The shutdown of some illegal marketplaces on the Dark Web fosters the trade in counterfeits on other trade platforms. This is the finding of a US analysis, which warns against rash actions against IP violations on the Dark Web.

A new study shows unwanted effects of the shutdown of the well-known Dark Web marketplace Silk Road 2.0 in November 2014. The shutdown of this platform triggered positive effects both for buyers of fakes and for operators of other marketplaces on the Dark Web on which fakes are offered – this is the conclusion of researchers from the US-based Tuck School of Business Administration at Dartmouth College.

In their study From Darknets to Light, the researchers in particular examined the effects of the takedown of Silk Road 2.0 on two other major Dark Web marketplaces, Evolution and Agora. In the weeks following the law enforcement action against Silk Road 2.0, transactions per vendor on the alternate sites increased. At the same time, prices for counterfeit products dropped, which had a generally positive effect on illegal trade. “It was cheaper to buy counterfeit products as a result of the law enforcement shutdown [of Silk Road 2.0]“, explains Prasad Vana, one of the authors of the study.

Criminal traders might have used the price reductions in a bid to attract new customers who were looking for alternative trading platforms after Silk Road 2.0 was shut down. “A portion of vendors sell on multiple markets simultaneously and when one market shuts down, move their business to another”, Vana continues. Via online forums and reviews, customers share updates on where goods are traded on the Dark Web. Due to the anonymity of the Dark Web, it can be assumed that those marketplaces will continue to be a relevant sales channel for counterfeiters. For taking action against such trading platforms, however, such unintended consequences should be considered.

Sources: Tuck School of Business, WTR