of Silk Road's users. That is not in the complaint against Ulbricht but it's true.

AnthonySaitta
AnthonySaitta

An estimated 300,000 people will die this year from tobacco related illnesses. The food we buy and eat isn't a whole lot better. It seems the finest Country on Planet Earth is falling apart, while the major concern seems to be about affordable health care.

kolagunta
kolagunta

America is sending illegal money to the Afpak area for the drugs it consumes. This illegal money is directly used for maintaining the terror machine. Further the US is pumping economic and military aid to Pakistan, which is again channeled towards terror. In effect the US is funding terror both legally and illegally.  

LutzBarz
LutzBarz

it's just depressing [here] where the state govt has sniffer dogs out not for bombs but dope. politiicans don't seem to realise that they are our servants sort of at least. but democracy is getting closer and closer to the olde East Germany. Stasi stooges rebooted in western garb.

Sabrina45959310
Sabrina45959310

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RobertBain
RobertBain

Illegal wars .. sure thats fine.. collapsing the world economy.. free pass for the super rich. Buy a dime bag, get castrated.

MikeJones2
MikeJones2

What a waste of taxpayer dollars, we should be rioting in the street with our government's willingness to waste our tax dollars chasing pot dealers and smokers.

thebes42
thebes42

So what we find is that the FBI's surveilled lawful tech forums in their efforts to find a Free Market drug dealer.

Pardon me if I'm not impressed with "Freedom in America" anymore...