​Dark Commerce



[Applause] good afternoon and it's great to be with you and I hope you don't get too depressed by this topic of dark commerce it has been with humanity for millennia and not all of it is met motivated by greed as we're going to learn about there are also political reasons that dark Commerce elicits Commerce goes on political reasons by States and it's also could be a form of resistance by citizens so when I said it's millennium old let's go to ancient Mesopotamia at the moment I'm doing research with my team at George Mason on illicit antiquities trade but this is not a subject of antiquities trade this is Hammurabi's code and Hammurabi's code which is located at the Louvre is a dates to about 1750 BC why do I have it up there because already almost 4,000 years ago you had provisions against selling and trading in stolen property what was known as fencing and at that time fences could be executed for stealing in stolen property the trade in illicit goods has gone on for 4000 years but it has changed fundamentally in the last 30 years so before this time if you go back to ancient Mesopotamia say you stole somebody's clothing their animals and you took this or their jewelry and took it to the fence you had to know who the fence was you had to have a personal relationship they had to pay you for your property that you've stolen and they pay you either in coins or they would pay you in gold silver so it was a very real relationship and since antiquity trade and illicit trade have been based on personal relationships but that's no longer the case as fencing has changed in the book I talked a little bit about fencing and Beggar's Opera and how it has endured in different periods of history but recently it has changed profoundly because when I lived in Philadelphia doing my doctoral research I had a colleague who was living with a fence and that fence could only make a certain amount of money because he had to deal with what people brought in to him it was all very personalized but now we have something known as a fencing where you can steal massive amounts of property and sell it on the web look at this image you'll say what is this image that's in Russian of Crest toothpaste well let me take and introduce you to a couple named the Smirnoff's who were operating out of vancouver and they had people stealing toothpaste tooth whitener and other related products all along the Pacific Northwest that they then proceeded to sell online and this business generated a huge amount of money unlike mr. swaggy who was the fence in Philadelphia who eked out a living the Smirnoff's were making through their offense in seventy to a hundred four thousand dollars monthly they had almost 28,000 transactions in two years and proceeded to buy themselves some expensive automobiles and Vancouver real estate so this is the transformation that we're looking at in illicit trade it has gone from a business based on interpersonal relationships to one that is anonymized and operates on what I would call steroids so let's take a look illicit trade has endured as it does not just come out of the desire for profits if you think about the Pirates of old because even at the same time as Hammurabi you were also having pirates operating four states in the Mediterranean and you go later and look at Sir Francis Drake we think about Sir Francis Drake as a great Explorer as a great figure in in British history other people think of Sir Francis Drake as a pirate and they have other names for him like elda rocky but why was he so revered is that he was performing a political function for the British state he was capturing very valuable property and the same thing can be said about cyber pirates that we're going to be talking about in a few minutes is that many of them are stealing data and valuable information for governments like China like Russia and we're going to find linkages between their involvement in ordinary illicit trade and their political service to the state so some of these themes that we've known historically endure today so what we're finding now and what should be of concern to you is that sometimes you go online to buy products you go online to Amazon you go online elsewhere and you may be finding that you're actually buying dangerous products because under our system of regulation we have exempted online platforms for any responsibility of what they're selling they're not responsible for quality control they're not responsible for what they're selling so we have huge numbers of ads in online platforms for sex trafficking and you can be having somebody selling you counterfeit electronic parts that could help burn down your house and in worst cases and we're going to talk about some of them you can be providing products that actually kill you so this is an example online pharmacy no prescription needed well what does this mean who are these online pharmacies many of them are selling generic drugs but sometimes they are also selling dangerous drugs that have components in them that will sell send you to the emergency room if not more one of the case studies that I have in my book is of a group that has been called Pharma leaks and they were selling millions and millions of worth of viagra but also drugs for heart conditions and others online they went into this business when they were driven out of the child pornography business and when eventually they were driven out of selling online pharmaceuticals by a bunch of researchers who managed to find out who they were using and correspond in banks to make their credit-card purchases the banks that were operating in the former Soviet Union where these pharmacy operation was operating out cut them off so but let me tell you a little bit more about this online pharmaceutical problem of these pharma leaks they were selling and how are they generating customers they were sending out spam they were the largest provider of spam in the world and that's what attracted the computer scientists who eventually broke up this this network what is interesting is what happened to one of these leaders of this pharma leaks and criminal conspiracy eventually he offended some Russian oligarch and got sent