Pubdate: Sun, 23 Jul 2017
Source: Philadelphia Daily News (PA)
Copyright: 2017 Philadelphia Newspapers Inc.
Author: Anick Jesdanun, The Associated Press


NEW YORK (AP) - AlphaBay, the now-shuttered online marketplace that
authorities say traded in illegal drugs, firearms and counterfeit
goods, wasn't all that different from any other e-commerce site, court
documents show.

Not only did it work hard to match buyers and sellers and to stamp out
fraud, it offered dispute-resolution services when things went awry
and kept a public-relations manager to promote the site to new users.

This screen grab provided by the U.S. Department of Justice shows a
hidden website that has been seized as part of a law enforcement
operation by the Federal Bureau of Investigation, the Drug Enforcement
Administration and European law enforcement agencies acting through
Europol. On Thursday, July 20, 2017, authorities announced that two of
the world's most notorious "darknet" marketplaces, AlphaBay and Hansa,
have been knocked out in a one-two punch that officials say yielded a
trove of new intelligence about drugs and weapons merchants that
operate from hidden corners of the internet. (U.S. Department of
Justice via AP)

Of course, AlphaBay was no eBay. It went to great lengths to hide the
identities of its vendors and customers, and it promoted
money-laundering services to mask the flow of bitcoin and other
digital currencies from prying eyes.

Such "darknet" sites operate in an anonymity-friendly internet
netherworld that's inaccessible to ordinary browsers. If you've ever
found yourself wondering just how they really work, a U.S. criminal
case unveiled Thursday offers an eye-opening look.


U.S. Attorney General Jeff Sessions calls it the largest darknet
marketplace shut down in a sting. Darknet refers to the use of various
technologies to mask the site's operators and users, allowing buyers
and sellers to connect anonymously - to each other and to law

Authorities say the site trafficked drugs such as heroin and cocaine,
fake and stolen IDs, computer hacking tools, firearms and counterfeit
goods. The site also facilitated services such as money laundering and
swatting - the practice of making bomb threats and other false reports
to law enforcement, usually to harass perceived enemies.

AlphaBay went so far as to hire scam watchers to monitor and quash
scams on the site. It had a public-relations manager responsible for
outreach to users and the broader illicit-trade community. The site
also employed moderators to resolve disputes and refund payments when

AlphaBay hid its tracks with Tor, a network of thousands of computers
run by volunteers. With Tor, traffic gets relayed through several
computers. At each stop, identifying information is stripped, so that
no single computer knows the full chain. It would be like one person
passing on a message to the next, and so on. The 10th person would
have no clue who the first eight people are.

Tor has a number of legitimate uses. Human rights advocates, for
instance, can use it to communicate inside authoritarian countries.
But Tor is also popular for trading goods that eBay and other
legitimate marketplaces won't touch.

To further promote secrecy, AlphaBay accepted only digital currencies
such as bitcoin and monero. In doing so, participants skirted
reporting requirement that come when moving $10,000 or more in a
single transaction. While bitcoin can be traced when converted back to
regular currencies, AlphaBay offered "mixing and tumbling services" to
shuffle bitcoin through several accounts before the conversion.

Vendors were also required to use encryption for all communications to
keep them safe from spies.

Buyers funded their accounts with digital currencies, similar to
loading an Amazon gift card with money. When making a purchase, buyers
moved money from their accounts to an escrow. The payment was released
to sellers once buyers confirmed receipt of the goods.

AlphaBay took a 2 percent to 4 percent commission, and that added up.
The suspect behind the site, Alexandre Cazes, had amassed a fortune of
$23 million. As part of the case, authorities sought the forfeiture of
properties in Thailand, bank accounts and four vehicles, including a
Lamborghini and a Porsche.
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