The Role of Informal Workers in Online Economic Crime

(Context) Online economic crime leverages information technologies (IT) for illegal wealth redistribution, such as banking theft. Such crime requires a series of actions, a scheme, to be successful. Informal workers, individuals whose economic activities escape regulations, can be leveraged to execute various tasks surrounding these schemes. However, what these workers represent for online economic crime organizations, and their impact on the reach and sophistication of the crime, has yet to be uncovered. This thesis focuses on understanding the contexts, motivations, and organizations of those behind online economic crime. While doing so, it assesses the role and availability of an informal IT workforce surrounding the crime organization and its likelihood to participate in such criminal schemes. (Methods and Data) This thesis builds on three data sources: (1) 21 semi-structured interviews with experts, (2) a private chat log containing discussions among individuals involved in online economic crime, and (3) two datasets on an informal IT workforce operating on a digital labor platform. A blend of qualitative and quantitative analyses is developed, including inductive thematic analysis, non-parametric statistical hypothesis tests, and group-based trajectory modeling. (Results) The findings illustrate three key contextual factors influencing those behind online economic crime: a lack of legal economic opportunities, a lack of deterrents and the availability of drifting means. Organizations behind online economic crime are found to take various forms, from organized, to enterprise-like, loose networks or communities. They are also characterized by a large sphere of influence given the indispensable workers hired to help with the crime orchestration. Among them, informal workers from the IT sector are found to be particularly important: they represent a pool of potential workers for all legal tasks surrounding online economic crime, and they can be leveraged easily due to digital labor platforms. However, further investigations illustrate that the benefits of hiring informal IT workers may be hindered by high transaction costs, including high hiring, switching, and monitoring costs. Moreover, the likelihood of informal IT workers to participate in crime-oriented spaces is found to be limited. (Conclusion) This study sheds light on the organization of online economic crime and the role of informal IT workers at the periphery. It provides both theoretical and empirical explanations as to why online economic crime is characterized by long reach, in terms of victims, and sophistication. It also offers nuanced concepts (e.g., drifters, informal workforce) to better grasp the organization of online economic crime and the degrees of involvement of those surrounding the crime

Are Cryptomarkets the Future of Drug Dealing? Assessing the Structure of the Drug Market Hosted on Cryptomarkets

Les cryptomarchés sont des plateformes virtuelles, similaires à eBay, qui permettent d'échanger de la drogue en ligne en tout anonymat, de manière professionnelle et sécuritaire. Cette étude vise à caractériser la structure du marché de la drogue sur les cryptomarchés, afin de comprendre le contexte économique. La structure du marché est évaluée selon le degré de concurrence ainsi que la portée et l’importance des vendeurs de drogue en termes de visibilité, de diversité et d’expérience. Les résultats de l’étude illustrent que le marché est concurrentiel mais également très inégal. Les vendeurs ont une portée et une importance relativement limitées. Ceci s’explique par le fait que les transactions en ligne, anonymes et illégales imposent d’importantes contraintes aux vendeurs. Le statut d’illégalité oblige les vendeurs à limiter leurs activités hors ligne, diminuant leur potentiel de croissance en ligne. De plus, le contexte en ligne favorise la concurrence, mais les risques qui découlent de l’anonymat des transactions intensifient la tendance des acheteurs à choisir des vendeurs réputés et expérimentés. Les vendeurs font donc face à des « barrières à la vente » et 90% agissent comme des spectateurs dans le marché. En plus, les vendeurs expérimentés utilisent des techniques agressives de publicité, afin d’empêcher leurs compétiteurs d’entrer sur le marché, gardant ainsi leur position avantageuse et contribuant à l’inégalité du marché. Un paradoxe émerge : le marché est compétitif, mais également peuplé de quelques vendeurs « superstars » qui ont une portée et une importance relativement limitées. Suite à cette analyse, il est peu probable que les cryptomarchés représentent l’avenir de l’industrie de la drogue, en raison des difficultés rencontrées par les vendeurs lors de la vente de drogue en ligne.Since 2011, drug market participants have had the opportunity to trade illegal drugs through online anonymous marketplaces dubbed cryptomarkets. Cryptomarkets offer a user-friendly infrastructure, similar to eBay, where market participants can meet and conduct business together. These well-designed anonymous platforms offer a professional setting for drug sales, but to what extent they are the future of drug dealing is unclear. This study characterizes the structure of the drug market hosted on cryptomarkets in order to better understand the economic setting of cryptomarket drug vendors. Market competition and the size and scope of drug vendor activities are analyzed. We find that the drug market hosted on cryptomarkets is fiercely competitive and deeply unequal. The size and scope of vendors’ activities are limited. Challenges arise due to the online, anonymity and illegality features of cryptomarket drug transactions. The illegality status of drugs forces vendors’ offline activities to stay within a small size and scope, limiting their potential growth online. The online nature of cryptomarkets fosters competition, but the risks that arise from anonymous transactions exacerbate buyers’ tendency to choose well-reputed and experienced vendors. Thus, vendors face strong barriers to sales and 90% of them act as spectators in the market. This inequality is exacerbated by aggressive advertising conducted by established vendors to push out potential competitors. A paradox is found: the market is fiercely competitive, but also populated by market superstars, whom, however, still have limited size and scope. We conclude that cryptomarkets are not likely be the future of drug dealing because of the challenging environment they offer to cryptomarket drug vendors

