Unveiling the Layers of the Internet
The dark web is a part of the internet made up of websites, forums, and marketplaces that require specialized browsers to access, ensuring user anonymity. Unlike the clear web, dark web content is encrypted and not indexed by standard search engines. Originally a niche for privacy-focused activities, the dark web has since become a hub for cybercriminals. This shift underscores how a technology once valued for privacy and free expression has been repurposed to enable covert illegal activities, presenting unique challenges to law enforcement and cybersecurity. While some still use it for privacy or activism, fraudsters increasingly exploit its anonymity to carry out sophisticated fraud schemes.
The internet’s layered structure offers a hidden refuge for illicit activities, with the dark web at its most concealed layer. The clear web, accessible through standard search engines, is followed by the deep web, which includes un-indexed content like private databases. The dark web, a portion of the deep web, requires specialized browsers like Tor, shielding user identities and facilitating illicit trade (1). This digital environment underscores the dual nature of anonymizing technologies—while they protect privacy, they also lower barriers for fraudsters, creating a marketplace that evades traditional surveillance.
Dark web by the numbers
The dark web attracted over 2.5 million daily visitors on average during 2023, with nearly 57% of its content deemed illegal. This content includes forums and marketplaces for cybercrime, drugs, violence, and extremist platforms. Dark web marketplaces offer a range of illicit goods, including credit card details, employee login information, and fake identities. Remarkably, cybercriminals could purchase the information for a credit card with a $5,000 balance for as little as $110 (2). Other items for sale include verified cryptocurrency accounts, Zoom meeting details, and illegal drugs. These products are often sold in bulk or with discounts, creating a competitive underground economy that fuels various types of fraud and financial crime.
How the Dark Web Facilitates Fraud
Dark web marketplaces operate as structured, efficient networks for trading illicit goods and services, drawing inspiration from e-commerce models. These platforms allow users to rate sellers, browse categories, and even access customer service. Such features make it easier for fraudsters to conduct business, using the anonymity of cryptocurrency transactions to trade in personal data, counterfeit documents, and cyberattack tools. As early as 2011, the now-defunct Silk Road marketplace demonstrated the potential of dark web markets to operate as hidden hubs for illicit trade (3). Its success inspired other markets, setting the stage for the "fraud economy" that thrives today.
These illicit marketplaces cater to different levels of cybercriminal expertise. By providing everything from beginner tutorials to advanced tools, dark web platforms actively democratize cybercrime, making it accessible to a larger pool of participants, including those without advanced technical skills. Beginner fraudsters can easily access "how-to" guides on phishing, hacking, and account takeover, lowering barriers to entry for those with limited technical skills. For more sophisticated criminals, the dark web offers advanced software, malware, and access to highly sensitive personal data (4). The availability of data from breaches enables criminals to assemble detailed profiles, facilitating crimes like identity theft and business email compromise.
Fraud-as-a-Service: A Lucrative Dark Web Offering
In recent years, "Fraud-as-a-Service" (FaaS) has gained traction on the dark web. FaaS enables even unskilled individuals to launch cyberattacks by purchasing pre-made tools and services, from phishing kits to hacking software. This commodification of cybercrime echoes the legitimate software industry but instead scales criminal operations, proliferating financial crimes with greater efficiency and anonymity. The concept resembles Software-as-a-Service (SaaS) models, though it has been adapted for illicit use. These services are often bundled with user-friendly instructions, 24/7 customer support, and tutorials, making cybercrime accessible to anyone willing to pay (5).
The commoditization of fraud has expanded online crime, allowing criminals of all skill levels to engage in increasingly sophisticated schemes. The Hydra marketplace, a major Russian-speaking platform, exemplified this scale by offering stolen financial data, fake IDs, and laundered funds—generating over $1.3 billion in sales before law enforcement shut it down in 2020 (5). This takedown underscores the vast reach of the dark web’s fraud economy and highlights the importance of global law enforcement collaboration to disrupt such networks.
The Role of Virtual Assets
Cryptocurrencies like Bitcoin, Monero, and Ethereum are central to dark web transactions, offering pseudonymity and enabling cross-border transfers beyond traditional financial oversight. By using virtual assets, fraudsters can mask fund origins and destinations, complicating efforts to track illicit activities. This decentralized structure challenges AML efforts, prompting regulators like FATF to push for guidelines requiring exchanges and wallet providers to verify user identities (6). However, cybercriminals continually adapt their methods, creating a technological arms race that keeps law enforcement agencies on high alert.
