The demise of the White House Market will change the dark web
You've probably never heard of the White House Market (WHM). Google can't find it, and its vendors don't advertise much. The few public mentions of the site are on Reddit forums or specialized tech blogs. But among dark web users, WHM has been the go-to online marketplace for illegal drugs and fraudulent credit cards for years.
While never reaching the peak volumes of its more famous siblings Silk Road and AlphaBay, WHM has established itself as one of the most popular and secure marketplaces on the dark web. So when WHM unexpectedly shut down on Oct. 1, it came as a shock to the platform's loyal user base.
The site's one-page shutdown statement letter did not go into detail, saying simply that the White House Market had "reached our goal" and that "now, as planned," the site was being shut down.
The letter reads, "Thank you all for your business, your trust, your support and, of course, for putting a lot of money in our pockets." , "We may or may not be back with a different project sometime in the future." The letter was signed by WHM's chief administrator, known only by his online user name "mr_white".
At the time of its closure, the platform had nearly 900,000 users, more than a third of whom (about 326,000) were active. Like other dark web marketplaces, it was only accessible on anonymous browsers such as Tor and I2P. According to its advertised numbers, the White House Market has about 3,000 vendors, and its list of goods includes credit card and bank fraud, forged documents, illicit and prescription drugs such as marijuana and ecstasy, opioids such as heroin and oxycodone, hallucinogenic drugs such as ketamine and PCP, cocaine, steroids and amphetamines or methamphetamines.
The final list matches the site's theme, which features Walter White from "Desperado" on the banner. But unlike Walter White's fictional business, this one is global, with suppliers and buyers all over the world, although most transactions are conducted in English.
On Tuesday, less than a month after the White House Market ceased operations, the Justice Department announced the results of Operation Dark Hunter - a sweeping international dark web operation that resulted in 150 arrests and the seizure of more than $31 million in weapons, drugs and other cryptocurrency and cash. More than $31 million in cryptocurrency and cash was seized. Whether WHM and its executives are under criminal investigation is an open question, according to court documents that identify a handful of dark web vendor accounts from the White House Market.
It is unclear how much money WHM's founders have made since they opened the site in August 2019, but they charged a 4 percent commission on all sales through a nearly untraceable cryptocurrency called Monero. Nicolas Christin, a computer scientist at Carnegie Mellon University whose research focuses on online crime modeling, security economics and cryptocurrencies, estimates that the White House Market has facilitated at least $35 million in sales, which means the administrator's take-home pay over the past two years is likely to be at least $1.3 million.
Christin estimates that toward the high end of the tally, sales could reach $120 million, which would mean that the site's administrators took home nearly $5 million.
the White House Market is also known for its superior digital security, reliable customer service and, perhaps ironically, its work ethic. It did not allow vendors to sell child pornography, offer murder for hire, or sell weapons, explosives or poisons.
Now that it's gone, experts say, a new portal will fill the void, borrowing some of the tactics of the White House's dark web marketplace and setting market standards in the process, such as encoding all communications using "Pretty Good Privacy" (PGP) encryption, and moving to prioritize decentralized Monocoin, a decentralized cryptocurrency that claims to be "secure, private and untraceable."
"Historically, based on 10 years of data, as soon as large markets close, second-tier markets start to fill the void. That's how the White House market started." Kristin said. "You can see the change from the proverbial marketplace in the basement and local development to an industry that looks more like it's starting to adopt some standard operating best practices."
Except that these industry best practices will make illegal online transactions more difficult for law enforcement to track.
Safe departures are extremely rare on the dark web. most of WHM's predecessors were shut down after their founders were indicted, arrested, and in one notable case, the admin was found dead in a suspected suicide cell before going to trial.
