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Coordinated International Law Enforcement Effort Leads to Shut Down of AlphaBay

Reading Time: 4 minutes by on July 17, 2017 Bitcoin, Business, News
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On July 5, Alphabay, one of the biggest marketplaces on the dark web, went offline mysteriously with no explanation from its developers or administrators. The website has yet to resume service, and it is believed to have been shut down by law enforcement.

AlphaBay started its operations in December 2014, filling the void left by the absence of Silk Road. Silk Road was arguably the biggest and most well-known marketplace on the dark web but was shut down through the intervention of law enforcement agencies in October 2013.

The dark web marketplace, AlphaBay, allowed for the trading of any products and services on its site. Unlike some other dark web platforms, it did not restrict the trading of illegal material such as weapons, drugs, and stolen credit card credentials. The site even allowed the sale of courses focusing on how to carry out online fraud successfully.

Speaking to Wired, Nicolas Christin, a computer science professor at Carnegie Mellon University, estimated that the website probably generated between $600,000 to $800,000 daily. Christin, who has long been following activities on the darknet, believes Alphabay to have grown to a size never witnessed before on a darknet bazaar. The site had close to 300,000 different listings, which is quite the achievement for an illegal online marketplace.

Trades on the site were executed using the digital currency bitcoin. The site would keep customers’ money in escrow until vendors made good on the purchase. After that point, the site would release the money paid in exchange for goods to the vendors and keep a commission for itself as a facilitator of the transaction.

AlphaBay’s Sudden Disappearance

On July 5, AlphaBay went offline sending its users into a panic. Due to the lack of communication from anyone on the sites’ team, users began to believe this was not a routine maintenance procedure.

On Reddit, AlphaBay’s users started to theorize that the possibility of the disappearance of the bazaar was an “exit scam.” An exit scam refers to a con where a website will make off with the funds it is holding in escrow for its customer base. The sudden silence was reminiscent of the Evolution exit scam orchestrated in March 2015. The Evolution Marketplace was one of the biggest illegal trading sites at the time. Its owners disappeared with an estimated 40,000 bitcoin leaving its users and clients in the lurch. Today, this would amount to $102 million but at the time was valued at $12 million, a large amount of money by any account.

Some users were keen to hold on to the idea of a routine maintenance operation as this had occurred in the past, accompanied by prolonged silence from the sites’ administrators, as was the case in this instance. Others, however, proposed possible legal action as a reason for the offline status of the marketplace.

Coordinated International Crackdown

The same day that the website went offline, authorities in Thailand arrested a Canadian national on drug trafficking charges. Twenty-six-year-old Alexander Cazes, who had been living in the country for eight years, was arrested in Bangkok’s Thawi Watthana district.

According to the Bangkok Post, the arrest was made on the request of the U.S. government and Cazes was to be extradited to America to face drug charges he had previously allegedly avoided. Cazes worked as a computer programmer and was arrested with large sums of money, a Lamborghini, and investigations found him to own three expensive homes in Thailand.

On the same day the arrest was made in Bangkok, the Royal Canadian Mounted Police carried out a search warrant in Quebec. The RCMP’s high technology crime unit executed the search in conjunction with the FBI as well as The Trois-Rivières Police Service. Computer equipment was seized on two addresses in Trois-Rivières due to an alleged connection with a global network of illegal dark net activity.

Theories began to circulate that Cazes was the man behind the AlphaBay. At around 7 am on July 12, almost a week after his arrest, Cazes was found dead in his Thai Prison cell. He was scheduled to have a meeting with a lawyer prepare for his extradition to the U.S. on the day but was discovered dead by a duty officer. It is believed he had hung himself in order to escape extradition and subsequent prosecution.

As news of the coordinated efforts between Canada, Thailand, and the U.S. surfaced, it became clear that the offline status of AlphaBay was connected to law enforcement. Though it is difficult to ascertain whether Cazes really is the man behind the marketplace, it is hardly coincidental that the site was shut down the day he was arrested.

Speaking to Gizmodo, Emily Wilson, an analyst at dark web monitoring firm Terbium Labs explained: “I’ve been saying all along that I don’t think this makes sense as an exit scam. The operation at Alphabay was well run and sophisticated… I’m very curious to see over the coming days and weeks how users react to the news.”

The server that allegedly runs Alphabay is located in Montreal, Canada. It still seems to be in good functioning order. The fact that the website is still offline though its main server is up and running may be explained by the fact that it’s rumored owner was arrested and is now deceased.

Following the shutdown, AlphaBay users began to migrate to other marketplaces on the dark web such as Hansa and Dream Market. Both sites experienced problems due to a large number of sign ups with Hansa eventually restricting new registrations until further notice while some of Dream market’s users were unable to log in using their credentials. It remains to be seen how the illegal marketplace scene will continue to react to the loss of its biggest platform.

As of today, AlphaBay is still offline, and all clues point to a permanent shut down of the site due to the efforts of law enforcement agencies. It is unclear what will happen to the funds that the site was holding in escrow for its users but it is safe to assume that the money is lost and may not be recovered.

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