Law Enforcement's Ongoing Battle
Law enforcement’s dismantling of dark web marketplaces like xDedic and Empire Market reflects a coordinated, transnational commitment to combating cybercrime. In a major international operation concluding in January 2024, the U.S. Department of Justice (DoJ), alongside agencies from Belgium, Ukraine, Europol, and others, took down xDedic’s infrastructure, halting its operations (7). This crackdown led to multiple arrests, with some defendants already sentenced, and disrupted a platform that facilitated access to thousands of compromised servers across sectors such as healthcare and government services. These actions highlight the importance of global collaboration in dismantling dark web networks that fuel fraud and identity theft worldwide.
In June 2024, Homeland Security Investigations (HSI) announced charges against two men for allegedly operating Empire Market, a dark web marketplace that facilitated over $430 million in illegal transactions, including large-scale fraud (8). The platform enabled anonymous buying and selling of drugs, stolen credit card data, counterfeit currency, and various fraudulent services, creating a vast, untraceable network for financial crimes. The alleged operators previously sold counterfeit U.S. currency on another dark web platform, AlphaBay, before founding Empire Market in 2018. Accessible only through anonymizing software, the site allowed users to buy and sell illicit goods using cryptocurrency, with ratings for "stealth" and transaction success. The investigation led to the seizure of $75 million in cryptocurrency and highlighted the role of HSI's El Dorado Task Force, which focuses on disrupting financial crimes and money laundering schemes that exploit the dark web.
Dark Web Fraud: Insider Trading & Retail Scams
Beyond marketplaces, individual cases of dark web-enabled fraud illustrate the extent of criminal activity. Apostolos Trovias, a dark web user known as "The Bull," capitalized on the dark web’s anonymity to sell insider trading tips. Trovias monetized non-public information by selling it to buyers who sought an illegal edge in financial markets. His business model included plans for an “inside information auction site,” underscoring how the dark web can facilitate even white-collar crimes that affect financial markets (9). This case illustrates the need for regulators to broaden their focus beyond the typical contraband sales on the dark web.
Another example is retail fraud scheme in North Carolina, where two individuals used cryptocurrency to purchase stolen credit card data from the dark web and then use those cards to make fraudulent purchases from retailers such as Lowe’s Home Improvement, reselling items to turn a profit. Both individuals were charged, plead guilty and were sentenced to prison for 16 to 42 months (10). This case serves as a reminder of the wide-reaching consequences of organized retail crime, which drives up consumer prices and endangers public safety. Such cases reveal the ongoing impact of dark web fraud on consumers and businesses alike.
The Evolving Threat Landscape
As dark web platforms become more sophisticated, so too do the fraud schemes they facilitate. Cybercriminals use anonymizing technologies and encrypted channels to evade detection, posing a formidable challenge to law enforcement. However, advances in investigative technology and increased international cooperation are beginning to counteract these efforts. Agencies now conduct regular dark web "patrols," where they monitor illicit activities and identify high-value targets for takedown. Advances in law enforcement technology and international cooperation counteract the dark web’s evolving fraud schemes, challenging cybercriminals’ sense of security.
Conclusion: Staying Ahead in the Fight Against Dark Web Fraud
For financial crime professionals, understanding the dark web’s role in facilitating fraud is essential. A proactive stance is necessary, as the dark web’s ability to enable fraud transforms it from a technological curiosity into a pressing, tangible threat to global financial security. The dark web operates with the same objectives as traditional crime—accessing accounts, stealing identities, and generating profit—but on a much larger and more anonymous scale. From Fraud-as-a-Service to cryptocurrency laundering schemes, the dark web enables a wide range of criminal enterprises, challenging traditional investigative methods and requiring continuous innovation.
To counteract dark web-facilitated fraud, law enforcement must employ adaptive strategies, enhance cross-border cooperation, and continuously innovate. These coordinated actions are essential to safeguard the global financial system against evolving cyber threats.
Meet The Author - Kashif Ghani
Connect with Kashif on LinkedIn: https://www.linkedin.com/in/kashifghani/
Reference Articles:
The truth about the dark web fraud trade (Fraud Magazine)
Dark web statistics & trends for 2024 (PreyProject)
Silk Road: A Cautionary Tale about Online Anonymity (Medium)
How the Dark web is making fraud easier (AICPA and CIMA
The Dark Web’s Underworld: Rise of Fraud-as-a-Service (Brunner Sierra Group
Digital Dangers: Dark Web, Virtual Assets, and Money Laundering (Financial Crime Academy)
19 Individuals Worldwide Charged In Transnational Cybercrime Investigation Of The xDedic Marketplace (U.S. Department of Justice
Dark Web Marketplace Owners Charged With Facilitating $430M in Illegal Goods Sales Following Joint HSI New York Investigation (Homeland Security Investigations
The Truth about the Dark Web (IMF Publications)
Two Sentenced in Dark Web Identity Theft and Retail Fraud Conspiracy (U.S. Department of Justice)
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