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The Digital Drug Trade: Shutting Down the Silk Road, Will More Follow?

Closed for Business, or Not?
Vice ecommerce are online marketplaces and much like the familiar Amazon and Ebay they exist to provide products to anxious customers. Unlike your typical ecommerce sites, however, these sites specialize in selling illegal products. Selling products ranging from drugs to counterfit documents and weapons, these illicit websites are the virtual equivalent of the real world black market.

The most prominent of these black market sites was The Silk Road, which launched in February 2011. In late September, 2013, however, after a two-and-a-half year investigation, The Silk Road was shut down by the FBI, and its alleged kingpin, William “Dread Pirate Roberts” Ulbricht was arrested.

Online Kingpin
The Silk Road was no small endeavor and was far from being a common street corner drug peddler. According to the FBI, total Bitcoin sales (‘anonymous’ virtual currency) for the Silk Road was $1.2 billion. Sales commission alone was $80 million. The FBI has so far seized about $33.6 million in Bitcoin assets belonging to Mr. Ulbricht, making it the biggest crypto-currency seizure ever.

The takedown by the FBI was no small endeavor either. It cost them well over two years’ worth of manpower and resources to get to this point, and the investigation isn’t even over yet. The prosecution of the case against Mr. Ulbricht is being handled by the DOJ’s Complex Fraud Unit with Assistant U.S. Attorney Serrin Turner leading the charge.

The FBI and the DOJ aren’t working alone though. Britain’s newly formed National Crime Agency, as well as other international organizations, is also participating in the global effort to end black market internet sales. In a statement related to the seizure of Bitcoins and the arrest of U.K. dealers, Keith Bristow, the agency’s general director, said “The latest arrests are just the start; there are many more to come.”

The Silk Road Continues
Even as the governmental agencies issue warnings and push forward to bring down all of the players involved with the Silk Road, as it turns out, they have merely scratched the surface of the black market internet underbelly. Just over a month after the shutdown of the Silk Road, the Silk Road 2.0 was already up and running. It was as if the Silk Road was merely closed for renovations while consumers lined up outside waiting for the big “Grand Reopening”. Just as they did with the original Silk Road, Reddit users simply picked up where they left off, openly posting information such as product and vendor reviews. For them, it was as if nothing ever happened.

Not only do the FBI and the DOJ now have the new Silk Road enterprise to deal with but, in the true spirit of capitalism and supply-and-demand economics, the Silk Road 2 (“Under New Management”), just like its predecessor, has its share of competition. The two biggest competitors to the Silk Road 2 are Black Market Reloaded and Sheep Marketplace.

Enter the Competition
Black Market Reloaded (BMR) is possibly the Silk Road’s biggest competition. It did have its own hiccup to contend with early on but, after being shut down for two days in early October (somebody published some of the source code), BMR was up and running again in no time. Black Market Reloaded changes its URL fairly often and, like all of the other major players, can only be accessed via .onion through Tor. On the BMR Reddit page, just like with the Silk Road, customers can post product reviews and advice on which vendors sell the best product, and who has the best customer service and shipping timeframes.

Sheep Marketplace, like Silk Road 2 and Black Market Reloaded, is accessible only via .onion, and only through the anonymizing network, Tor. Sheep Marketplace also sells a variety of illegal merchandise, but just like the other black market internet ventures, the bulk of its trade is through illicit drug sales. Reddit users also post vendor and product reviews and consumer advice.

There are even sites on the ‘regular’ internet that provide step-by-step instructions on how to safely and anonymously access Silk Road 2.0, Sheep Marketplace and Black Market Reloaded, and they’ll even tell you where to find the URL. It seems that, with the reviews being openly posted on Reddit and the other mainstream sites offering information on how to tap into the black market sites, no one is taking the actions of the FBI and the DOJ seriously.

It’s possible that these buyers have a ‘catch me if you can’ attitude because they feel a certain level of invincibility since their identities are supposed to be protected through Tor. Unfortunately, that’s what Mr. Ulbricht may have thought. Of course, as it states at the bottom of the FBI’s Ulbricht-related press release, “the defendant is presumed innocent unless and until proven guilty.” As such, the ending to Mr. Ulbricht’s story has yet to be written.

Regardless of the flourishing virtual black market and the indifferent attitude of its consumers, it really is a “buyer beware” industry. In a Forbes.com interview discussing the arrest of the alleged Silk Road mastermind, William Ulbricht, an anonymous FBI spokesman said “This is supposed to be some invisible black market bazaar. We made it visible. When you interviewed [Ulbricht], he said he would never be arrested. But no one is beyond the reach of the FBI. We will find you.”

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