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The Internet Bitcoin Crime Technology

How Online Black Markets Work 98

Posted by Soulskill
from the probably-better-than-most-real-markets-these-days dept.
CWmike writes "The internet is no stranger to crime, writes corporate investigator Brandon Gregg. From counterfeit and stolen products, to illegal drugs, stolen identities and weapons, nearly anything can be purchased online with a few clicks of the mouse. The online black market not only can be accessed by anyone with an Internet connection, but the whole process of ordering illicit goods and services is alarmingly easy and anonymous, with multiple marketplaces to buy or sell anything you want. Gregg started with $1000 and a took journey into the darker side of the Internet using two tools: Bitcoin and the Tor Bundle."
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How Online Black Markets Work

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  • by crazyjj (2598719) * on Monday April 30, 2012 @03:56PM (#39849383)

    The authors, no doubt to avoid legal troubles, never actually go through with any transactions. But I would be very curious to know how many scammers are on these sites (not like you could report them to the cops if they didn't deliver). I imagine the feedback/rating system helps, but plenty of scammers found a way to game ebay's system.

    • by zAPPzAPP (1207370) on Monday April 30, 2012 @04:03PM (#39849487)

      It's where I do my grocery shopping.

      But these aren't organic farmed tomatoes! Damn you, shadyPeasant67!!

    • by Anonymous Coward on Monday April 30, 2012 @04:09PM (#39849579)

      I was following the whole "Silk Road" site for a while. I even ordered a grey market (not illegal but not really legal to "sell for human consumption") drug off it, just to test the waters, and.... it didn't show up. So I sent the guy a message and... he appologized and sent another one, which did.

      I would even call that "good customer service". That said, scams must be a problem and I may have gotten lucky. Last I saw (I lost interest shortly thereafter....I also never tried the "research chemical" so I can't say whether it was real... I want to say it was AMT but, I honestly don't remember) they were talking about makeing "seller accounts" pay to join.

      That at least decreases the incentive to scam, if they implemented it. I looked at some other sites, and some of them had a more in depth verification process before you could start selling. Not sure what that amounts to, as I never went through it.

    • Re: (Score:2, Flamebait)

      by ClintJCL (264898)
      How often do legitimate companies one pay's actual legal fees to rip one off? Especially an entrenched monopoly like a local phone company? I'd say the odds are higher, but not as different as most would expect.
      • local phone company? who uses a landline anymore?
        • by ClintJCL (264898)
          Lots of people, including myself.

          Though I can't find much past year 2010 - in 2010, "they" were becoming concerned because the number of residential households relying solely on mobile phone service was up to ... 20%.

    • by maz2331 (1104901) on Monday April 30, 2012 @04:40PM (#39849999)

      I'd also expect that the cops are using some of these as sting operations.

    • by Anonymous Coward on Monday April 30, 2012 @04:42PM (#39850029)

      I know a number of people who have successfully ordered LSD (for ornamental purposes only) from a guy on Silk Road. It has a feedback system which works pretty well.

      Scammers can only get away with it a few times before changing user names, and few are willing to support a guy with 0 feedback when there are sellers with the same goods with tons of positive feedback.

      • Re: (Score:3, Interesting)

        by Anonymous Coward

        Although it's possible, I think that would require too much cooperation between different law enforcement agencies. Remember you don't need a recipient's consent to send them an illegal substance. What they tell you to do when ordering their merchandise is to have it sent to a friends house. When the package arrives, take a marker and write "return to sender." Act like you don't know what's in it and then take it to a different location for consumption.

    • Re: (Score:3, Interesting)

      by kyrio (1091003)
      If you look around and use your brain, Silk Road is just as good as any public site. eBay is filled with just as many scammers as there are legit sellers. Anyone with good feedback on Silk Road will be just as good as any legit retailer.
    • by glorybe (946151)
      Pay Pal seems to work quite well for ebay purchases. I must have made 100 purchases at Ebay and have never had much of a problem with anything at all. I did have one trivial misrepresentation of the completeness of an older musical instrument. I love shopping on Ebay.
      • by tlhIngan (30335)

        Pay Pal seems to work quite well for ebay purchases. I must have made 100 purchases at Ebay and have never had much of a problem with anything at all. I did have one trivial misrepresentation of the completeness of an older musical instrument. I love shopping on Ebay.

