A year after the Silk Road 2 came online promising to revive the Dark Web drug trade following its predecessor’s seizure by the FBI, the sequel has suffered the same fate.
On Thursday international law enforcement agencies including the FBI, the Department of Homeland Security and Europol took down the Silk Road 2 and arrested its alleged operator 26-year-old Blake Benthall in San Francisco. Benthall, who is accused of running the new Silk Road under the handle “Defcon,” has been charged with narcotics trafficking, as well as conspiracy charges related to money laundering, computer hacking, and trafficking in fraudulent identification documents. The criminal complaint against him alleges that the Silk Road 2 sold hundreds of kilograms of drugs of every description to hundreds of thousands of buyers around the world, with bitcoin-based sales of more than $8 million per month at the time of its seizure.
“Let’s be clear – this Silk Road, in whatever form, is the road to prison,” Manhattan U.S. attorney Preet Bharara wrote in a statement to the press. “Those looking to follow in the footsteps of alleged cybercriminals should understand that we will return as many times as necessary to shut down noxious online criminal bazaars. We don’t get tired.”
Benthall appeared in a San Francisco court Thursday morning, where he had a bail hearing scheduled for tomorrow.
When the cryptocurrency darkcoin launched earlier this year, it distinguished itself from dozens of bitcoin copycats by promising to keep users’ transactions far more anonymous than its predecessor. Now that promise is being tested in the Internet’s fastest-growing proving ground for privacy technologies: the online black market for drugs.
Over the last month, two of the dark web markets selling an anonymous, mail-order catalog of narcotics and other contraband have begun supporting darkcoin transactions. On a site called Nucleus, visitors can now use darkcoin to buy LSD, MDMA, and marijuana. On the competing market Diabolus, dealers accept it for cocaine, synthetic stimulants like ethylone and alpha-PVP, and even counterfeit Euros. Those two markets still represent only a tiny fraction of the growing dark web drug economy—most of which uses bitcoin exclusively. But darkcoin’s entrance could signal a new means of transaction in that underground industry, and one that’s far harder for law enforcement to trace.
Someone out there likes anonymous money.
In only a month, the little-known bitcoin alternative known as Darkcoin has rocketed nearly tenfold in value–from around 75 cents a coin to almost seven dollars. Its selling point: Darkcoin offers far greater anonymity than bitcoin, mixing up users’ transactions so that it’s incredibly difficult to trace a payment to a person. And though few have yet to accept that more-anonymous coin for actual goods and services, the promise of Darkcoin’s privacy features seems to have sparked a miniature boom. It’s one of the fastest growing among the wave of cryptocurrencies that’s followed bitcoin’s success, with the total value of its combined coins topping out at nearly $30 million.
Darkcoin, supporters argue, serves a real privacy need. Despite its reputation for being more anonymous than traditional money, the bitcoin network actually allows anyone to see every transaction on a public accounting ledger known as the blockchain. Users often have to take extra steps, like mixing their coins in a “laundry” service, to prevent those addresses from being tied to their identity by any government or corporation that wants to snoop.
Darkcoin adds an extra layer of privacy by automatically combining any transaction its users make with those of two other users–a feature it calls Darksend–so that anyone analyzing the blockchain has a harder time figuring out where a particular user’s money ended up. “A large community believes that the way bitcoin’s blockchain is designed is a problem,” says Evan Duffield, the 32-year old Arizona-based software developer who launched Darkcoin in January. “Darkcoin has this anonymity aspect to it, which is attractive to a lot of people.”
