The King is Dead, Long Live Decentralized Markets?

On May 7th, 2019 The dark web news site, Deep Dot Web, had its website seized and administrators arrested through a coordinated effort with the U.S. FBI and European law enforcement agencies via Europol. The U.S. has charged the two with money laundering conspiracy due to the millions in dollars they received as “kickbacks” for affiliate marketing links to marketplaces selling illicit goods.

In this post, we will look at the takedown of Deep Dot Web, the potential rise of decentralized marketplaces, and the threat they pose to your information security. We will also discuss the impact decentralized marketplaces will have on the development of breach management processes and the necessity of automation when monitoring a decentralized market structure.

DARK WEB MARKETS WILL CONTINUE TO GROW

The seizure of Deep Dot Web is just the latest in what seems to be a cyclical process of dark web policing and market rebuilding. Walk with us through the dark web takedown timeline.

In 2013, when the Silk Road was taken down, many replacement markets began to rise to fill the market demand for illegal and illicit substances, and by 2017, AlphaBay was the clear successor in this void. Providing drug-addicted users access to their vices was good business as the site grew more massive than the Silk Road. It was taken down in a two-pronged attack, which included hijacking a second marketplace and re-writing code to de-anonymize and install beacons on users’ computers. However, none of that stopped the rise of Wall Street Market, a behemoth marketplace, which was taken down earlier in the same week as Deep Dot Web.

Wall Street had over 1.1 million customer accounts and over 5,400 vendors in 2019, 6 years after the fall of the Silk Road. A clear signal that dark web marketplaces will continue to exist and even grow in use. Nicolas Christin, a Carnegie Mellon computer scientist, believes that the pattern of bust and boom will continue when it comes to dark web marketplaces saying, “History has taught us that this ecosystem is very, very resilient… It’s part of a cycle, and we’re in the chaotic part of the cycle. We’ll have to see how it recovers. But if I were a betting person, I would put more money on it recovering than on it dramatically changing.”

The continued prevalence of dark web marketplaces seems guaranteed. Markets will continue to exist, grow in use, and evolve to protect themselves.

THE EVOLUTION OF THESE MARKETPLACES IS CERTAIN AS WELL

Since the fall of the Silk Road Platform in 2013, over 100 dark web marketplaces have come and gone. Less than 20 of these have been shuttered by law enforcement, and even then, the most skilled vendors mitigate risk with technology, laundering funds via cryptocurrency, and communicating only via encrypted channels. The dedication to anonymity to thwart arrest and other consequences will continue to result in an evolution in the sophistication of the methods used to do so.

The dark web community, as well as law enforcement and cybersecurity professionals, are all well aware of the vulnerabilities of today’s dark web markets – trust and centralized servers. These two “flaws” allow for the seizure of these markets, but what if they are circumvented by the development of decentralized dark web markets? What impact would that have on the protection of data and policing of these marketplaces?

The marketplace community has begun to experiment with decentralized market structures, and we may soon have an answer to those questions. In 2014 DarkMarket, a proposed fully peer-to-peer market system with no central authority for the feds to attack won first prize at a Toronto Bitcoin Hackathon. The proof of concept for DarkMarket’s distributed architecture has not become more than an experimental demonstration, but if it had been built and worked, it would have been a new Silk Road, completely decentralized. The project even described the creation of “multi-signature” addresses that would use three public encryption keys, created based on a private encryption key generated when users, buyers, and arbiters installed DarkMarket. If successfully built and implemented, law enforcement would have had to go after every contraband buyer and seller one by one to take down the market.

Then in 2018, project Eden, a proposed decentralized marketplace built on the Etherum blockchain, produced a white paper. The white paper claimed to eliminate the two fatal vulnerabilities of dark web markets, trust, and centralized servers with Eden. Projects like Eden that address the weaknesses of dark web markets, may one day result in marketplaces that are entirely decentralized, theoretically impervious, and built on the blockchain. To take down a marketplace like Eden, the theoretical use of the Ethereum blockchain would require the seizure of every single computer and miner operating on that blockchain. The use of blockchain technology is an aggressive evolution from the peer to peer DarkMarket that wowed audiences in Toronto four years prior.

THE PROBLEM FOR CORPORATIONS, ORGANIZATIONS, AND GOVERNMENTS

If decentralized marketplaces rise and replace the centralized markets currently in existence, stolen information being sold on these sites will become harder to find, and criminals harder to prosecute as transaction, vendor, and account data would all be decentralized.

The shift towards monitoring externally for data theft and the need for a solution that employs technology that incorporates human intelligence with automated intelligence gathering becomes a necessity. Automation would be required in order to both discover and keep up with the growth and available wares on these marketplaces. Terbium Labs’ Matchlight, for example, employs both an automated web crawler that scrapes the web for your organization’s sensitive data 24 hours a day and dedicated analysts that compile reports and provide you with valuable insight concerning your data’s exposure on the dark web.

Solutions like these are the future of dark web monitoring and would adapt to a decentralized market structure.

IS THERE A SOLUTION?

In closing, it appears that dark web marketplaces are both cyclically expanding after takedowns and evolving to become more decentralized. Though decentralization won’t happen overnight, the research is detailed and clear – many centralized dark web markets exist and continue to do so and the decentralization of dark web markets is coming. Decentralization threatens data security by burying marketplaces underground and ensuring the anonymity of records while facilitating the growing illegal drug, fraud, and weapons trades.

This evolution to decentralized market structures will require automated dark web monitoring solutions capable of crawling the darkest and most obscure parts of the dark web; that also employ some level of artificial intelligence and human analysis, like Terbium Labs’ Matchlight. Solutions like Matchlight will be required to identify sites as they become more and more obscure. Employing both automation for data collection and human intelligence to best interpret that data. The best possible solution would marry the two.

To learn more about Terbium Labs’ Matchlight product, and how it can help you proactively address data compromise everywhere on the dark web, contact us or visit our resources page to explore more about our approach to dark web monitoring.