Tangled web of intrigue as drug dealers hide behind Bitcoin
Investigators are struggling to keep up as more drug sales take place on the dark web, often settled in cryptocurrencies
A gang of international drug traders were trapped in their own online web when India’s Narcotics Control Bureau got on their trail earlier this year, but investigators were jolted by the complexity of the digital maze that they uncovered.
The bureau arrested Jerome Watson and Rhythm Das in December for supplying synthetic drugs to college students and other youngsters in major cities. In March officials nabbed their accomplice, Kamlesh Baste, 20, in the central-west state of Maharashtra.
Baste had been “cautious and cleared his stock” following the arrests, but was backtracked through the same distribution network when a consignment from Watson and Das in Kolkata was returned.
Not only was the gang operating though the dark web, but payments were being made with Bitcoins and other cryptocurrencies, officials at the agency told Asia Times. At least three international narcotics cartels that used the currencies have been smashed, with large quantities of drugs seized in Mumbai, Hyderabad and Delhi.
Online gangs are notoriously difficult to trace, as their operations are widely dispersed. The kingpin of Baste’s ring was a United Arab Emirates resident who originated in the southern Indian state of Kerala; Baste bought drugs from his website and they were distributed to buyers in cities like Mumbai, Noida, Bengaluru, Chennai and Kolkata.
Gangs with global tentacles
Investigators say that drug orders for masterminds living abroad are usually placed through mobile networking apps like WhatsApp, or via social media. Drugs procured from the dark web are sent by courier or mailed to India, where they are snapped up by buyers as diverse as doctors, engineers and students. Three foreigners have been arrested.
“These students were operating their business through their US-based Indian friend. That friend would then place all orders on the dark web to suppliers based in the European Union and get them delivered at students’ Mumbai addresses via courier, said Shivdeep Lande, chief of the Anti-Narcotics Cell at Mumbai Police. “The entire money transaction was based on cryptocurrencies,” he added.
“For dealers it is much easier to do business over the web, where they can buy a wider range of contrabands quickly, get consistent quality and don’t have to personally interact with suppliers,” an official said.
The risks entailed in buying a large consignment of drugs are usually minimized by employing a facilitator, who can rope in young college students to deliver them to a second location. Once there, the drugs are collected and distributed to dealers in small portions.
Consignments are hidden from scanners by using bulk posts and other innovative methods. “Most consignments of LSD are sent in the form of paper sheets with emojis or stamps,” Lande said. “Ecstasy consignments, a bit thicker, look like invitation cards or posters of deities such as Shiva, made up of several tablets.”
Following a crypto maze
Police say that cryptomarkets have changed the way drugs are bought and sold all over the world. Websites look like ordinary shopping sites, with pictures and descriptions of a vast range of products, as well as buyer reviews. Once a sale is made the payment trail vanishes, as Bitcoins are electronic, anonymous and outside banking channels.
The narcotics bureau first encountered dark web sales in 2015, when it intercepted two syndicates using sophisticated cyber tools to peddle drugs. Since then, traffic on dark sites has surged. Cryptocurrencies have also become the preferred payments mode for illegal transactions involving weapons and the sex trade.
As gangs increasingly operate across international borders, the agency has had to boost its reach into other countries.
Two-thirds of dark web transactions involve drugs, according to a report by Europol released in November 2017. The study says European Union suppliers account for nearly half of drug sales through the dark web, which is believed to be worth $150 million a year — still only a small fraction of the $300 billion illegal drugs trade.
Dark web sales are taking a bigger share of transactions every year, and the business has become a haven for shady dealers who offer other illicit goods, including arms, counterfeit currencies, stolen credit cards and illegal pharmaceuticals. Their illegal drugs are also becoming more potent, with a large number of synthetic products and new psychoactive substances entering the dark web market.
The anonymity offered by the dark web and Bitcoins has a massive appeal to younger, more vulnerable users, especially those who haven’t been into drugs before. A Delhi University student, who declined to be named, said there is even a plethora of guides online to help buyers navigate through the technical jargon on the dark web.
Hiding behind anonymity
According to the 2016 Global Drug Survey, around 10% of users bought their drugs online, and many were trying them for the first time. Officials say this has alarmed law enforcing agencies globally.
“The digital drug revolution is attracting youngsters. All it takes is five minutes, one quick download, an encrypted URL to access the ‘Ebay for drugs’ – hidden deep in the dark web,” said a police official.
Lande added: “The online cryptomarkets facilitate access to drugs without any direct contact with criminals running the drug rackets. Besides, chances of getting on the radar of law enforcement authorities are also minimized.”
Following the financial trail and nabbing drug peddlers has become extremely difficult for both the police and the narcotics bureau.
“We tried to access dark web sites with an aim to detect drug cartels operating in India. Despite depositing a substantial amount of money to different accounts, it didn’t happen,” Lande admitted, in a reference to a five-month undercover operation by Mumbai police. “We gave up when asked to deposit more money.”
Efforts to clampdown on dark web markets haven’t had much success, either. For instance, when the US Federal Bureau of Investigation shut down the Silk Road – the so-called “eBay for drugs” – in 2013, its successors Silk Road 2.0 and Silk Road3.0 quickly popped up.
India banned virtual currencies in April, and Lande said this had made it a little easier for investigators. However, the ruling has been challenged in the Supreme Court and a hearing is scheduled for July 20. Meanwhile, a Reserve Bank of India panel has reportedly suggested that the ban should be revoked, fuelling speculation that cryptocurrency trading might be allowed, albeit with some conditions.