        Paypal and eBay are complimentary businesses. eBay lets random Joes hawk stuff online that other random Joes may want. Paypal lets them do it the Internet way - by using credit cards. Because otherwise, the only way to pay for the sale is cash,

    • by bentcd (690786)

      But I would be very curious to know how many scammers are on these sites (not like you could report them to the cops if they didn't deliver).

      At this point you'd be buying fantasy product and paying for it with fantasy money, so it's an open question who is scamming who exactly in this case.

      Ok, so I jest. A little bit. :p

  • Time to switch. Remember the switch.

  • Sounds like... (Score:5, Informative)

    by AlienIntelligence (1184493) on Monday April 30, 2012 @04:10PM (#39849611)

    Sounds like a reason to blow a grand on stuff you shouldn't,
    in the name of writing an article.

    Until you read the article and see it's a talk thru.

    Then you read the entire article and realize, it's not even a
    talk-thru, it's a talk-about. And not even a good one at that.
    There is really no info, except, get bitcoins, use Tor, find
    stuff.

    Wow. In depth reporting at its finest.

    -AI

    • by Dyinobal (1427207)
      Ya I was curious what these illegal and black market items you could buy online with bit coins sadly he didn't even say. Other than that they were illegal and black market... So ya seems kind of lame.
      • Re:Sounds like... (Score:5, Informative)

        by AlienIntelligence (1184493) on Monday April 30, 2012 @04:23PM (#39849799)

        What's worse, the one notable statement of what he could find:

        M9 Tactical handgun with an illegal silencer, unregistered of course.

        Is not an illegal weapon. Most states in the US, you can purchase
        an unregistered weapon from person to person. Further here in AZ,
        that is NOT an illegal silencer (unless you don't purchase the very
        cheap $200 license to own a silencer).

        So, basically, he told us about a http://www.gunbroker.com/ [gunbroker.com] that
        takes bitcoins. Lol.

        Btw, $2000, your own Stargate PS90
        http://www.gunbroker.com/Auction/ViewItem.aspx?Item=284429588 [gunbroker.com]

        for those that shall troll me, yes... Stargate used P90's but unless
        you are a LEO... THOSE are illegal for commoners.

        Man I wish I had a spare 2 grand.

        -AI

        • by Anonymous Coward

          On the contrary, a short barreled rifle is just a tax stamp away (very similar to the silencer scenario). There is no LEO-only restriction, and BATF still issues the tax stamps for newly manufactured SBR's to regular people (unlike the situation with newly manufactured select-fire weapons).

        • Re:Sounds like... (Score:4, Informative)

          by srmalloy (263556) on Monday April 30, 2012 @05:13PM (#39850357) Homepage

          Looking at that particular auction, that's the carbine version of the P90, semiauto and with an extended barrel to meet the barrel-length requirement, not the select-fire PDW used on the show. That variant was made so that it could be sold to civilians.

          • Short barrel rifles are legal for civilians to own, they just again need a $200 tax stamp upon transfer, like silencers. No issues at all, so long as you jump through the hoops properly.

            Only fully automatic weapons are banned, and then only if they weren't already registered prior to the ban in 1986. Now that means all P90s, of course since they weren't made until after that. However you can get the short barrel variety. FNH doesn't seem to want to sell them to civilians, but licensed dealers will modify th

            • Usually there are barrel length restrictions for handguns as well. In Minnesota a handgun or pistol [state.mn.us] is defined as:

              a weapon designed to be fired by the use of a single hand and with an overall length less than 26 inches, or having a barrel or barrels of a length less than 18 inches in the case of a shotgun or having a barrel of a length less than 16 inches in the case of a rifle (1) from which may be fired or ejected one or more solid projectiles by means of a cartridge or shell or by the action of an explosive or the igniting of flammable or explosive substances; or (2) for which the propelling force is a spring, elastic band, carbon dioxide, air or other gas, or vapor.