to prison but in prison he got what I talked about as his like in the Monopoly game his get out of jail card and what was his get out of jail card that was you go work for the Russian state in exchange for getting out of prison so he starts running an online pharmacy and winds up doing what today he is now heading the national payment system of Russia and what does the National payment system of Russia consist of if you know what it takes to run an online false news campaign it's very useful to be running the national payment system but how do you run false news you need to mobilize botnets and this man by running the largest spam operation in the world also had the greatest links with botnets so you go from some ordinary what you think of involvement in dark commerce and you wind up with something that can help serve the political objectives the state next week I'm speaking to a conference of people who are worried about the integrity of online pharmaceuticals and we have this call yesterday and what we're going to talk about and I said well you go from online pharmaceuticals to the hacking of our elections and they said Oh that'll really get the audience so this is not you know it looks benign but the money and the people behind it are not so benign this is the problems of what happens on Amazon and people warning about products and you can see here says total ripoff will not charge this is a purchase of something that you may need to recharge your cell phone a cell phone cord but there's no control there's no policing or regulation that requires providers online to be monitoring what they're selling and so you can be buying counterfeit products you can get totally ripped off and there is no sense of responsibility in cyberspace this is the most deadly part of our dark commerce notice this sale of fentanyl and if you think about the overdose deaths in the United States last year there were 72 thousand people fellow Americans who died of fentanyl and overdoses from opioids this is how most of the opioids that enter the United States come through online marketplaces where people go and order them some of them exist on the web and some of them exist on the dark web this is the sort of the inner workings of the computer systems that you need to enter through special software like poor but much of this is easily accessible I've been doing research recently with a Chinese speaker and we've found literally 70 registered companies in China selling this deadly drug and there are many many more that are not registered and sometimes as I suggest in my book that this might be the revenge of the opium wars that in the mid 19th century the Brits used opium as a way of weakening the Chinese Empire and the Chinese may are not policing this activity because it is weakening our society because they're just almost no prosecutions of these Chinese companies that are involved in this massive fentanyl trade and this is a photo from the dark web and you can see some of the drugs that are being sold and these are extremely harmful commodities there you can find many harmful commodities on the internet but you'll find them especially in the dark web where there's almost no legitimate commodities for sale so you can buy drugs you can buy hitmen and you can buy many other things that are extremely pernicious and one of the things that's most damaging on the Internet on the dark web apart from the drugs are the selling of ransomware Trojans botnets sort of the most advanced form of what I would call illicit trade today where you are dealing in commodities that are no longer tangible but these commodities are what are stealing your identities and breaking into your bank accounts so what have we seen as the evolution for antiquity and why do I say that things have changed fundamentally in the last 30 years so for almost 4,000 years since ancient Mesopotamia people traded intangible goods new the people that they traded with and received money gold silver something of value as they were involved in this trade but what has fundamentally shifted in the last thirty years is that this trade is anonymous it is now with these botnets and ransomware and Trojans trading in objects that are not tangible that you can't touch and people are paying for them in cryptocurrency one of the first large of dark web activities was called Silk Road and it operated for a little over two years who started it it was a PhD dropout in physics from Penn State so he had computer savvy he had technical skills and earlier in life he had no criminal tendencies he had been an Eagle Scout so an admirable figure but he like bees OHS was or a libertarian and so he believed that we needed to encourage free trade without regulation of all substances including drugs and so he started this dark web site called Silk Road that in two years before he was caught processed 1.2 billion dollars worth of commodities that's how much this sale has scaled and once Silk Road was taken off its successors have had multiples of this multibillion-dollar sales so every next-generation is a multiple of the previous one what's interesting also is that people keep thinking about this dark web that's impersonal that has no violence I read scholarship oh there's no violence in the dark web but the but the man who ran dark Silk Road hadn't Monaco named Dread Pirate Roberts and when he was sentenced by the judge he was sentenced to six life sentences why because he had ordered multiple hits as people had not paid him in Bitcoin for the money they owed him they had stolen from him and so he had just ordered their executions he doesn't know if they were actually executed because all of this is going on in cyberspace but he had ordered these and he had thought that he had actually killed people so it's not just our street drug markets that are so violent what is so interesting is that there are also two law enforcement officials who were investigating Silk Road who are now in prison each of them for seven years because human behavior goes into the dark web and therefore just as there's corruption in the real world there's corruption in the cyber world and one of the officials went to prison for stealing