Various Aspects of Escrow Systems on The Cybercrime Forums


Escrow Systems is the most used payment method on the dark web. By the dark web, we mean both the dark web marketplaces and the darknet forums, especially in the cybercriminal forums. The financial transactions that are made on the various Russian and English cybercrime forums have the capabilities to look quite similar to the transactions that are made on the legit platforms. All you need is the trading website with products and buyers offering to sell their goods and services and as well as sellers who are keen enough on purchasing them against some deals by using bitcoin escrow systems.

What has been seen from the dark web trade is that all the transactions that are made take the help of cryptocurrencies, also known as the digital currencies. A cryptocurrency might be defined as a digital asset that is designed to work as an exchange medium where the individual coin ownership details are stored in a ledger. A ledger is a current form of a computerized database. Thus, there are various kinds of transaction modes of which one is the Escrow payment systems. This article will serve as the handbook offering the basics of escrow in brief along with how the escrow systems perform on the various lingual underground forum and its complications.

What is an Escrow System?

Wikipedia has defined the term “escrow” as –

“a contractual arrangement in which a third party (the stakeholder or escrow agent) receives and disburses money or property for the primary transacting parties.”

The term is quite well known in the United States in the context of real estate purchases. But on the cybercriminal forums, it describes as an arrangement where the purchaser sends their funds to a third party ( neutral) who is known as the guarantor. All of these are done following an agreed deal. The guarantor releases the cryptocurrency to the seller only when the customer confirms that the goods or the services are up to the mark or things went according to the deal’s agreement. The guarantor, being the third party, sometimes takes a commission from the funds as “payments” for the rendered services. The main motto of the escrow services is to diminish the chances of both the buyers and the sellers falling victim to a scam and serves as a step to ensure both parties are satisfied with the deal. Most of the vendors in the darknet marketplaces will attempt for escrow payment, but if someone is refusing this, this might be taken as a clear sign of a scam.

What is a Bitcoin Escrow Service?

A Bitcoin escrow service can be termed as a mediator service that protects the money (in this case bitcoin) for a transaction between the strangers (the buyers and the sellers/vendors) until the goods or the bitcoins are handed over. An alternative to the BTC escrow service is a multisig wallet named Bitrated that has been designed in such a way that it can facilitate transactions between the buyers and the sellers.

How Does Bitcoin Escrow Service Works?

The BTC escrow service works similar to any other escrow services and that the currency used is bitcoin. The bitcoin escrow platform works as a third party that collects the agreed bitcoin from the buyer’s wallet and stores it in the platform’s wallet. When the seller sends the goods to the buyer and the buyer confirms that the product is good and asks to release the coins, the escrow platform transfers the bitcoins to the seller’s wallet.

Why Do I Need A Bitcoin Escrow Service?

Bitcoin Escrow Services work as a mediator. In this, the seller requests the buyer to pay the product price. The buyer waits for the products to arrive after which he pays to the seller. Since both of them are strangers to each other, there is a high possibility of risk for both of them. There is no guarantee that the seller will send the products or the buyer will release the payment. This is where the guarantor in the bitcoin escrow service or crypto escrow system will be of help. He will make sure that there are no discrepancies and that none of them is scammed.

FAQ On Cryptocurrency Escrow Services: 

What will happen if things go wrong? How will I be protected?

If things do not go the way it should have been, the mediator or the escrow service provider steps in and mediates the trade. Thus, it becomes important to send and receive messages via the escrow platform.

How long does it take to transfer bitcoin to a wallet?

At the very first stage, the escrow wallet needs to be funded. This fund comes from the buyers. After the buyer confirms the release of the funds, it would take seconds to be transferred from the escrow wallet to the seller’s wallet.

Will the seller be able to cancel the escrow payment after I have released the payment?

Typically, the seller would not be able to cancel the payment after you (buyer) has clicked on “Payment Made”. The buyer, on the other hand, can only cancel. Before making a payment with Bitcoin, make sure the escrow wallet is funded.

What should I do if a trade goes wrong?

In this case, you have to contact the third party or the bitcoin escrow service provider and raise a dispute.

Can I get scammed using bitcoin escrow service?

Usually, escrow services help you stay protected from getting scammed. However, the cybercriminals sometimes warp the model of the escrow and convince the consumers that their bitcoins will be protected. In such a situation, the cybercriminals will ask the consumers to send money via the unconventional methods. The escrow scammers sometimes establish an escrow service platform that mimics the reputed websites like Amazon, PayPal, eBay or Apple to cause a scam. They send fraudulent emails that look like authentic-company emails that use legit company logo and email format. These emails instruct the buyers to send bitcoins via wire transfers or gift cards that are untraceable. As the victim sends the money, he would never receive the products, nor the scammed bitcoins.

Various Cybercriminal Forums & Their Escrow Systems

Russian Linguistic Cybercriminal Forums:

Almost all of the Russian Speaking cyber criminal forums rely on the escrow systems where most of the platforms offer an official escrow system for their members, having a senior member of the forum team designated to be a trusted guarantor. For example, on both XSS and Exploit, the buyers and the sellers mandatorily require to fill out an escrow form and establish contact with the guarantor of the forum through the Jabber messaging service or XMPP. After this, the buyer will send the money to the guarantor, and as the buyer receives the product as per the deal, the guarantor will release the seller’s payment.

