Markets Sep 25, 2020

A Behind-the-Scenes Look at What Happens During and After Darknet Market Shutdowns

A number of typical events happen before, during and after darknet market…

Like traditional markets, the dark web ecosystem has had its fair share of triumphs and misfortune.

Darknet marketplaces come and go, and just like conventional marketplaces in the free market space with regular openings and shutdowns, the past several months have been marked by landmark dark web disruptions.

The common observation is the entry new markets set to replace their fallen counterparts that have long been hailed to be sizeable entities dealing in all manner of illicit goods and services.

In the free market scenario, when a retail store collapses to economic events such as a recession, a standard pattern of corporate and political events ensue – including an initial announcement to mark an exit, installation of signs to communicate an impending shutdown, clearance sales, the termination of employment contracts and eventual closure of the brick-and-mortar space to take up a different purpose.

Similarly, a matching scenario plays out in the dark web context whereby a pattern of events will mark the beginning to an end of a darknet marketplace.

Life Cycle of the Dark Web Marketplace

Generally, a site crash precedes the death of a dark web marketplace, which is then followed by an ominous absence of information from the platform’s operators. Such silence is typically followed by an explanation before the website’s value is repurposed.

Site crashes are usually announced by market admin who mostly term the events as “temporary” due to emergent technical difficulties or requisite website maintenance procedures. But then, the purported technical problems and site upgrades tend to persist and throw market users into a state of paranoia as the site admin becomes MIA.

Much sooner than later, the true explanation to an apparent shutdown surfaces in three main forms:

Law Enforcement Takeover

International anti-darknet operations have led to the closure of illicit websites known to fuel the dark web economy in fundamental ways.

A typical law enforcement takeover is marked by shutdown before the site springs back online for a few weeks. During this time, law enforcement agents operate behind the scenes to collect as much data as possible before it is finally closed for good.

Exit Scam

Exit scams have become a far too common phenomenon among dark web marketplaces. In recent news, Empire Market pulled a $30 million exit scam on its users.

It started with the market’s downtime, which was reported by Empire staff as the effect of an aggressive DDoS attack.

Within a few days, users were informed that the platform’s operators had made away with their Bitcoins.

Competitor Takeover

Sometimes, a hostile takeover may drive a dark web marketplace off the internet. Such an event is then followed by re-opening, in which the competing actor runs the platform’s affairs in full control of a site.

What Next?

Recent months have been marked by sensational darknet shutdowns and police arrests, so much that the European law enforcement agency Europol has announced an end to the dark web market’s golden age.

Apart from the high profile Empire Market exit scam, Operation DisrupTor alone is credited with leading an international law enforcement effort that has resulted in hundreds of darknet arrests, dozens of court prosecutions and seizure of millions in cryptocurrency.

Certainly, while the dark web ecosystem is used to witnessing the rise and fall of marketplaces, experts have observed the adaptation of cybercriminal networks to adopt alternative means of staying profitable and away from police interference.

Today, there is an increasing emergence of more targeted and niche platforms online, such as automated botnet markets to represent the rapid innovation being embraced by dark web criminals. The highly-motivated darknet actors are establishing cutting-edge darknet business models to replace the ones that have since been dismantled by law enforcement operations.

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