Bitcoin from Dread Pirate Roberts and the other one was selling him intelligence on the law enforcement operations that were going on against him so this is what you're finding people who think that we're going into some new world that's unrecognizable what I'm trying to tell you is there are historical precedents and they're also human behavior that goes on into the dark web just as it operates in the real world so this is the digital world this is where we have so many concerns of the transformation that have occurred in the last thirty years but there's one other part that I bring out in dark commerce which is what is happening to the sustainability of life because now we have seven and a half billion people on this planet and we have a scarcity of human resources if you think about where has organized-crime operated its think about the old movie on the waterfront where you had organized crime and the ports think about Marseilles or Vladivostok and where you have the Fulton fish market you've always had crime in what are called time sensitive industries so that if you don't unload those bananas fish fast enough from the ship if you don't unload the fish they rot and they smell and therefore you can extort money and what we're living in today is a time sensitive planet where we don't have enough resources for all of the people living on this planet and therefore what we need to survive water fish timber wildlife have become the absolute targets of illicit trade and the fastest growing area of illicit activity the UN has estimated that the growth in these commodities is 5 to 7 percent a year so let's take a look at this this our water mafias here you can see this is an illegally operated water tank water mafias exist in the mega cities of Pakistan of India of the large cities of Central America where there's not enough water for people to survive and therefore water becomes an expensive commodity that's traded apart from talking about water mafias I also have a section the book in which I talk about what was behind the war in Syria and how the illicit trade in water rights in the period before the Arab Spring during a period of extensive drought in the Middle East led to over three and a half million people moving in Syria from rural to urban areas and in the corruption of the government of President Assad's father there was no way for these people to survive in cities and you can actually map the discontent that accompanied the Arab Spring to the migrant communities that were displaced by the absence of water and the corruption in the in the water rights that drove them to to urban areas this is examples of illegal deforestation it is massive it has enormous effects on climate change but it is not done by the usual criminals one of the case studies I talked about is the ruler of of Borneo and there's a wonderful film called Borneo who deforested 80% of of Borneo with the help of funding from Goldman Sachs and Deutsche Bank that were informed that this loans that they were making were enabling enormous deforestation but they persisted in making these loans the mr. Taibbi the man who was engaged in this activity is believed to have generated about 10 billion dollars through this illegal forestation and where has this money gone it's gone all over the world but ironically one of the most interesting pieces is that it has gone in to the Lincoln Building in Seattle and this is confirmed in a GAO report and who rents the Lincoln building in Seattle it is the FBI that is our primary governmental organization to go after corruption and as the GAO report talks about having a building owned by a you know a corrupt kleptocrat is also a national security threat so we go from deforestation to problems in our own society not only related to deforestation but to corruption and money laundering into real estate think about the fish that you eat most of the shrimp that's imported into the United States has done through illegal fishing and most of the wild of 25 to a third of the what's labeled as wild caught fish in the United States is illegally caught it's part of iU you fishing and one of the problems that we have of illicit trade today is that one formerly illegal activity goes with another so you can see that these people here who are engaged in this illegal fishing are often trafficked laborers because once these illegal fishing boats are caught you can abandon them with the laborers on them because they are not employees they are disposable people this is rhino horn and the there's a whole chapter on the book of why the illicit trade in rhino horns go is going in the last 10 years it has gone from 7 Rhino being killed to over 1,200 a year but look at this young girl behind beside this rhino this dead rhino this is what I call convergence it is this young girl is a trafficked young woman involved in the sex trade in South Africa and because there are permission to have hunts and they sold hunting licenses the Vietnamese who were a major consumer of the rhino horn were using the trafficked women as hunters even though they didn't even know how to hold a rifle so this is how you have the combination of different types of illicit activity and I call this dysfunctional selection the rhinoceros has been on the planet for tens of millions of years but will not probably survive another few decades because of the absence of genetic diversity so if you think about the Darwinian concept of natural selection it's the healthiest that survive but under our illicit economy it's dysfunctional selection because the animals that are the healthiest with the longest horns are the ones that are chosen for elimination and the poachers who do this who are poor and make maybe $5,000 for killing a rhino then dissipate this money and don't use it as an investment for the future so it is the killing is dysfunctional and the killers are not able to take advantage of their illicit activity so this is what we're having of the different forms of illegal activity converging as I shown you fish with traffic labor trafficked women posed as rhino hunters and then you often have the criminal activity moving together in South Africa president Zuma's family had the