Is the IDF weaponizing blockchain? Are cartels paying ransomware on the dark web? #hearsay | Opinion

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Welcome to #hearsay, Dorian Batycka’s weekly crypto gossip column. This week’s edition brings you a small dose of dark web cartels, a potential blockchain interface for the Israel Defense Force (IDF), and one NFT collector’s hilarious flex fail.

Every week, brings you #hashtag hearsay, a gossip column of scoops and stories shaping the crypto world. If you have a tip, email Dorian Batycka at [email protected]

Question: what if Sam Bankman was actually fried?

That’s the thought that immediately sprang to mind when I learned about a recent exit scam involving one of the world’s largest darknet vendors of illegal drugs.

On March 5, users of the site Incognito Marketplace, a site like Reddit where buyers and sellers can get everything from a gram of weed to kilos of coke, were awakened to a message from one of its administrators, an admin known as Pharaoh.

The message read:

We have accumulated a list of private messages, transaction info and order details over the years. You’ll be surprised at the number of people that relied on our auto-encrypt functionality. And by the way, your messages and transaction IDs were never actually deleted after the expiry.

Anyway, if anything were to leak to law enforcement, I guess nobody never slipped up. We’ll be publishing the entire dump of 557k orders and 862k crypto transaction IDs at the end of May… whether or not you and your customers’ info is on that list is totally up to you. Yes, this is an extortion.

Pharaoh, Incognito Marketplace admin

Holding the site’s BTC and Monero (XMR), Pharaoh stated that vendors on the site would be asked to pay large ransoms, lest they have their data leaked online.

What’s more, Pharaoh also revealed that the “auto-encrypt” button, made available to vendors on the darknet marketplace, actually exposed them to a data breach.

Worries about the Incognito Marketplace began to circulate the week before when users were unable to withdraw BTC and Monero (a privacy-focused cryptocurrency) from the platform. Efforts by online sleuths soon revealed that the site was an “exit scam,“ only with an ominous twist, with site admin demanding as much as $20,000 in ransom in crypto from vendors.

Not all together different from the various ransomware attacks that regularly attack for-profit companies and governments, this exit scam/ransomware attack is one of the largest in recent years.

Those with large balances and orders are initially being targeted, initial reports claim, but all buyers may also soon have their data leaked online.

“As for the buyers, we’ll be opening up a whitelist portal for them to remove their records as well in a few weeks.”

Incognito’s vendors, some of whom are likely connected to the biggest and most nefarious cartels in the world, are now screwed.

I don’t know much about the drug game, but blackmailing drug dealers and attempting to extort from them for millions of dollars in cryptocurrency seems like a pretty dangerous idea. All of this begs the question, who is Pharaoh? If anyone can DOX his crazy ass, community feedback in the form of a hit would likely be very swift.

Is the IDF planning to weaponize blockchain?

The Mamram Alumni Association, which includes over 8,000 alumni members of the Israel Defense Fund’s Center of Computing and Information Technology Systems unit, recently announced that it would soon be deploying the release of a “first of its kind, self-proclaimed ‘no bullshit’ blockchain incubation program for early state blockchain and web3 start ups.”

In a press release shared with on March 19, Mamram announced partnerships with blockchain technology startups StarkWare, Fireblocks, and Collider VC. 

StarkWare, one of the companies given support by the alumni group, uses zero-knowledge proofs to provide verification resources that can be deployed for all sorts of technologies and applications.

The elephant in the room is, of course, how ‘blockchain’ and ‘web3’ are being deployed—or at least funded—by some of the top minds of the IDF’s computing units. 

Identification of individuals with self-sovereign identity management is an emerging field of blockchain technology known as “eKYC,” which could be used to control and manage populations and borders.

Blockchain technology can be useful for all sorts of large centralized lists, lists that may need to talk to other lists, i.e., identity/verification checks.

eKYC could ostensibly be used to aid in Israel’s ongoing efforts to annex Palestinian territories. Blockchain is effectively weaponized as a tool of population control, centralization at its absolute worst.

NFT collector flexes then gets flexed on announcing loan-backed by Beeple

Does 1 ETH = 1 ETH? Or is it equal in value to the USD backing it? In a strange collector flex/fail, the digital art collector Pablo Rodriguez Fraile boasted about getting what he described as the “largest ever loan against a single piece of digital art.” Putting up Beeple’s “Crypto is Bullshit,” Fraile announced he had received a $400,000 loan facilitated by the NFT lending protocol Gondi.

However, his flex was immediately flexed on, as not technically the largest on-chain loan, which technically belongs to @Anonymoux2311, who loaned a grail xcopy 1/1 for in 2023.

In a comment, X user @FeatureFrank accused Fraile of not being crypto-native enough to understand the difference.

In this week’s what-to-watch

Wagie Wojak gets told by Dad to get a job.

Until next week degens, don’t forget to log-off and touch grass. As always, please send tips to: [email protected] or hit me on X @temp_projects

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