Dark Web drug sales continue to rise

This weekend, June 26, the world celebrated International Day against Drug Abuse & Illicit Trafficking – the holiday officially recognized by the United Nations to encourage our society to fight against drug abuse and stay healthy.  This day was established in 1987 as an expression of the determination of the UN General Assembly to strengthen its activities and create a world community free from drug abuse. 

The international law enforcement community continues to fight against this problem facing new technology challenges and emerging sophistication of the threat actors operating online. The lockdown restrictions during COVID-19 may have accelerated drug trafficking using the Internet, according to the United Nations Office on Drugs and Crime’s World Drug Report-2021. 

In Asia, the most frequently mentioned countries of shipment of drugs sold on the 19 major Dark Web markets analysed over 2011-2020 were China and India. “Access to drugs has also become simpler than ever with online sales, and major drug markets on the dark web are now worth some $315 million annually. Contactless transactions, such as through the mail, are also on the rise, a trend possibly accelerated by the pandemic,” it said. Although this is a “tiny fraction” of overall drug sales, the trend of using dark web on the rise, with a fourfold increase in annual sales from the beginning of the 2010s to more recent years. 

While cannabis dominates darknet sales, marketing on the so-called clear web often involves NPS [new psychoactive substances] and precursors used in the manufacture of synthetic drugs.

The report said COVID-19-related restrictions did not seem to have affected the interception of heroin flows in South Asia. In India, the quantity of heroin seized during the first four months of 2020 (about 1 ton) was a third of the quantity seized in the previous year, suggesting a level of supply or interdiction similar to that observed in 2019.

The closure of the Kabul International Airport to passengers until the beginning of July 2020 impeded the use of air couriers for trafficking opiates to countries such as India. However, there has been a spurt in the use of maritime/waterway routes for trafficking large consignments of drugs such as heroin and crystal methamphetamine.

Stating that drug markets had largely proved to be resilient to COVID-19 related changes, the report said some drug markets experienced no change due to the pandemic, while others quickly recovered after initial disruptions or underwent opportunistic changes in routes and modi operandi. Drug trafficking even appeared to be continuing with an increased pace.

“The COVID-19 pandemic led to shifts in drug use: overall, MDMA, LSD and cocaine were used less due to the closing of social and recreational venues; increased stress, boredom, more free time and changes in financial resources triggered an increase in the use of cannabis, as well as in the non-medical use of pharmaceutical drugs,” it said.

Another key finding was that the pandemic had accelerated some drug trafficking patterns, with larger shipment size, increased use of private aircraft and contactless methods to deliver drugs to end consumers.

Dark Web drug sales continue to rise
Dark Web community selling illegal drugs using alternative cryptocurrency (Monero)

The pandemic pushed over 100 million people into extreme poverty, and greatly exacerbated unemployment and inequalities, as the world lost 114 million jobs last year. “In doing so, it has created conditions that leave more people susceptible to drug use and to engaging in illicit crop cultivation,” said the report.

Dark Web actors are actively leveraging alternative cryptocurrencies with enhanced privacy to minimize the risk to be traced by tools collected transactional information from public blockchains. In certain cases, criminals rely on less known cryptocurrencies and exchangers with almost no KYC” – said Gene Yoo, CEO of Resecurity, Los Angeles-based cybersecurity and risk management company hunting on Dark Web actors globally. “The number of new underground marketplaces selling drugs almost doubled during the pandemic” – he added.  

Earlier this month, WazirX, India’s largest crypto exchange, was accused by the Narcotics Control Bureau (NCB) of using Bitcoins to buy drugs on the Dark Web. The exchanger released a public statement that WazirX will “fully cooperate” in any investigation, following reports that the Enforcement Directorate (ED) had issued a show-cause notice to the company for undertaking transactions in alleged violation of the Foreign Exchange Management Act (FEMA) rules. Earlier on Friday, the ED issued a statement saying that it stumbled upon the transactions, worth Rs 2,790.74 crore of the company during an ongoing money laundering probe into the “Chinese-owned” illegal online betting applications. The agency said it found that “the accused Chinese nationals had laundered proceeds of crime worth about Rs 57 crore by converting Indian Rupee (INR) deposits into cryptocurrency tether (USDT) and then transferred it to Binance (exchange registered in the Cayman Islands) Wallets based on instructions received from abroad. “In the period under investigation, users of WazirX via its pool account, have received incoming cryptocurrency worth Rs 880 crore from Binance accounts and transferred out cryptocurrency worth Rs 1,400 crore to Binance accounts. None of these transactions are available on the blockchain for any audit or investigation,” the ED claimed. 

Binance is considered a market leader in this domain and had acquired WazirX in 2019.

This weekend Britain’s financial regulator FCA has banned Binance, one of the world’s biggest cryptocurrency exchanges, and issued a consumer warning against both the Cayman Islands-registered Binance holdings company and Binance Markets Limited, a London-based affiliate that is controlled by chief executive Changpeng Zhao and is overseen by the UK regulator. “Binance Markets Limited is not permitted to undertake any regulated activity in the UK,” the FCA said, adding, “no other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the UK ”.

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