According to a recent research report written by the blockchain surveillance firm Elliptic, there’s been a massive influx of darknet market (DNM) vendors selling personal protective equipment (PPE) like masks and coronavirus test kits. The spike in medical equipment sales on the invisible web during the month of March, follows Ebay and Amazon’s decision to remove all third-party PPE suppliers who sell masks and disinfection products on the websites.
Also read: Merchant Services, Gambling, and Darknets: Coronavirus Economy Stunts Cryptocurrency Spending
Report Shows Hundreds of Personal Protective Equipment Listings Can be Found on the Darknet
Medical equipment and PPE resources are being sold in great numbers on darknet markets (DNM) for bitcoin and other digital assets. The blockchain forensics firm Elliptic recently published a report called “How Darknet Markets Are Exploiting the Coronavirus Pandemic,” which describes the situation in detail. Since the coronavirus outbreak started gaining traction on a global scale, PPE and certain types of medical equipment like masks and ventilators have been hard to come by. Elliptic’s report notes that DNM vendors have found opportunities by supplying PPE goods to buyers willing to travel the invisible web. Elliptic underlines that the PPE products being priced with extreme premiums, as the company explains that masks are a top item.
“Hundreds of listings have recently appeared on darknet markets for N95 respirator masks,” Elliptic’s report details. “Usually priced at less than $1 each, these masks have been in very short supply and their sale for non-medical use has been restricted. The listings shown offer N95s in bulk at around $1.75 per mask – a surprisingly low mark-up on retail prices. Compare this to the prices charged by vendors on legitimate marketplaces such as Amazon or Ebay, where N95 masks have been listed for sale for upwards of $10 each.”
Moreover, besides the traditional darknet markets that have been around for quite some time, a market that claims to be a European mask wholesaler has a dedicated site just for masks. “Everybody needs a chance to get a mask for protection – Not only medical employees,” the website declares. Vendors on DNMs are also selling alleged covid-19 diagnostics for cryptocurrencies as well. Elliptic’s report stresses that DNM vendors know there is a global shortage for coronavirus testing kits and one vendor is selling “COVID-19 test strips” for $92 apiece. Even though Elliptic states that the diagnostics being sold on DNMs are overpriced, test kits on the white market are similarly priced.
So-Called ‘Coronavirus Cures,’ Openbazaar, and the Debate Over Price Gouging and Government Limitations
The blockchain forensics firm’s findings also show that there are some DNM operatives selling so-called “coronavirus cures.” “There has been anecdotal evidence that existing drugs such as chloroquine, a malaria treatment, could be an effective treatment for COVID-19. Public interest in this drug has been sparked by repeated comments from U.S. President Donald Trump about the drug’s potential, despite the absence of regulator approval for its use,” Elliptic notes. The authors further add:
We have started to see listings for chloroquine on darknet markets. The listing below refers to the claims made by Donald Trump, and offers a pack of 150 pills for $500.
The news follows the recent report from the blockchain surveillance company, Chainalysis, that explains DNM sales have seemingly declined. DNM vendors might be leveraging the need for PPE resources and masks to overcome the slight decline in narcotic sales. In addition to darknet markets, PPE supplies like N95 masks are being sold on Openbazaar and the Haven Privacy app as well. For instance, one seller on Haven is selling a lot of N95 masks for 0.0117 BTC ($85) at the time of publication. There has always been a debate on whether or not price gouging is ethical and when the act is mixed with government-induced limitations and shortages, prices can get worse.
At the end of February, Ebay and Amazon both banned third-party vendors who were selling PPE products like masks and disinfectants. There’s no doubt that suppliers have to find other types of marketplaces to sell these much-needed goods. It’s up to the buyer to decide whether or not the product is overpriced and the vendor is being exploitive. Elliptic’s opinion that DNM vendors are exploiting the market during the covid-19 crisis is merely the company’s meaningless subjective valuation. Government critics say, however, that price gouging is merely supply and demand and to Austrian economists, it is a “life-saving market mechanism.”
Mises author TJ Roberts explains that “a sober mind must acknowledge the necessity of price flexibility.” Price gouging stems solely from governments hindering the free market. For instance, the global shortage of sanitizers is caused by the government because of FDA regulations and costly oversight. Not only does the government regulation add to the price of these goods, but it also stops anyone from making products like sanitizers. At the end of March, vodka distillers and whiskey suppliers decided they would make alcohol-based disinfectants, but the government had stopped a number of them due to regulations. If the bureaucracy did not exist, the free market would easily help supply the demand a great deal and price gougers would be forced to deal with fair-value market prices.
Unfortunately, Elliptic’s report fails to mention all the private sector businesses that have attempted to help the situation. Some companies have come forward to make products like masks, but were stopped by regulators like the Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC). A few medical professionals that have tried to 3D print ventilator parts or create vaccines, have also been harassed over IP laws, regulations and government-backed patents.
What do you think about all the medical supplies and PPE goods being sold on DNMs? Let us know in the comments below.
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