Mapping the DeFi Crime Landscape: An Evidence-based Picture

Over the past years, decentralized finance (DeFi) has been the target of numerous profit-driven crimes. However, until now, the full prevalence and cumulative impact of these crimes have not been assessed. This study provides a first comprehensive assessment of profit-driven crimes targeting the DeFi sector. To achieve this, we collected data on 1155 crime events from 2017 to 2022. Of these, 1050 were related to the DeFi industry and 105 to the centralized finance (CeFi) industry. Focusing on the former, a taxonomy was developed to clarify the similarities and differences among these crimes. All events were mapped onto the DeFi stack to assess the impacted technical layers, and the financial damages were quantified to gauge their scale. The findings show that the entire cryptoasset industry has suffered a minimum loss of US$30B, with two thirds related to centralized finance (CeFi) and one third to DeFi. Focusing solely on the latter, the results highlight that during an attack, a DeFi actor (an entity developing a DeFi technology) can serve as a direct target, as a perpetrator, or as an intermediary. The findings show that DeFi actors are the first victims of crimes targeting the DeFi industry: 52% of crime events targeted them, primarily due to technical vulnerabilities at the protocol layer, and these events accounted for 83% of all recorded financial damages. On the other hand, in 40% of crime events, DeFi actors were themselves malicious perpetrators, predominantly misusing contracts at the cryptoasset layer (e.g., rug pull scams). However, these events accounted for only 17% of all financial damages. The study's findings offer a preliminary assessment of the size and scope of crime events within the DeFi sector and highlight the vulnerable position of DeFi actors in the ecosystem

Conflict Management in Illicit Drug Cryptomarkets

Illegal drug markets have been described as “stateless” systems. Drug dealers, moreover, are commonly considered to have a predilection toward the use of violence to resolve disputes arising from dealing activities. While some studies have undermined this popular perception, new trends surrounding the distribution of illegal drugs via online channels (drug cryptomarkets) have shifted the transactional setting from the physical to virtual realm, thus decreasing the likelihood of violent resolution outcomes even further. This article examines conflict management strategies within cryptomarkets by coding discussion forums between vendors and buyers. Violence, as expected, is absent. Strategies more likely reflect alternatives that have been recognized in conflict management research within and beyond illegal market settings: tolerance, avoidance, ostracism, third-party intervention, negotiation, and threats. The overall setting from which such resolutions emerge is clearly not subject to formal regulations, but our analyses illustrate the multitude of informal social control mechanisms that are consistently at play and which underlie the self-regulatory and communal processes that are firmly in place. </jats:p

DRUG MARKETS AND ANONYMIZING TECHNOLOGIES

Online drug markets taking advantage of social media and encryption software (e.g. Tor network) and cryptocurrencies (e.g. Bitcoin, Monero) to conceal the identity and physical location of their users are a relatively new area of internet research. Yet, a range of socio-technical innovations have contributed to the proliferation of drug markets on the Internet. Due to the illegality of drugs and drug dealing are anonymizing technologies regarded as important socio-technical practices among its participants allowing to mitigate risks of vendors and customers when exchanging drugs. This panel draws together a number of leading scholars in this emerging area of research to explore questions and issues associated with online platforms enabling illicit transactions. The collection of papers in this panel contribute empirical data and theoretical insight on a range of relevant topics in the study of online drug markets, including methodological challenges, social embeddedness, trust production and governance on cryptomarkets. Various papers in this panel propose new concepts for understanding cryptomarkets as social phenomena where relationships enable economic transactions. It also pluralizes trust building on online platforms and, expanding it from merely institution-based mechanisms to include social relations such as interpreting signs and signals or previous interactions between buyers and sellers. They also expand on reliability of data gathered via anonymous online interviews, drawing attention to participation of marginalized communities. The aim of this panel is to bring together new research to further our understanding of the overall impact of online platform emergence upon global drug markets and to better model their impact on drug dealing, online networks and society in general