            • by Specter (11099)

              "Short barrel rifles are legal for civilians to own, they just again need a $200 tax stamp upon transfer, like silencers."

              With one important caveat: your state may have additional restrictions on SBRs or silencers that make them illegal (in that state) even if you've got a tax stamp.

        • by 1s44c (552956)

          Further here in AZ, that is NOT an illegal silencer (unless you don't purchase the very
          cheap $200 license to own a silencer).

          Going off at a tangent here but what possible reason does anyone have to own a silencer?

          Genuine question BTW.

          • Most "silencers" are actually suppressors; that is, they suppress the noise the gun makes from powder detonation down to lower decibel levels, but they more or less don't make it whisper quiet/silent. Valid reasons to have them would be to prevent hearing damage in general, in addition to noise control for places such as shooting ranges that might be near other developments (say, an indoor range, or an outdoor one that has had residential and commercial development encroach upon it). Even countries with st
          • Same reason for owning a corvette, it makes your dick bigger.

      • Re:Sounds like... (Score:5, Informative)

        by jsh1972 (1095519) on Monday April 30, 2012 @04:28PM (#39849851)
        I actually read something early this morning on the subject that named an online marketplace called Silk Road, only accessible through TOR, and all transactions use bit coin, so I went and checked it out... the main thing was drugs (weed, heroin, meth, cocaine, pharmaceuticals, the new designer drugs, hallucinogen, you get the idea)... there were also hacking tools, banned books (think meth manufacture)... I saw categories for art, currency, services, clothing, and many others. It's an anonymous international marketplace with an escrow service and buyer/seller ratings. I was actually quite impressed.
      • The article mentions:
        Bulk credit cards 6.5BTC
        Credit card reader/writer 76.60350 BTC
        M9 Tactical handgun with an illegal silencer for 225.00000 BTC

        • Re: (Score:2, Funny)

          by Anonymous Coward

          Getting revenge on your neighbor letting his dog crap in your yard PRICELESS

      • by Anonymous Coward

        Baseball cards.

        Not authorized by MLB.

        Not even with implied oral.

    • Re:Sounds like... (Score:5, Insightful)

      by AlienIntelligence (1184493) on Monday April 30, 2012 @04:16PM (#39849677)

      Gregg started with $1000 and a took journey into the darker side of the Internet using two tools: Bitcoin and the Tor Bundle."

      No..., he didn't.

      It makes it seem like he did. But I doubt the veracity after reading the entire article.

      Considering the article description, there would be no point to have converted the
      money, unless he's never done it before and likes OMG ponies. Because in order
      for it to be a black market purchase, you must purchase something, that doesn't
      exist on the regular market. ie, He needed to commit a crime.

      And then write about it.

      Tits or GTFO.

      -AI

      • Re:Sounds like... (Score:5, Informative)

        by Red Flayer (890720) on Monday April 30, 2012 @04:30PM (#39849879) Journal

        Because in order for it to be a black market purchase, you must purchase something, that doesn't exist on the regular market.

        That's not true at all. Black market != market for illegal goods.

        Black market means that the trade is being conducted outside the legally operating market, not that the item(s) are illegal.

        Cigarettes are legal. Buying cigarettes, cash-only, tax-free off the back of a truck is a black market transaction.

        Black markets capture economic activity that is "priced out" of the official market due to constraints on trade (like manufacturing quotas, taxes, legal price floors or caps, etc).

        As the market he delved into was not an official market, and operated out of the purview of LE, taxing authorities, etc, it was the black market.

        • We are splitting hairs, but generally speaking activities which are legal but are done illegally (to dodge taxes, regulations, and the such) is considered to be Grey Market activity.

          Cash under the table is considered more of a economic crime, and is generally considered a lesser moral offence.

          Black markets deal with illegal actives done illegally or within a criminal organization.

          i.e. bootlegging untaxed cigarettes that you picked up at the reservation is one thing. Running a organization (multiple people,

          • by aclarke (307017)
            A grey market, according to Wikipedia, "is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer."