monopoly on smuggling cigarettes and so often the Rhino were transported with the cigarettes because of the impunity that they had so what do we think about how does this function this illicit trade have other effects often this is a domino effect when you have overfishing in West Africa which has some of the richest fishing grounds in the world if you over fish this you deprive the fisherman of their livelihoods and you can see that some of them become illegal migrants to other parts of the world after the in Drogheda which is a major criminal organization in southern Italy disposed of hazardous waste off the coast of Somalia once an Italian colony they killed the fish and what did the fishermen do they became pirates because they could not survive having lost their their supply of fish that they needed to sustain themselves so what do we need to do this is an incredibly complex problem and the idea of how do we deal that with this is not just law enforcement and that's why I'm so glad to be able to talk to a community like you because when we think about these problems and our government sits and talks about them they say we need a whole-of-government strategy and I think that's wrong what we need is a whole of society strategy to deal with it where we have engaged citizens we have the corporate world which needs to be much more responsible because of their role in running online platforms of running technology that facilitates much of the solicit trade we need journalists who expose it we need consumers who are much more aware of what they're buying and then we need governments to act if there is not a simple strategy of how to deal with this but sometimes it is not the sort of the natural answer of what you would think about of how to address this problem one of them major problems that we have now that nobody's talking about is the rise of illegal pesticides for example in India one third of the pesticides that are now being used are illegal many of them are very harmful to the farmers to the earth in Europe it's about 10% generally and in North East Europe it's about 25% and you think what do you do about this well one of the indian civil society leaders i know who mr. microfinance of itll india was talking about how they set up buying cooperatives so that farmers who are not educated who don't have the ability to buy the best commodities form into collective organizations where someone is educated where they can determine that they're buying things with proper supply chain and proper origin and buy them for the community so this is not the way one normally thinks of how you deal with illicit activity but you need to think about how you deal with this problem and not stovepipe these activities one of the problems that we have is talk about policies against drugs tralala sees against wildlife trade policies against cigarettes but as we've seen all of these problems merge together and we need to think about them more holistically we also need to think about policies and what we're doing before they're implemented and one of the activities that has enormous ly scaled in the digital space has been human trafficking research that was done by DARPA which is a research arm of the Pentagon that helped develop the internet found that in the two years they were engaging in their study on human trafficking human traffickers spent a quarter of a billion dollars on ads for sexual services to advertise trafficked women so one of the things that has been done recently by Congress in a rare moment of bipartisan activity was voting 97 2 in favor of forcing online companies to be responsible for ads concerned with human trafficking this is the first effort to regulate or force online marketplaces to be responsible about what they are making available to consumers the three votes that were absent was McCain who couldn't vote one Rand Paul who said that we shouldn't regulate anything and one other senator who said this law wasn't going far enough but beyond that we need to be having a growing awareness and a consumer demand that we must be providing a more responsible marketplace for for citizens and that we need to I would say reign in the internet so that it is not the source of so much harm in our in our lives in this area of illicit trade the Europeans have done much more than we have but we are behind in this area so one of the things that we think about and keep talking about how this transnational this is transnational crime and yes it crosses borders but it is not just committed by crime groups as I say this much harm to the planet this much harm to human life cannot be done just solely by criminals as I talked to you about today we've had corporate actors in the banking sector we've had corporate actors in online marketplaces I could talk to you about Volkswagen and its failure to control its emissions and trading cars that it shouldn't be trading so we have corporate involvement we have corrupt officials like the the leader of Borneo who DeForest the territory that he controls we need to be thinking much more about the diversity of actors and not just focusing on criminal organizations there are a piece of this but only a piece of this and we need to be focusing much more on transparency how could somebody like mr. Taibbi buy buildings all over the US and elsewhere is that we do not have something called beneficial ownership where you can understand who is laundering their money in our country and elsewhere so with this I want to close and say we have a daunting issue ahead of us illicit trade and this dark commerce is threatening the sustainability of life and of our planet and while we talk much about the role of climate change and this illicit trade is certainly linked with climate change because deforestation is undermining and limiting the absorption of trees and the capacity to control it it goes much farther and as I conclude the book I say there are no jobs on a dead planet and that's what we need to be focusing on how we maintain life not only for ourselves but for the other parts of the planet that live here and that we interact and depend on thank you you

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