Seven years ago, agents from the United States Federal Bureau of Investigation busted into a San Francisco Public Library to arrest Ross Ulbricht, the mastermind behind the Silk Road. Launched in 2011, the Silk Road was the first modern darknet market where anonymous users could purchase illicit drugs, weapons and other illegal goods using Bitcoin (BTC).
Although the Silk Road was shut down in 2013 following Ulbricht’s arrest, many individuals still use Bitcoin and other cryptocurrencies to purchase illicit drugs from darknet markets. For example, a recent press release issued by the Naval Criminal Investigative Service, or NCIS, states that over the past year, there has been an increase of drug-related investigations involving Navy personnel. Many of these individuals have specifically been caught purchasing LSD using crypto on darknet markets. The release notes:
“Recent law enforcement reporting has revealed that an increasing number of people are moving to purchasing illicit substances via the dark web because of the perceived anonymity provided by tools like The Onion Router (TOR). They also use cryptocurrencies such as bitcoin to pay for purchases.”
Although darknet markets are havens for tools like TOR, which offer anonymity by obscuring IP addresses, law enforcement officials have been using new techniques to identify purchasers and sellers across these marketplaces. Additionally, while some cryptocurrency transactions can be anonymous, many are traceable. Michael Meyer, the chief information officer of automated crypto trading platform ArbiSmart, told Cointelegraph that while using crypto to purchase illicit drugs may appear to be secure, Bitcoin transactions are not that private:
“Even with the transparency associated with crypto, Bitcoin is not as private as people tend to think. Companies like Chainanalysis and CipherTrace are able to provide a lot of details about each transaction, which eventually can reveal the identity of those wallet owners…