Dark web drug sales (which by volume constitute the majority of activity there) represent a small but growing portion of the total global drug trade. Exact numbers are hard to pin down, but the United Nations Office on Drugs and Crime estimates that sales of such drugs have quadrupled in the past decade to $315 million. Christin, whose team collects data widely used by the United Nations, believes the upper limit is closer to $1 billion because his team can only track a fraction of all sales that occur on these platforms.
The first modern dark web marketplace to attract public attention was Silk Road - at its peak the business was worth $1.2 billion. Launched in 2011, Silk Road served over 100,000 customers and popularized the use of bitcoin in dark web transactions. The marketplace was outlawed in 2013 by an FBI investigation. Its administrator, Ross Ulbricht - who used the Internet nickname "Dread Pirate Roberts" - was eventually sentenced to life in prison without parole. The company's business has been in the news for years.
Other marketplaces continue to develop to fill the vacuum, most notably AlphaBay, which was founded in late 2014 and encourages (but does not mandate) the use of Monroe coins. By July 2017, AlphaBay was about 10 times the size of Silk Road. Around this time, one of AlphaBay's administrators, Alexandre Cazes, made a series of mistakes that exposed his identity. Operation Bayonet, a multinational law enforcement operation, raided and shut down AlphaBay, arresting Cazes, who was found dead in his cell a few weeks later.
After AlphaBay's closure, users scrambled to find a successor to AlphaBay, and many flocked to Hansa, then the third largest dark web marketplace, but the Dutch police had taken over the operation of Hansa's dark web marketplace, meaning that newly arrested AlphaBay users were instead exposed through Hansa's marketplace.
Contemporaries of other major marketplaces like Dream, whose founder was arrested by U.S. authorities in August 2017 and whose platform was eventually shut down in 2019 due to DDoS attacks and operational security issues, have faced their own troubles.
Since its launch that August, White House Market, a White House dark web trading marketplace, has been determined to do business in a slightly different way. Commenting on the platform's origin story in an interview with DarknetOne this summer, mr_white said they "saw an opportunity, thought we had the capabilities needed, and tried it out."
The platform founders implemented arguably the most stringent user security protocols of any dark web marketplace or DNM today. They promote the use of two-factor authentication and PGP encryption for all communications between buyers and sellers.
the White House Market also insisted that all users turn to Monroe Coin for transactions, which made them virtually untraceable. While other DNMs at the time were reluctant to enforce complex security protocols for their users, buyers didn't seem to mind following WHM's rules.
One anonymous buyer I interviewed said that the rules and regulations of the White House Dark Web Trading Marketplace were the best compared to any other marketplace they had used. As mr_white himself said, "Neither PGP nor XMR are as scary as they sound, and for most users they learn them once and can master them later."
Eileen Ormsby, an attorney and author of several books on true crime on the dark web, says that the White House Market has also led to other markets mandating PGP encryption and going wallet-free. These precautions would prevent platforms and vendors from using so-called exit scams - where established merchants stop shipping new orders while receiving payment for them.
"the White House Market is unusual in that it is virtually a walletless marketplace, even though it doesn't advertise itself as such." Ormsby said. That means users never keep a cryptocurrency wallet on the platform, but only pay for services or goods as they appear. The platform also operates on an "escrow" basis, meaning that it holds funds in all transactions until all terms are met to maintain the integrity of the buyer during the transaction.
But even the strictest platform security protocols don't necessarily keep DNM users away from law enforcement. Court documents say Paul Engstrom, a 45-year-old Las Vegas man who allegedly ran a thriving drug-dealing marketplace, two stash houses and a team of dealers, went to great lengths to set up Monroe currency for all his WHM transactions and used cryptocurrency blenders to make less secure cryptocurrency transactions untraceable.
Prosecutors said Engstrom was one of the most prolific cocaine suppliers on the White House Market under the name "Insta. Since October 2020, Drug Enforcement Administration (DEA) agents have been investigating Engstrom, who allegedly sold at least 20 kilograms of cocaine through the White House Market at three times the Las Vegas market price - netting an estimated $1.9 million over four months in 2021.