Such kind of the escrow service charges a service fee of 3-10% (the commission of the guarantor) and this fee depends on several parameters. Of the many factors, the most common ones are transaction amount, the type of services or goods ordered and the potential risks that come along. However, this commission has to be paid by all means despite the result of the transaction. The admin of XSS is the guarantor while on Exploit, a new official guarantor account has been created.

English Linguistic Cybercrime Forums:

The English Linguistic cybercriminal forums do not take the escrow services that seriously and as a result, least number of such forums offer bitcoin escrow payment service. The members, as well as the vendors of such kind of forums, largely depend on the other forum members (especially the high-ranked ones) who would take the responsibility of performing the role of a guarantor. One of the most notable exception in this regard is the Torum cybercrime forum whose escrow model evolved based on the Russian system of payment. They have integrated three fully verified users on their platform from September 2019 who acts as the official forum guarantor, whose usernames are “Chargen19”, “Terminal” and “TheAngryDwarf.”

Unfortunately, the user ids “Chargen19” and “Terminal” have been dissolved in September 2019 and February 2020 respectively. So, TheAngryDwarf is the only moderator who charges a 2% commission fee against a Monero (XMR) or Bitcoin (BTC) transaction. Nevertheless, the English cybercriminal forum administrators do not usually provide escrow services, but they ask the transacting parties to place a guarantor in their deals.

German Linguistic Cybercrime Forums:

The German Linguistic cybercriminal forums do take advantage of the system of escrow where it is termed as “Treuhand”. The classic Treuhand process maintains a standard escrow model where the funds are held unless both the buyers and the sellers are completely satisfied with the conditions placed in the deal.

Some of the German forums have levelled up their forum escrow services and provides the “Multisig Escrow System”. Under this system, both the parties in a deal have to enter their public Bitcoin wallet keys. After this, a multi-signature cryptocurrency wallet will be generated where the buyers can deposit their funds. As soon as the transaction made by the buyer has been verified, the seller then sends the goods to the buyer, following which the buyer confirms the quality of their purchase and the funds are next released to the seller. The funds are only issued to a single direction when two out of the three involved agree to a payment being sent. This refers that the guarantor cannot steal the funds for themselves.

The underground forum Crimenetwork is a fantastic example of a formalized safe escrow services, where two distinct systems operate. In both the arrangements, a 5% commission fee is automated via the use of a dashboard styled payment platform. The forum’s escrow service solely involve a forum guarantor (as in this case, a forum administrator) if there is any dispute.

Escrow System Complications & Reductions

The advantages of utilizing a guarantor are pretty transparent, and there are certain complications to this arrangement. The most prominent disadvantage of the escrow system is that it comes with a risk of guarantor trust being misplaced. Apart from this disadvantage, there are a couple more complications as well, which are described below:

  • Losing Money Via Charged Commission: This is specifically uncommon for the official escrow mechanisms to charge up to 10% on each of the transactions that kind of consumes the profit.
  • Failure of Financial Responsibility Against The Guarantor Actions: This complication is faced on the cyber crime forums where a user is designated as their website’s guarantor. The forum will be held guilty if this individual fails to fulfil both the parties’ obligations.
  • Unavailability of Individuals Providing Escrow Services: Complications are faced when individuals (the guarantors) stay offline when there is an urgent need for transactions. The first step, which is contacting the guarantor gets a hindrance in such case that further delays the upcoming processes.
  • Transaction Success Depends on The Condition of A Guarantor: A guarantor at any circumstances and any point of their responsibility tenure might show a change of attitude that compels them to get tempted and misuse the escrow funds of the transacting parties.
Image: Escrow

However, over time there have been specific changes in the terms and conditions of the escrow systems in the bid to eradicate the complications that have been discussed earlier. One of such changes is the integration of the automated systems. Take, for example, the now-defunct cybercriminal marketplace named MarketMS that had allowed the buyers to challenge the quality of the goods that they have received and opt for a refund. Also, the funds were kept on hold till 72 hours had elapsed following the purchase. Within this period, the buyers could open an arbitration ticket or opt for completion of the transaction.

Another verified Russian Linguistic cybercriminal forum has been evolving in the part of their escrow system introducing several elements of automation. Back in March 2018, the website had added the following couple of changes:

  •  In the case of disputes, the users could now summon an arbitrator with just a single click.
  • In case one of the parties in a transaction disappeared, the users could now start the refund process against one click.
  • The buyers now need not go through a back-and-forth conversation to confirm purchases, instead press one button.
  • The users can now see the exact amount the transaction’s guarantor had received.

To conclude, it can be said that some of the websites are potentially increasing the use of escrow mechanisms. Specific forums who have integrated the automation in their escrow services have announced positive results that are stemming from the changes. Even the transactions using this service have increased bearing deals of $50 to $300, making this escrow services an everyday tool.

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