            That coincides with the definition I'd understood of a grey market. I checked Wikipedia before responding to make sure I wasn't wrong. For example, I have a grey market vehicle. It was never sold in this country, but was legally imported outside the regular channels. If I'd forged the VINs or done something ille
            • You may want to read the article a bit deeper. It's not as narrow as you think.

              Yes, it does refer Grey market cars and textbooks.

              However, the article also refers to the underground economy in legitimate goods to avoid taxes. The article refers to bootlegging alcohol to avoid taxes - which is very darn close to your example of cigarettes. And to paying workers under the table.

        • "black market" is often another way to say "free market"
          • by rohan972 (880586)
            In a free market, the government provides protection from force and fraud. Black markets are closer to feudalism than capitalism.
            • by 1s44c (552956)

              In a free market, the government provides protection from force and fraud. Black markets are closer to feudalism than capitalism.

              Free market's don't involve the government at all. Fraud is always possible.

              If taxes and governments are involved it's not really 'free' as in 'free beer' or as in 'freedom'. It's a regulated market.

              • by rohan972 (880586)

                Fraud is possible but charges can be laid and you can sue. With black markets you enforce your own contracts, if you can. I know there was a marijuana dealer in my home town whose wife was paid a visit by bikers who were taking over their business. They didn't offer a superior product or service at a lower price, they convinced their competition that if they didn't shut down their wife would die a horrible death.

                Adam Smith did not promote the dissolution of government as far as I know. If you think that's w

                • Your post is woefully underrated and a good example of the civilisation we all buy when we pay our taxes (to paraphrase another user's sig).

            • by 0111 1110 (518466)

              So you don't believe people would trade at all without a government? I've been the victim of fraud a few times on Ebay and I don't recall the government reimbursing me for my losses. Nor do I recall a government agent following me around to protect me from being mugged.

              So I think you are wrong on all counts. The government doesn't protect me from force or fraud and there would certainly be a free market without a government.

              Rather than protecting me at all, the government is what I need protection from. The

              • by tehcyder (746570)
                I'd rather have a government that prevented 90% of crime than a free market free for all.
              • by rohan972 (880586)
                The government would enforce repayment if you successfully sued. They might even charge and imprison the fraudster. Government protection isn't perfect and certainly has to be limited. Even limited, some abuse of power will occur. Without government, you'd likely be serving your local warlord right now. Yes, I know some trade would occur but it would be very limited and credit would be virtually non-existent. Yes, we need protection from government, but they aren't the only ones we need protection from. It'
      • by s.petry (762400)

        Glad it was not just me. Can someone break the link to this article? It's not an article worth reading!

        Best I can figure is they are trying to get reader counts somehow and sent the link to /.

    • by Wizard Drongo (712526) <wizard_drongo&yahoo,co,uk> on Monday April 30, 2012 @04:20PM (#39849747)

      Well it would have been a bit more in-depth, but after the first few deliveries of premium 'shrooms and acid drops, he kinda lost focus...

      • Well it would have been a bit more in-depth, but after the first few deliveries of premium 'shrooms and acid drops, he kinda lost focus...

        Lol, well played.

        -AI

  • by l0ungeb0y (442022) on Monday April 30, 2012 @04:18PM (#39849719) Homepage Journal

    I propose we call these "Attractive and Successful Markets of Alternative Economy"

  • by denis-The-menace (471988) on Monday April 30, 2012 @04:21PM (#39849777)

    -Go to shady parts of a Big City.
    -ask around for [illegal stuff]
    -Use anonymous Cash (-- mention this is *BAD*, Um-Kay)
    -Conclude "Big Cities" are bad and should be controlled/blocked off. Should have check points. (IOW: Nazis had the right idea: "Papers Please")

    When will these fuddy-duddies/ idiots die-off so that this constant fear-mongering can stop?

    • by vlm (69642) on Monday April 30, 2012 @04:33PM (#39849921)

      When will these fuddy-duddies/ idiots die-off so that this constant fear-mongering can stop?

