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Post-Silk Road, Feds bust chaps for 'dealing heroin, coke' on world's largest dark web souk

Whack-a-mole against online drug sales continues

By Iain Thomson, 12 Aug 2016

Two men from Brooklyn in the US have been indicted on charges of selling heroin and cocaine on AlphaBay – believed to be the world's largest dark web marketplace.

Abudullah Almashwali, 31, and Chaudhry Ahmad Farooq, 24, were cuffed on August 2 after agents bought packages of the drugs from members of the Tor-hidden souk calling themselves Area51 and DarkApollo.

Almashwali was arrested [PDF] in New York after cops trailed a cab he was in and pulled it over. He was traveling with a selection of manila bags of the same type that had been used to package the aforementioned drugs, along with computer equipment. Almashwali told police the computers were used for Bitcoin mining and the envelopes were used to send out CDs.

Meanwhile, according to prosecutors, Farooq was fingered after agents linked the "encrypted email address used by 'Area51' and 'DarkApollo'" to Twitter, Instagram, and Facebook social media accounts. In a statement on Friday, the US Department of Justice claimed:

Almashwali and Farooq accepted orders for heroin and cocaine on AlphaBay, and then mailed the narcotics from post offices in New York to customers throughout the United States. They received payment in Bitcoin. In May 2016, law enforcement made two undercover purchases of heroin from “Area51,” which were delivered to a post office box in the Eastern District of California.

Postal records revealed that Almashwali purchased the postage for the two heroin parcels mailed to law enforcement, and that Farooq was involved in other mailings. Law enforcement agents were also able to determine that the encrypted email address used by “Area51” and “DarkApollo” was associated with actual Twitter, Instagram, and Facebook accounts used by Farooq.

The collars came as part of a campaign by the Central California Darknet Strike Force (CCDSF), which was set up to track and prosecute dark web drug sales. The two are being e to the Eastern District Court of California for trial and face 20 years in jail and fines of up to $1m apiece if convicted.

While the CCDSF will be toasting the indictments as a success, a study by the RAND Corporation shows that they are fighting a losing battle. The study found that since the Feds took down Silk Road, one of the first online drug marketplaces, the online sale of illegal narcotics has tripled and revenues for sellers has doubled.

"The closure of Silk Road has not curbed the growth of these cryptomarkets, as more markets continue to be created and more illicit drugs are being bought online," said Stijn Hoorens, a research leader at RAND Europe.

"This is despite several high-profile law enforcement interventions and exit scams by market administrators. Cryptomarkets are often online only for several months and users seem to be operating under the assumption that they could be closed at any moment."

Although small by comparison to the traditional illegal drug market, online forums are still generating a lot of revenues. The researchers estimate that dark web drug forums generated between $12m and $21.1m in January of this year, and sales are growing fast.

The vast majority of sales online were for less than $100 in value, but a quarter of buyers were spending over $1,000 per month, suggesting that they are reselling the goods to others. Either that or a fair few users have massive drug habits.

For some sellers these forums are very big business indeed. The top seller raked in Bitcoins worth $276,230 in January, a ten-fold increase on the same month three years ago, and over half now pull in at least $1,000 a month in sales.

The US dominates these online drug markets, accounting for over 35 per cent of sellers, and the UK is in second place with 16 per cent. But sellers in the Netherlands are the revenue champions, mainly because they dominate the market for popular party drug MDMA.

"The evidence on the full impact of cryptomarkets remains inconclusive. Some have argued that cryptomarkets reduce violence from the drug supply chain, but others believe that it may offer a new, often young, consumer base easy access to drug markets," Hoorens said.

"Law enforcement agencies that try to curb these markets can use a combination of traditional surveillance operations, postal detection and interception during shipping, and online detection and tracking of the cryptomarkets." ®

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