An Entangled Mess: Cryptocurrency, the Dark Web and Drugs
The world of cryptocurrency which is known to be facilitated by the existence of the dark/ deep web has for the longest time been one of mystery and wonder. However, it has often proven easy to overlook this intriguing face of money and the internet, for its interference with human life has been under the constant attempt of being regulated.
The irony that the dark web and cryptocurrency have always posed is that despite its allure and ever-growing mystery, it has always been watched from a close range with attempts made by institutions and authorities to regulate it.
Yet, in 2021 the Indian economy and the officers of law enforcement in Mumbai found themselves entangled in this world when they arrested the “crypto king” of India, Makarand Pardeep Adivirkar, a resident of Mumbai and known member of the underground drug circuit. His arrest did not just help bust open the underground drug racket but also raised important and rather fascinating questions about the darknet, cryptocurrency, regulation, and accountability.
The arrest came after a drug bust in November 2020 by officials of the Narcotics Control Bureau of Mumbai, when they were successful in seizing 20 blots of Lysergic acid diethylamide (LSD), also locally known as ‘acid’ from Kharodi village in Malad, Mumbai.
It was apparently found by them that the hallucinogenic drug had been purchased via the use of bitcoin, a known and accepted form of cryptocurrency from Europe by a drug peddler that was located in Mumbai. The consistent trail followed by them since, eventually led them to the doorstep of Makarand Pardeep Adivirkar, who was found to be involved and the heart of this entire racket.
Although the transactions, according to the investigation reports, could be dated to nearly two years back, the drug racket was brought to light only after the LSD had been seized by NCB. However, since his arrest further investigations and reports have led to the discovery that he used to purchase other drugs aside from LSD, such as ecstasy, meth and hydroponic weed off the dark web with the intent to further distribute.
Apparently, reports have stated that he was known as the “crypto king” among drug peddlers for his means of business was to take money/cash from his customers via his online wallet, he would then proceed to purchase the drugs online by making payments abroad via his bitcoin wallet. Thus, in essence he was the middle-man who was converting other people’s money into bitcoins while making a marginal profit for himself.
The investigation suggested that the transactions were carried out via WazirX- an exchange platform that is known as ‘India’s most trusted bitcoin & cryptocurrency exchange”. The involvement of such a platform as a medium that facilitated the drug circuit, led to multiple questions and accusations which were centered around the idea that such platforms were aiding drug trafficking and trade and thus, adding to the list of problems that has been alluded to cryptocurrency.
However, after the initial report by Vice Media which placed the aforementioned accusation on WazirX, the exchange platform was quick in its response. It published a statement in response to the accusation stating that Makarand Pardeep Adivirkar was never a user of the platform.
The statement, WazirX stated, was supported by the fact that they had checked their records to ensure that Makarand Pardeep Adivirkar, was not a part of their database. The officials from WazirX went on to record to state that they had received an email from NCB on 11th June, 2021 enquiring the same and by 12th June, 2021 they had checked their records and clarified that Makarand Pardeep Adivirkar had never been a part of their exchange platform.
However, such an accusation on a national platform held the potential to harm the reputations and validity of WazirX as an exchange platform for cryptocurrency. The platform made attempts to repair the damage by clarifying that all users were only allowed to be a part of the platform post the verification of their KYC (Know Your Customer).
They also reiterated that aside from being in absolute adherence with AML (Anti-money laundering) guidelines that have been laid down globally, they also have a strong transaction monitoring system in place to keep in check any and all transactions.
While exchange platforms such as WazirX have greatly profited from the rise in use of cryptocurrency, they have had their fair share of fires to put out owing to the lack of clarity around the legality of cryptocurrency in India. This case, while shedding light on the ongoing underground drug circuit, raised bigger questions about the known and permitted use of dark web and the legality of cryptocurrency.
It has been known for a while internationally that the dark web has a great many shortcomings that helps fester a breeding ground for crimes to take place. It is known that the dark web can be accessed from browsers such as Tor browser, Brave and ungoogled Chromium which provides multiple layers of anonymity and privacy to its users.
Browsers such as Tor browser work on the idea of being open sourced platforms that redirect Internet traffic through a worldwide, free, volunteer overhead network which helps in veiling a user’s identity, usage and location from anyone who would be surveilling the network traffic. However, it has been realised that the privacy that is offered by open source platforms can also be sinister for it can, like stated above, prove to be a breeding ground for underground crime circuits.
It has been noted that the multiple protective layers that provide privacy and anonymity to its users, allows criminals to engage in growing marketplaces that cater to trafficking arms and drugs, identity theft, collection and distribution of child pornography and other illegal services and products. While the dark web has proven to be a springboard for nefarious activities of all kinds, when coupled with the use of cryptocurrency it truly becomes an enigma, the extent of which is yet to be understood and regulated.
Cryptocurrency, while spoken about at length in this article, is essentially a virtual currency which makes it impossible for the providers to counterfeit or double-spend it. It is not regulated by a central bank or single person/entity and can be sent from one user to the other via a peer-to-peer cryptocurrency network without the use of a middle-man.
The highlight, though, of a virtual currency such a bitcoin, which has been realised is that it provides anonymity to the user. The currency proves to be completely untraceable and thus, is able to avoid any kind of institutional interference for it also avoids the use of any formal financial system. The use of bitcoin as a cryptocurrency first became popular back in 2011 when it was used in Silk road, a marketplace for the purchase and sale of drugs that existed on the dark web.
While the untraceable quality of bitcoins used in drug deals was a problem that was thought to be pertaining to the west, particularly the United States of America, the same challenge has become increasingly evident in the Indian context. As of 2020, it has become apparent that the purchase of cryptocurrency can be done by anyone and anywhere, thus, making it difficult for the officers of law enforcement to trace its origins and snip the crime at the bud.
The problem of accountability that is chalked up to the use of cryptocurrency in India was so rampant, that it led to complete ban on the use of the same by the Reserve Bank of India in 2018. This decision came post a series of frauds that were allegedly committed using cryptocurrency transactions. However, cryptocurrency exchanges were quick to file a counter lawsuit which led to a reversal of the ban in March, 2021.
Therefore it is fair to say that lack of accountability and transparency surrounding the use of cryptocurrency is not news to anyone. Yet the form of transaction and exchange remains completely legal till it is used on the darknet for payments for illegal services and products. The anonymous currency that evades the use of formal and structural financial institutions worsens the privacy and anonymity that shrouds users of the dark net, making the task of nabbing the criminals exponentially difficult for law enforcement officers.
However, this is not to say that there are no laws and procedures in place to keep such activities in check. As stated above, cryptocurrency exchanges in India are supposed to remain compliant with the KYC and AML guidelines as well as ensure that their users carry out transactions that are linked to legitimate bank accounts.
While these measures do not unmask the users of cryptocurrency and the darknet, it certainly shines a light on the identity of the users, making the task at hand for the law enforcement officers easier by a margin. Nonetheless, none of these measures and procedures help in untangling the mess that is a cryptocurrency and the dark web; only upon truly understanding the depth and nature of these two separate yet symbiotic entities can one hope to achieve the same. Sources: