Why LE Are Attacking Vendors, Not Darknet Markets

Over the last decade, we’ve seen various Darknet Markets under attack, most notably the Hydra market, which went down last year, being the largest and most effective darknet market takedowns ever. However, there is much evidence to say that going for Darknet market vendors is a more practical and cost-effective method in the attack against the darknet. Will LE shift its focus entirely going, forwards?

Study Shows Darknet Vendors Should Be The Target

The study published by INFORMS (Information Systems Research) provides compelling evidence that targeting darknet vendors is an effective strategy in combating the sale of illicit drugs on the dark web. The researchers analyzed data from various older and defunct darknet markets, including Silk Road 2, Evolution, and Agora. What they found was counter to the general belief until now. 

The study’s findings revealed that arresting major vendor instead had a greater impact on the overall activity of vendors (more particularly of those using the same darknet market.) 

When news of the vendor arrest comes out, this creates a negative shock, discouraging vendors from continuing their sales activities and sometimes leaving the market altogether. These disruptions cause declines in transactions within the markets and fewer vendors operating within the market, further damaging the reputation. 

Interestingly enough, ​​the study highlights that the “vendor arrest impact” doesn’t work for your random small vendors. It’s the smaller vendors, who often have lower sales volumes, are more likely to exit the market following the arrest of a major vendor. On the other hand, the largest vendors, who tend to have established customer bases and reputations, experience an increase in sales as they attract customers previously served by the arrested vendor.

Why Law Enforcement Might Choose To Attack Vendors Instead

It’s evidently much more cost-effective to target high-level vendors rather than attempting to shut down entire darknet markets. On average, there was a decline of approximately 39% in transactions in various markets after the arrest of a major vendor. Over the same period, there was a decrease of 56% in the total number of vendors on the market. 

When other markets went down due to LE takeovers, most vendors and users simply found a new shop, there could have been a delay, but transactions returned to their usual volumes and increased. 

By strategically targeting influential vendors, law enforcement can effectively curtail the availability of illicit drugs and disrupt the networks supporting their distribution.

However, it is important to note that this study primarily analyzed data from older and defunct markets. As the dark web continuously evolves, further research is needed to assess the long-term effectiveness of targeting vendors in more recent and active markets.

This study co-insides with Operation SpecTor, where more than 288 Darknet Market vendors were arrested. Although we weren’t given information this operation’s impact on the darknet as a whole, it’s clear that LE has already shifted focus. Atleast partially.

Realistically, LE Focus Won’t Change Entirely

While targeting vendors proves effective, there are several reasons why law enforcement may not entirely shift their focus from darknet market takedowns, starting with bragging right.

Any country or agency that manages to take down entire markets attracts more recognition and media attention. For law enforcement agencies this contributes to their public image and demonstrates their effectiveness in combating illicit activities.

The same attention is not there when a few darknet market vendors are removed. To the public, a vendor arrest may not feel different than the police removing your average drug dealer on the streets. It’s an important part of their job, but it’s nothing noteworthy. 

Finding a few kingpins may bring some media recognition, but removing an entire darknet market is seen as an unlikely victory. The effort behind this is noticed, and the validation from governments and peers is worth more. 

Using Hydra Market as a case study, it’s easy to see that taking down darknet markets will have significant effect in darknet markets. Hydra marketplace accounted for 90% of all darknet market revenue in 2020 and 2021.

The average daily revenue for all markets prior to Hydra’s closure sat at about $4.2 Million a day. After their seizure, that dropped to an average of $447,000. A near 90% on daily sales. Prompting fear in the darknet community. 

This attack on such a large darknet market was so impactful that 2022 darknet markets only earned $1.5 Billion, which is poor compared to 2021’s $3.1 Billion. 

There is still impartance in removing major darknet markets, and it’s the government’s job to remove them… That won’t change any time soon. 

Conclusion: More Vendor Arrests Await

While law enforcement agencies have historically focused on the takedown of entire darknet markets, targeting individual vendors is now known to be a more practical and cost-effective approach. By arresting major vendors, law enforcement are creating a shock to the dark web ecosystem, leading to a decline in transactions and the exit of smaller vendors. Perhaps this is evidence to say the future holds many more darknet vendor arrests. Perhaps… Operation SpecTor was the first sign of agencies shift of focus.