A drug dealer ripping off customers? The nerve!
Silk Road, as I reported previously, is the online illicit drug marketplace that has defied law enforcement efforts to close it down. Last month, Silk Road reported the greatest scam in its fifteen-month history, which cost the site’s users over a hundred thousand dollars in just two days.
Silk Road’s vendors live and die by their reputation and feedback, which buyers give much as they do on eBay. Nobody on Silk Road had a better reputation or more enthusiastic feedback than Tony76, a vendor of heroin, stimulants and psychedelics from Canada.
The site has a system of escrow in place – a user places an order, money goes into escrow and the user releases it once the order has been received. Any disputes can be referred to the site’s administrators for resolution.
However, ‘trusted vendors’ have always been allowed to request that users ‘finalize early’ – release the funds immediately. New members to the site are often asked to do so until they prove themselves to be ‘trusted buyers’, and sellers will ask for early finalisation when bitcoin – the virtual currency used to trade on the site – is fluctuating wildly.
A few days before the great ‘420 Sale and Giveaway’ held on April 20, Tony76 posted in the forums that he was being targeted by a vindictive rival seller who had threatened to set up bogus buyer accounts to order thousands of dollars of drugs in “multiple orders, in multiple names, from multiple states”. Tony would have no way of knowing which were the bogus accounts and would lose the money not released from escrow.
‘Don’t worry’ came the flood of replies from Silk Road’s community. ‘Everyone knows and trusts you, Tony. To avoid this horrible scammer, just make everyone finalize early.’
So when Silk Road held the ‘420 Sale and Giveaway’, the site’s highest-grossing and most trusted vendor, “Tony76”, jumped on board, offering fabulous discounts on his products and for the first time ever opened up shop to buyers outside North America. Orders flooded in from users well accustomed to receiving high quality goods from this seller and from new users, excited to have the chance to buy from such an esteemed identity.
And Tony, sadly, had to ask all buyers to finalize early until he could sort out the situation with the scammer. And of course they did. He was the most highly respected and prolific seller on Silk Road; the buyers had had countless transactions that went smoothly; anyway, to not finalize might mean missing out on a bargain.
A week later the rumblings started. The local orders should have arrived by now. Tony wasn’t answering messages. The bespoke site Tony had set up was gone.
Two weeks later the rumbles became a roar as it became clear that the most trusted vendor on Silk Road had absconded with what buyers estimated was over a hundred thousand dollars for a single weekend’s work. One moderator of the forums placed it at a cool quarter of a million dollars.
There followed much angst and hand-wringing going on at Silk Road. Some believed Tony76 was killed by Mexican drug lords. Others assumed he had been busted. Many refused to believe that someone in their ‘Community’ would do such a thing. Then came the conspiracy theories: he is already selling under another name; Silk Road’s owners are in on it; it’s all part of a worldwide sting and nobody is safe; Tony76 is actually a Canadian bikie gang.
Perhaps the greatest surprise to take from this is the number of people who are shocked that a drug dealer would rip them off. Silk Road’s advice: never trade outside of escrow.
It’s a lesson that will stay with their customers for a long time.
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