SEO: Perfect Storm...Help Requested earn by blogging adsense income

Good morning, and Happy Thanksgiving!

I own an e-commerce company, we are small niche business selling recovery coin to Alcoholics Anonymous groups. You can check us out here for investigative purposes: www.thetokenshop.com Leading up to October 1st, we have historically ranked #1 for our top 3 keywords; AA Coins, AA Chips, and AA Tokens.

Here's how the storm started, and I am seeking input on what to expect, how to correct, etc. There was the Google update at the end of September, we upgraded our site to HTTPS on October 1st, and during the last 2 weeks of September a competitor picked up 24,000 backlinks which rocketed them to the #1 spot in almost every keyword we rank for.

Competitor: my12stepstore.com

I have ran some backlinks scans and found that most of backlinks are coming from 3 domains:

1. westhollywood.com (which subsequently has copies of the other domains as sub domains such as westhollywood.com/~gayinla7/
2. gayinla.com
3. wehotimes.com

These 3 domains account for about 24,000 links, many of which are coming from banner ads which don't have No Follow tags. Do you guys think that Google will eventually penalize them for this? Can you offer any advice on how to play catch up if they won't get penalized?

Thank you in advance!

submitted by /u/The_Token_Shop
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