Much has been said about the dark web and the dark markets that exist, but how did they arise and where did they come from?  How have emerging technologies been used for illicit sales?  What about the first purchase made online and the rise of dark markets?  What is the role of law makers and what stance will policy makers from around the world take, to control this criminal activity?

Let’s take a deep-dive into the dark web to see how it all started.

It all started back in October 1969, when the Advanced Research Projects Agency (ARPA), a branch of the US Department of Defense, came up with a plan for a computer communications network using data packet switching. This network was known as ARPANET.  Initially used by US Universities to communicate with each other, it eventually became the foundation of what we now call the Internet. John Gregory Markoff, in his book titled ‘What the Dormouse Said’, discusses what the counterculture of the sixties did to shape illicit crime in the computer industry.  He also claims that the first illicit online sale took place between students from Stanford University and the Massachusetts Institute of Technology (MIT).

“In 1971 or 1972, Stanford students using ARPANET accounts at Stanford University’s Artificial Intelligence Laboratory engaged in a commercial transaction with their counterparts at MIT. Before Amazon, before eBay, the seminal act of e-commerce was a drug deal. The students used the network to quietly arrange the sale of an undetermined amount of marijuana.”

Despite this achievement, many do not consider this to “officially” be the first purchase made online, probably because the payment was made in person and in cash, without using any type of payment platform.

In 1989, Sir Tim Berners-Lee, while working at CERN (European Organization for Nuclear Research), invented the World Wide Web and by 1990 he had created the basic principles that make up the web – HTML, URI / URL and HTTP.  It was during this year that Sir Tim, as well as creating the first page editor and browser, also created the first web server. Finally, in 1991, the Internet was released to the public. Sir Tim, and other researchers, fought to make the Internet free for people around the world, but it took until 1993, for CERN to announce that the code would be available forever on a royalty-free basis.

Jump forward a few years, and by 1994 the first secure purchase was made over the Internet through the NetMarket website (created by Dan Kohn).  Incidentally, the purchase was for a CD by the artist Sting titled ‘Ten Summoner’s Tales’. The album cost US$12.48, plus shipping fee and it was the very first transaction to be protected by encryption technology.

By 2002, Tor Alpha version had been launched and a year later it was released to the public with 12 volunteer nodes. Tor is free and open-source software for enabling anonymous communication. The project, “The Onion Router”, which is where the name Tor came from, was developed by people with a common belief: internet users should have private access to an uncensored web. Development of the Tor Browser started in 2008.  The simplest explanation for how Tor works, is that it routes traffic through multiple servers and encrypts it at each step along the way to allow for “anonymous” internet activity.

In 2009, Bitcoin software was released to the public and its mining began.  However, it wasn’t until the following year, in 2010, that Bitcoin had its monetary value assessed for the first time in a transaction, when someone decided to sell their Bitcoins– swapping 10,000 of them for two pizzas!

Finally, in 2011 the very first dark market appeared – the infamous ‘Silk Road’. With all the technologies already in place and working well – Internet, Tor and Bitcoin – Ross Ulbricht (aka Dread Pirate Roberts) was able to start his long-awaited criminal project.

“The idea was to create a website where people could buy anything anonymously, with no trail whatsoever that could lead back to them.”

According to the FBI investigator, Christopher Tarbell, Silk Road became the most sophisticated and extensive criminal marketplace on the Internet at that time.

Unfortunately, it was short–lived, and by 2012, a postal inspector told law enforcement about strange activity on parcel sorters and the increase of drugs being sent through the mail. The FBI set up a multi-agency task force called, ‘Marco Polo’ and took control of the investigation and soon discovered the underground drug site called Silk Road.  Within a year, in 2013, Silk Road was seized, and the 27-year-old, Dread Pirate Roberts, was arrested.

So, is the Road still made of Silk?

Essentially, Silk Road is seen to be the pioneer of illicit transactions.  The God Father, if you will, of illicit dark web activity!  But like most criminal activity, when one door closes another one opens, and other large markets began to appear, which Silk Road’s sellers and buyers shifted to.

Let’s take a trip down memory lane with a timeline of the past seven years, showing the rise and fall of some of the most famous darknet markets so far.

Evolution

Its creators executed the so-called “Exit Scam” – shutting down the market, and disappearing with the user’s money, leaving them empty-handed.

AlphaBay

Said to be the largest online dark market in the world, AlphaBay was shut down after Alexandre Cazes, its founder, was arrested by the Royal Thai Police, with help from the FBI and DEA. A series of mistakes led the police to him, and AlphaBay’s take-down was seen as one of the most sophisticated and coordinated takedowns ever, in the fight against online criminal activity.

Hansa and Operation Bayonet

Hansa was taken down during a massive globally coordinated operation called ‘Bayonet’.  This 10-month investigation had a different approach: taking full control over the market, operating it for over a month and then shutting it down.

Dream Market

The longest-running market on the dark web, Dream Market was shut down because it was having difficulties staying online due to DDoS attacks, which were driven by a $400,000 ransom demand they couldn’t afford.

Wall Street Market and Valhalla – Silkkitie

Valhalla marketplace was seized by Finnish law enforcement during the same time the Wall Street Market was seized. It had been operating since 2013 and had over 1 million active users.  No details about the seizure have been released.

DeepDotWeb

The popular dark web news and index website, DeepDotWeb (DDW), was seized on May 7, 2019, just days after Wall Street Market and Valhalla.

 

As we wrap up our history of the dark web, we can see that the rise of dark markets is a fairly new thing, which surprises some people, but they are growing and maturing all the time with better designs, infrastructure and technologies.  Luckily, policy makers and law enforcement from around the world have been working together to seize the markets and arrest the individuals behind them. Their tactics vary, using methods such as, going undercover, hacking, grabbing open-source information, surveillance, analysing seized data, following the money, and always looking at the activity of the postal system.  Like all criminal activity, it takes time and resources to try to stay one step ahead.  Does crime pay?  Maybe in the short term.

FraudWatch International security analysts actively monitor and spend time in dark web environments for the purpose of gathering intelligence, understanding patterns of behaviour and identifying current and future attack trends.  We use all of this information to support our primary objective of protecting client brands and also sharing it with the broader community through articles like this.