Collective Displacement of Regional Cryptomarket Vendors—A Study on the Aftermath of the Flugsvamp 3.0 Closure

• Published date: 01 September 2024
• DOI: http://doi.org/10.1177/10575677241229682
• Author: Oscar Waldner,Kim Moeller
• Date: 01 September 2024
• Subject Matter: Original Articles

Collective Displacement of

Regional Cryptomarket

Vendors—A Study on the

Aftermath of the Flugsvamp

3.0 Closure

Oscar Waldner and Kim Moeller

Abstract

The cryptomarket ecosystem has become increasingly volatile and fragmented with sites shutting

down on short notice. Displacement to new marketplaces is tricky when the original location

was domestically oriented. We examine the spatial and temporal displacement of 83 Swedish ven-

dors in the aftermath of the Flugsvamp 3.0 shutdown. Vendors rejected the successor Flugsvamp 4.0

and moved to German-run Archetyp Market. Using quantitative cross-sectional data from Archetyp

Market we measure bivariate correlations between the temporal displacement and status-related

variables. We found moderately strong correlation between vendors’number of sales per day

and the order of their relocation to Archetyp. We also examined cryptomarket discussion forums

and blogs during the time of the Flugsvamp 3.0 shutdown. This qualitative data supported the f‌inding

that migration choices of high-status vendors inspired others to follow.

Keywords

cryptomarket, darknet, online drug market, status, reputation, migration

Introduction

Since Operation Onymous shut down the pioneering cryptomarket Silk Road 2.0 in 2014, law

enforcement agencies worldwide have cracked down on these platforms. Despite the effort, the

overall ecosystem of encrypted platforms used for trading illicit goods and services persists

because vendors and buyers displace to other marketplaces (Décary-Hétu & Giommoni, 2017;

Jardine, 2015; Ladegaard, 2020). These displacements are important for the matured cryptomarket

phenomenon (Martin et al., 2020), and resemble the “war of attrition”between law enforcement

and drug sellers known from conventional drug markets crackdowns (Curtis & Wendel, 2000; see

also Cohen et al., 2003). Another important trend in cryptomarket drug trading is the increased

Department of Criminology, Malmö University, Malmö, Sweden

Corresponding Author:

Oscar Waldner, Department of Criminology, Malmö University, Malmö, Sweden.

Email: oscar.waldner@mau.se

Original Article

International Criminal Justice Review

2024, Vol. 34(3) 206-223

© 2024 Georgia State University

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/10575677241229682

journals.sagepub.com/home/icj

preference for domestic shipping (Norbutas, 2018). Sending illicit drugs in the mail across interna-

tional borders is the riskiest step (Bakken et al., 2018; Demant et al., 2018; Giommoni et al., 2023)

and regionally oriented cryptomarkets are increasing in numbers (UNODC, 2023), e.g., Russian

Hydra, Finnish Silkkitie, and Swedish Flugsvamp (Groshkova et al., 2018; Magnúsdóttir, 2019;

Nurmi et al., 2017). The combination of these two trends implies that there are more but smaller cryp-

tomarkets with a shorter lifespan than before (UNODC, 2023).

In Sweden, the location of this study, the cryptomarket Flugsvamp (FS) appeared around 2013 and

specialized in domestic drug shipments. Operation Onymous disrupted the platform in 2014, but it resur-

faced as FS 2.0, then FS 3.0, following repeated crackdowns (Stockholms Tingsrätt, 2023). At its peak,

around 150 vendors were active on the platform and the value of trade increased from €530,000 in 2015

to an estimated €3,100,000 in 2021 (Tollin et al., 2021). On 30

th

October 2021, Flugsvamp 3.0 (FS3)

was shut down by its administrators. They cited unspecif‌ied security reasons while denying it was an

exit-scam, but this was questioned in the Swedish cryptomarket community. A fourth installment

launched as Flugsvamp 4.0 (FS4) on 2

nd

November 2021, but it never reached the same popularity

as its predecessors. Instead, FS4 suffered from persistent rumors and allegations of various frauds (f‌lash-

back.org, 2021; Luffarn, 2021c; see also Moeller et al., 2017), and at this point, most of the Flugsvamp

vendors displaced their operations to German-run Archetyp Market (Luffarn, 2021a).

The purpose of this study is to examine the displacement of vendors following the shutdown.

With several alternative locations to choose from, it was not given that Archetyp Market would be

the destination. Nor is it self-evident how vendors choose a new cryptomarket to operate from. We

analyze the temporal order of the displacement measured as time on the marketplace in relation to

vendor’s status characteristics measured as their number of sales, reputation score and number of

accounts. We augment this analysis with qualitative data from discussion forums to provide

context and assist our interpretation. This contributes to improving our understanding of the

matured cryptomarket phenomenon.

In some ways, cryptomarkets are an exotic niche of the global illicit drug market (Sumnall, 2018),

that may be declining in importance as compared to other forms of online drug distribution (Bhaskar

et al., 2019) but they continue to evolve technologically and still have potential for growth (Hiramoto &

Tsuchiya, 2020). They also illustrate the wider phenomenon of offending moving online, and merging

with off‌line contexts as drugs bought on cryptomarkets are resold off‌line (Brownet al., 2023; UNODC,

2023). The Swedish National Council for Crime Prevention argued that law enforcement needs a better

understanding of longer-term trends in the online drug trade (Tollin et al., 2021; see also Jardine, 2015).

Review of Literature

We interpret reactions to the closure of FS3 as examples of the strategic displacements offenders

make to reduce apprehension risk and sanction severity. In Gibb’s (1975; Moeller et al., 2016) theory

of restrictive deterrence these strategies broadly consist of three forms of displacements: spatial, tem-

poral, and tactical. We focus on the spatial and temporal displacement, the where and when of

offending. We follow Yar’s (2005) proposition that space, time, and routine activities are applicable

to cybercrime and assume that displacement processes are neither random nor uniform (Brantingham

& Brantingham, 1995). Spatial displacement refers to a change of geographic location to avoid law

enforcement or other threats. Eck (1995) noted that routine activity marketplaces for illicit drugs will

displace spatially to similar locations, and for our analyses, this corresponds to the move to a different

platform. Temporal displacement conventionally refers to changing the time of day where offenses

are committed or offense duration (Maimon et al., 2014). In our study, this pertains to the urgency or

hesitation that vendors display in moving to a new platform. Vendors have different opportunity

costs. For less popular vendors it is better to wait and see what others do, for popular vendors, hes-

itating entails more lost revenue.

Waldner and Moeller 207