"All it takes is one mistake and you're done."
Engstrom's indictment, announced Tuesday by the U.S. Justice Department, also provides a window into how investigators can track even the most discreet of dark web transactions. Engstrom allegedly used a cryptocurrency-for-cash exchange called BitLiquid to convert his earnings into U.S. dollars. He swapped Monero for Paxos Standard, a cryptocurrency pegged to the U.S. dollar, and then used BitLiquid to convert it to cash. Meanwhile, the DEA agent tracking Engstrom used charge records to determine when Engstrom accessed BitLiquid via his phone and monitored BitLiquid wallet activity during those timeframes. A queued transaction - a $37,000 PaxosStandard for $36,900 in cash - automatically triggered a Currency Transaction Report, or CTR, because it exceeded $10,000.
If convicted, Engstrom faces at least 10 years in federal prison, and he later told Pretrial Services that he had between $8 million and $10 million in cryptocurrency.
CMU's Christin said that when you cash out, "it doesn't matter if you use Monero or not," and that "an unexplained source of income from a crypto wallet is always a red flag."
Personal security protocols aside, White House dark web marketplace vendors like "Insta" need to follow many other rules if they want to trade their wares on the platform. Even though WHM facilitates the sale of illegal drugs and other items, site administrators abide by and enforce their own brand of ethics.
WHM prohibits the sale of items such as fake Covid vaccine cards, child or animal pornography, deadly weapons and fentanyl, a cheap but powerful synthetic opioid that can be deadly in very small doses.
Christin said this ethical stance underscores the indisputable fact of how the dark web marketplace exists under the threat of law enforcement.
"Putting morality aside for a moment, if you're an economically rational actor, you don't want murder for hire on your platform because it attracts heat." He said. "And it could very well be an FBI agent doing that. Weapons, too."
The site's limited number of vendor registrations also creates a degree of exclusivity. The trade-off is that WHM's sales are worth no more than a fifth of what they were at AlphaBay's peak, at best.
So why shut down a dark web marketplace that was profitable at its peak?
"Anonymity always diminishes over time. All it takes is one misstep and you're done." Kristen says. "If your IP address is captured once, it's a disaster. So there's a perfectly rational act to quit while you're ahead."
One beneficiary of the White House Market's decision to shut down its store may be the newly relaunched AlphaBay, now run by administrator "DeSnake," one of the original AlphaBay administrators who escaped prosecution. DeSnake says he re-emerged to re-establish AlphaBay's popularity as the online black market of choice. But weeks after the marketplace relaunched, AlphaBay is still struggling to attract users. deSnake wasn't deterred in an interview, saying dark Web marketplaces usually only attract an influx of new users after another popular marketplace is shut down or busted by law enforcement.
DeSnake is right. Although no platform became the preferred DNM after the demise of the White House Market, marijuana, meth and cocaine suppliers on WHM flooded Dread (a Reddit-like dark web forum) with announcements of where their buyers could now find them. In his closing remarks, mr_white cites Versus and Monopoly (two smaller DNMs) as safe successors adopted by the White House Market user base, while encouraging users to give the new platform a chance.
The most lasting impact of the White House Market may be that it establishes higher industry standards for operational security and customer service among dark web marketplaces, making transactions more difficult to track and providing a smoother experience for online dark web users. The relaunched AlphaBay now only accepts Monopoly and even runs its own internal Monopoly blender to add an extra layer of defense. Walletless marketplace Monopoly, which until recently was a relatively small player, is rapidly gaining new users and offering them the ability to clear all order data. dark0de Reborn is trying to follow in the design footsteps of Apple and Google. Its mission statement places a strong emphasis on "consumer empathy" and "user experience".
It's a new kind of dark web marketplace - one that will make the next big international crackdown more difficult to achieve.
From：On DarkNet – Dark Web News and Analysis
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