Falling cryptocurrency prices are putting pressure on crypto exchanges on the dark web and causing a “bank run,” security researchers have found. This is making it harder for threat actors to “monetize” their attacks, buy vulnerabilities or fund malware-as-a-service operations.
Dov Lerner, security research lead at Cybersixgill, suggested that cryptocurrencies have lost up to $1.8tn in value since the market’s peak in November last year. This is causing a further run on the market, where holders exchange crypto for more stable currencies.
According to Lerner, this has put pressure on regular cryptocurrency exchanges, forcing some to slow withdrawals to maintain liquidity. Additionally, it is having an impact on exchanges on the dark web.
Dark web exchanges operate outside the regulated financial markets and do not carry out identity checks on their users, such as Know Your Customer. They are, Lerner says, purely changes and not crypto banks that can store currencies. But they allow users to change money from services such as Revolut or PayPal to crypto. Fees are often substantial.
In a post, Lerner argued that the dark web exchanges have invested in branding and marketing to build trust. They are also frequent posters to dark web forums, with some operating for up to four years.
However, Cybersixgill researchers noticed a significant drop-off in posts since the cryptocurrency crash. Of a sample of 34 actors known to be operating crypto exchanges in 2021, none are now posting about their services. But they are still active on forums and posting on other topics.
Lerner suggests that dark web exchanges and legitimate crypto markets experienced a run of withdrawals, putting pressure on their reserves of dollars.
Dark web actors also face a loss of their purchasing power. Although dark web transactions use crypto, prices for services and materials are set in dollars. With crypto values falling, actors might be struggling to cover their costs.
Lerner believes that this loss of liquidity will slow down commerce on the dark web, but he predicts this will only be temporary. If crypto increases in value, the exchanges could well come back.