Crypto markets increasingly infiltrating illegal drug trade, study says

Cryptomarkets – dark web marketplaces that facilitate the sale of illicit goods between buyers and sellers – are proving to be an attractive alternative to traditional face-to-face drug transactions, and tracking them with machine learning and web crawlers could help curb this growing trend, according to researchers at Simon Fraser University.

Their research shows that pharmaceutical revenue for crypto markets and vendors grew 80% from 2013 to 2021, indicating significant growth in the pharmaceutical and crypto market ecosystem.

“Crypto markets are typically short-lived, sites that pop up and shut down periodically, but they can be used as an alternative way to access these goods,” said Richard Frank, director of SFU's International Cybercrime Research Centre and professor of criminology. Frank is also a panelist on the Canadian Academy of Sciences' Expert Panel on Public Safety in the Digital Age, which released the report “Weak Connections” today. He is also the developer of DarkCrawler, a tool that collects and analyzes data from the internet and the dark web. The dark web is an unindexed, encrypted, anonymous section of the internet that is accessed using special software to hide details and identities.

“Low prices, contactless transactions and the freedom for buyers to choose different quantities of medicines make it an attractive option for the illicit trade,” Frank said.

To better understand the products available in the crypto market drug system and identify factors that encourage or discourage vendors from shipping globally, researchers collected product information from eight large, prominent crypto marketplaces between June 2021 and January 2022.

Presenting their findings at the recent International Conference on Systems Sciences, the researchers reported that an estimated 16.8 tonnes of drug products were traded across eight crypto markets for $234.7 million, with the most popular drugs being stimulants, cannabis, opioids and benzodiazepines.

The study also found that bulk, cheap goods are more likely to be shipped overseas, while other goods are only shipped domestically due to the perceived increased risks of shipping overseas.

“Crypto markets have grown and are likely to continue to do so, but some transactions may become less visible, such as as vendors moving to invite-only chat platforms,” ​​said Xu Liu, a researcher on Frank's team who oversees data collection and analysis. “While it may be difficult for law enforcement to crack down on international drug trafficking in crypto markets, developing and testing new tools and techniques could improve the chances that illegal imports are intercepted by authorities as they are sent through the mail.”

Frank said the crypto market ecosystem is expected to continue to grow, facilitating an increase in the volume of illicit goods in circulation over the next few years.

“Machine learning could be the solution to better search and identify drug packages during the transportation process based on their characteristics. With more packages being seized, vendors may decide to avoid global transportation due to the heightened risks and potential financial losses.”

Further research into the cryptocurrency market will help researchers better understand how to counter cryptocurrency market activity. Researchers plan to use web crawlers to continually track the cryptocurrency market to get a clearer picture of the number and volume of transactions for wholesale products, including custom listings that are often difficult to find.