      Die off won't help. You need a fundamental societal shift where fear doesn't sell. Damn unlikely to happen anytime soon. I'm sure right about where scarey movies stop selling, roller coasters go away... Or you need something "real" to be scared about instead of fearmongering on TV. Maybe a nice civil war, or ethnic cleansing, or utter economic collapse, or famine, or all 4 at the same time. They're extremely likely in our future; how far in future, who can say.

      What MIGHT happen in the short term is the fuddy duddies die off so we no longer have to hear about how Elvis's hips, err, Dungeons and Dragons, err, video games, err, the gangster rap is corrupting the youth and there's this scarey internet thing, but in replacement we'll have to sit thru endless "Gen Y idiots gave away all their privacy on the internet; now they're screwed" and "all big business are always bogey man all the time" and stuff like that.

      • by Hatta (162192)

        Or you need something "real" to be scared about instead of fearmongering on TV.

        What about the ever expanding authoritarian state we find ourselves in?

        • by jamstar7 (694492)
          Shhhhhhhhhhhhhhhhhhhh, you'll give away the Secret Plan.

          Get back to watching the Kardashians already, they just inked a $40 mil deal and we need the advertising revenue.
    • When will these fuddy-duddies/ idiots die-off so that this constant fear-mongering can stop?

      As an exterminator might say: you can't eradicate, only control. If you shot every idiot today, more would be born tomorrow, grow up and fill your nostrils with the fragrance of stupid.

    • by Anonymous Coward

      Perfect analogy. Because, of course, there are no laws, law enforcement agencies, regulations or rules that attempt to shut down "offline" black markets, so the internet should work exactly the same way. Also, for the love of god, don't actually follow this plan. It is much more like to get you [shot] than to get you [illegal stuff].

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      If I have a stick, and I call one end of it "geniuses" and the other "idiots", then I cut off the end labeled "idiots" I do not get a stick with no "Idiots" end. Instead my stick still has an "idiots" end and it's even closer to the "geniuses" end. Continuing to apply that "solution" will only ensure I destroy the stick piece by piece.

    • by H0p313ss (811249)

      When will these fuddy-duddies/ idiots die-off so that this constant fear-mongering can stop?

      When they stop getting paid to do it. In other words when the alarmist media can stop selling advertising for it. Which all translates to: when the general public can no longer be fooled by the reactionaries.

      Which will around the time that Joe Public finally realizes that "Reality TV" is anything but real, and that when anybody advertises themselves as "Fair and Balanced" the reality is probably something else.

      In other words, don't hold your breath, the marching morons are coming... knee-deep in the water

    • Difference being, of course, that on the internet you're in no physical danger and almost certainly won't lose more than what you gave the guy - he won't tell his buddies in the next block to carjack you.
  • by Anonymous Coward

    Sorry, no string! *points to sign

    Family Guy....

  • by the way, there are a number of fairly simple ways of avoiding all taxes by running an online business.

  • by trum4n (982031) on Monday April 30, 2012 @04:33PM (#39849909)
    Just Ebay with your monitor brightness on 0.
  • Its all the fault of this Internet thing. We've got to take steps to stamp it out. Fast.

  • by CanHasDIY (1672858) on Monday April 30, 2012 @04:47PM (#39850095) Homepage Journal
    No matter how hard you try to stop it!

    One would think shit like this would give our legislators a moment's pause to consider the futility of their constant attempts to enact various forms of prohibition... but alas, will likely have the opposite effect.


    Apparently one of the key factors in getting elected to representative government is knowing fuck-all about economics.



    So it goes...
    • by mdenham (747985)

      Apparently one of the key factors in getting elected to representative government is knowing fuck-all about anything except having good hair.

      Fixed for the sad truth.

  • by retroworks (652802) on Monday April 30, 2012 @06:46PM (#39851585) Homepage Journal
    Ran out of breath, returned to his hammock. Nothing to read here.
  • The black market is a living proof that the free market does not exist. After all to be a free market means being free of all laws, regulations and taxations. This can give a rethink to the Ayn Rand dribble as the fact is that no free market has ever existed at any time in any place. So much for the dogma of capitalism.

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