Designer Drug Markets Get Boost From Crypto

Conversations on drug forums can get nerdy. People looking to push the barriers of their mental and bodily experience tend to know a lot about the vagaries of the law, organic chemistry, metaphysics and, increasingly, the ins and outs of blockchain technology. For many, the first step towards opening the doors of perception is managing a bitcoin (BTC) key.

Technology and drugs have always been intertwined. Marijuana was the first thing ever sold over the ARPANET, an early version of the internet, in a cross-country deal between graduate students. Magic mushrooms were the first thing listed and sold on the Silk Road, a shuttered anonymous marketplace that was proving ground for commercial use of Tor and Bitcoin.

This article is part of CoinDesk’s Sin Week.

And now, crypto is serving as a bedrock tool for an emerging world of novel drugs, the interaction of which is fundamentally reshaping the recreational drug industry. Research chemicals, aka designer drugs, are new synthetic substances sold primarily online that exist in a legal gray area.

These are chemical cousins to familiar, illicit substances like LSD, ecstasy and meth that, through a few chemical tweaks as well as ambiguities in global regulations, can be sold and advertised with almost total impunity. They have names like 2C-B, AMT and 5-MeO-DMT, and hundreds of variations are synthesized annually.

“The internet has allowed for easy access to drugs, weapons and other criminal activity through the dark web as well as other criminal organizations who make their living off the backs of those unsuspecting young people looking to score any number of drugs,” James Capra, the retired chief of global operations for the U.S. Drug Enforcement Agency (DEA), told CoinDesk.

That’s only the half of it. While darknet markets remain a popular place to score, the research drug industry thrives on the “clearnet,” or the part of the web you can explore with a Google search. This has enabled people who otherwise would not have access to recreational drugs to discover them.

Roy Gerona, a drug monitoring specialist at the School of Medicine at the University of California, San Francisco, said “the explosion” of research chemicals can be attributed to three concurrent and interrelated trends: the democratization of information over the internet, easy shipping through globalization and the adoption of digital payments – including credit cards and crypto.

“The market has evolved so rapidly,” Gerona, who was one of the first to model novel synthetic cannabinoids, said in an interview from a book-lined office. The internet has allowed for an entirely new type of market to emerge, creating a platform for demand to surface and for suppliers to meet it.

There are dedicated forums, like Erowid and on Reddit, where psychonauts (those who experiment with the new pharmacopeia) act as guinea pigs to study the effects of these never-before-seen chemicals and post about their experiences. They titrate doses and write trip reports, breaking down their experiences by the minute or hour.

«The darknet market ecosystem has changed dramatically over the past decade,” Chainalysis’ Lopez-Penalver said

Jerry Martin, founder of MicroDelics, a research chemical retailer based in “beautiful” Vancouver, British Columbia, Canada, said his wares are unregulated and for research purposes. Sometimes simply sticking a “not for human consumption” sticker on packages makes all the difference.

Martin did say some of his customers, typically people interested in microdosing trace amounts of psychoactive drugs, prefer transacting in crypto even if what they’re buying is not illegal. “A lot of customers want to make their purchases discreetly,” he said.

This was echoed by Gerona, who investigates drug forums to stay up-to-date on the market. “The main attractive feature of that community is the non-traceability of the transaction,” he said.

Tammy Jarbeau, a representative of the Public Health Agency of Canada, sent CoinDesk a series of documents spelling out Canadian regulation of pharmaceutical drugs for human use, of drug analogs and controls on chemicals and precursors, which together allow authorities to trace financial flows as part of criminal investigations.

But as it stands, the Canadian government is not necessarily tracking cryptocurrency transactions to drug retailers or manufacturers.

“I have reached out to many departments, and from the Canada Border Services Agency there are currently no reporting requirements under the Cross-border Currency and Monetary Instrument Reporting Regulations (CCMIRR) and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) related to virtual or crypto currencies,” Jarbeau said via email.

“Most marketplaces are now cognizant of the fact that bitcoin is not a panacea, and instead recommend that people use privacy coins. We’ve seen dash also, to a lesser extent, and monero seems to be more prominent than it used to be,” Christin said.

Information spreads

The most hardcore research chemical users often see their experiments as ways to improve their lives and possibly better humanity. Many of the chemicals currently sold today were first synthesized or theorized by professional biochemist Alexander Shulgin, whose books “TIHKAL” and “PIHKAL,” short for Phenethylamines and Tryptamines “I Have Known and Loved,” have become touchstones for the community. In both, Shulgin describes routes of manufacturing as well as his and his wife and friends’ subjective experiences with various substances.

The complicated chemistry he wrote about was once privileged information, which began to spread on the Usenet message boards in the early days of the web. Self-described psychonauts have taken up his tradition of experimentation. For them, drug use is a personal choice that should not be intermediated by governments.

Shulgin, who died in 2014 and is credited with inventing MDMA, argued that drug prohibition has the opposite effect to the one intended and argued for decriminalization. Although he didn’t live to see the rise of the internet or the mass sale of some of the many compounds he first created, his prediction was likely correct.

See also: Criminal Crypto Use Is Growing, but That’s Just Half the Story | Sin Week

Gerona said prohibition is a double-edged sword. On one hand, it limits legitimate use and research into potentially helpful chemicals. On the other hand, it likely prevents death, addiction and other societal harms. He did say that the thousands of posts on message boards about recreational use of novel drugs has “legitimate” scientific value.

James Capra, of the DEA, said it’s not uncommon for drugs to be “counterfeit” and “deadly” when bought online. Christin said you should assume you’re talking to someone in law enforcement when using a darknet service.

Research chemicals are similar to crypto in at least one way – it’s an industry that seems to have hit escape velocity. Neither seems to be slowing down soon, and the more individuals who join the truer that is.

   
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