## The Truth About The Dark Web

## Source details

**Canonical URL:** [The Truth About The Dark Web](https://www.imf.org/en/publications/fandd/issues/2019/09/the-truth-about-the-dark-web-kumar)

## Other formats

- [Markdown version](/en/publications/fandd/issues/2019/09/the-truth-about-the-dark-web-kumar/index.md)
- [Structured JSON version](/en/publications/fandd/issues/2019/09/the-truth-about-the-dark-web-kumar/index.json)
- [Bundle manifest](/en/publications/fandd/issues/2019/09/the-truth-about-the-dark-web-kumar/bundle-manifest.json)

## Bibliographic details
- Authors: ADITI KUMAR, ERIC ROSENBACH
- Published: September 1, 2019

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### Origins and technology
- Tor network ("The Onion Router") originated from late 1990s US Department of Defense research to develop an anonymized and encrypted network to protect sensitive communications of US spies.
- Tor is the underlying technology of the dark web: a collection of hidden sites inaccessible via a regular browser and not indexed by search engines.
- The Tor browser—a free download—enables access to hidden .onion sites.
- Purpose split: protect dissidents and privacy activists versus enabling illicit anonymity.

### Scale and composition of the dark web
- Over 65,000 unique URLs ending with .onion exist on the Tor network.
- A 2018 study by Hyperion Gray catalogued about 10 percent of these sites and found most prevalent functions facilitate communication (forums, chat rooms, file and image hosts) and commerce (marketplaces).
- A 2016 study by Terbium Labs analyzing 400 randomly selected .onion sites suggests that over half of all domains on the dark web are in fact legal.
- Of the close to 200 domains catalogued as illegal by Terbium Labs, more than 75 percent appear to be marketplaces.

### Uses that are legal and legitimate
- The dark web serves as a lifeline for individuals under oppressive regimes that block internet access or punish political dissent.
- In freer societies it can be used for whistle-blowing, shielded communication, and privacy against corporate or government tracking.
- Many organizations maintain a hidden Tor site, including major newspapers, Facebook, and the US Central Intelligence Agency, to facilitate secure communication.

### Illicit activity and markets
- Prevalent illicit activities include arms trafficking, drug dealing, sharing exploitative content (often involving children), and supporting extremist rhetoric.
- Market offerings commonly include:
  - Recreational and pharmaceutical drugs (most popular).
  - Stolen and counterfeit documents such as identities, credit cards, and bank credentials.
  - Hacking and technological crime services (malware, distributed denial of service attacks, hacking for hire).
  - Pornography and counterfeit goods.
- Cryptocurrencies (Bitcoin, Monero) have paired with Tor to facilitate illicit transactions.

### Economic magnitude and trends
- Chainalysis report: Bitcoin transactions on the dark web grew from approximately $250 million in 2012 to $872 million in 2018.
- Chainalysis projection: Bitcoin transactions on the dark web will reach more than $1 billion in 2019.
- Chainalysis noted the proportion of Bitcoin transactions tied to illicit deals has declined by 6 percent since 2012 and now accounts for less than 1 percent of all Bitcoin activity.
- United Nations estimate: amount of money laundered globally in one year is 2 to 5 percent of global GDP—between $1.6 trillion and $4 trillion.
- Despite growth, the overall portion of worldwide commerce transacted on the dark web remains relatively small compared with global illicit commerce.

### Law enforcement and disruption efforts
- International cooperation has increased information sharing and technical capabilities to take down major illicit marketplaces.
- During 2018–19, Interpol and the European Union brought together law enforcement agencies from 19 countries to identify 247 high-value targets and shared operational intelligence.
- Outcomes from that cooperation in the referenced period: arrests and shutdowns of 50 illicit dark-web sites, including Wall Street Market and Valhalla.
- FBI operations have reportedly allowed it to "de-anonymize" Tor servers by establishing nodes that reveal identities and locations of some illegal Tor-based webpages.
- Silk Road 2.0 takedown details:
  - Operated for two and a half years.
  - Used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to well over 100,000 buyers.
  - The site was used to launder hundreds of millions of dollars from unlawful transactions.
  - The site had generated sales totaling more than 9.5 million in Bitcoin valued, at the time, at approximately $1.2 billion.
- Successor marketplaces AlphaBay and Hansa market were shut down in 2017.
- Dutch operation example: hijacked a leading dark web merchant, anonymously ran it for a month, then used collected information to disrupt dozens of other dark web merchants.

### Regulatory responses and policy guidance
- Financial Action Task Force (June 2019) issued guidance urging companies processing cryptocurrency transfers to identify both the sender and receiver of fund transfers.
- G20 Summit (2018) recommended international regulatory agencies consider policy responses for crypto assets, particularly related to know your customer, anti–money laundering, and countering the financing of terrorism.
- Observations on capacity and challenges:
  - The start-up ecosystem of exchanges, wallets, and other crypto payment facilitators lacks necessary infrastructure to adopt financial-sector-like standards.
  - Supervisors need to begin laying groundwork for enhanced scrutiny.
  - The impending launch of Libra (Facebook’s cryptocurrency) will increase urgency by lowering barriers to adopting virtual assets for Facebook’s nearly 2 billion-plus users.

### Policy trade-offs and recommended approach
- Core challenge: protect political dissidents, privacy advocates, and whistle-blowers while preventing child abuse, arms trafficking, drug distribution, and other illicit activities.
- Effective responses noted:
  - Improved information sharing among law enforcement agencies and financial institutions.
  - Sharpened technical law enforcement capabilities to disrupt marketplaces.
  - Regulation and oversight of cryptocurrency transfers to increase traceability.
- Recommended stance: adopt a nuanced approach that thwarts illegal and immoral activities on the dark web while preserving the benefits of an anonymized network for legitimate users.

*Aditi Kumar and Eric Rosenbach, "The Truth About The Dark Web," F&D Magazine, September 2019.*

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_Source: https://www.imf.org/en/publications/fandd/issues/2019/09/the-truth-about-the-dark-web-kumar_