Further, in an attempt to extort the members, the admin threatened to leak private messages, transaction information, and order details of vendors and buyers unless they paid a fee ranging from 100 to 20 thousand dollars. One of the servers searched by the agents was the so-called “bank”, a database containing all cryptocurrency transactions. In addition, in November 2023, an undercover law enforcement officer received several tablets purporting to be oxycodone purchased on the Incognito Market. On Dreads, the co-administrator of the Supermarket announced to the community on May 21, 2024, that the wallets had been emptied and that the only person who would have had access to them was “FatherBear”, the other administrator of the marketplace. As we move forward, the lessons from this case will inform both the defenders of the law and the next generation of cybercriminals.
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It also uses global law enforcement networks, like Europol, to combat cybercrime threats. Credible reporting from the referenced agencies, in addition to contributions from ATF; Army CID; CBP; Department of Treasury’s FinCEN and Office of Foreign Assets Control; and NCIS enabled domestic law enforcement actions in support of Operation RapTOR. Operation RapTOR includes law enforcement actions taken by JCODE member agencies, to include ICE HSI; the DEA; FBI; FDA-OCI; IRS-CI; and USPIS; in addition to foreign partners listed below. If you profit from pain online, we’re looking for you — and you’ll soon learn that no corner of the internet is beyond our reach.” No matter where criminals hide, we will find them, dismantle their operations, and bring them to justice. “Working through the JCODE initiative, IRS Criminal Investigation and our international partners led the largest and most impactful takedown to date — seizing over $200 million in assets, removing deadly drugs and weapons from circulation, and holding more than 270 individuals accountable.
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Lin operated the market under the online pseudonym Pharoah or Faro. According to the investigation, Incognito Market was an online narcotics bazaar that existed on the dark web. The DOJ noted that the marketplace had closed in March this year, coinciding with a previously reported exit scam that allegedly stole millions of dollars worth of customer’s BTC and XMR. A 23-year-old man has been arrested in New York and charged with owning, running and profiting from a $100-million dark web narcotics marketplace after authorities claimed to have tracked crypto transfers that uncovered his real identity. The FBI claimed it found Incognito Market’s alleged owner, Rui-Siang Lin, by tracking crypto from the dark web drug market to a crypto exchange account allegedly in his name. Launched nearly two years ago, Nexus Market has quickly grown into one of the more prominent darknet marketplaces, boasting a substantial a…
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Incognito Market was an online narcotics bazaar that existed on the dark web. Various successful operations have tracked down bad actors through their on-chain transactions. He now faces multiple charges, including engaging in a criminal enterprise and conspiracy to sell adulterated medication, with potential penalties ranging from 10 years to a lifetime in prison.
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The Organized Crime Drug Enforcement Task Forces (OCDETF) operation, which aims to uncover and dismantle high-level criminal groups, included the operations to eliminate Incognito Market. Lin is charged with serious offenses that carry a maximum sentence of life in prison for narcotics conspiracy, a mandatory minimum sentence of life in prison for engaging in a continuing criminal enterprise, a maximum sentence of 20 years for money laundering, and a maximum sentence of five years for conspiring to sell tainted and mislabeled medication. HSI New York is unwavering in its resolve to shield the public from those who use risky tactics to further their financial gain, working in tandem with law enforcement partners. Upon the completion of a transaction, cryptocurrency was transferred from the buyer’s to the seller’s account, minus a 5% commission for the market.
Hundreds of pounds of cocaine, methamphetamines, and other drugs were sold on Incognito Market since its launch in October 2020, it said. The stings have included markets for cybercrime tools and stolen data, including BreachForums last week and xDedic in January. Lin, who allegedly used the aliases Pharoah and faro, faces charges that include running a criminal enterprise and money laundering. Most notably, there was a tool to mitigate DDoS attacks, software that allows online merchants to accept XMR for payment, and “Koa-typescript-framework” – a program used as a foundation for web applications.
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In the DOJ’s criminal complaint against Lin, it points to a handwritten document the FBI pulled from his email, which appears to sketch out a flow chart for a dark-web market’s mechanics. Among all those incongruities, though, it’s the image of Lin giving his cryptocurrency crime training in St. Lucia—which Lin proudly posted to his LinkedIn account—that shocked Tom Robinson, a cofounder of the blockchain analysis firm Elliptic, who has long tracked Lin’s alleged Pharoah alter ego. During those same busy years, Pharoah also launched a web service called Antinalysis, designed to defeat crypto money laundering countermeasures—only for Lin, who prosecutors say controlled that Pharoah persona, to later refashion himself as a crypto-focused law enforcement trainer. That was before Lin’s alleged theft of his own users’ funds earlier this year and then his arrest last week by the FBI in New York’s JFK airport. Hundreds of pounds of cocaine, methamphetamines and other drugs were sold on Incognito Market since its launch in October 2020, it said.
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In 2021, Pharaoh introduced a service called “Antinalysis,” which was essentially a counter-intelligence tool for crypto users. According to prosecutors, Lin “had ultimate decision-making authority over every aspect of the multimillion-dollar operation”. He recruited a small staff (“employees” in the DOJ filings) to handle tasks like site maintenance, customer support, and possibly dispute resolution. However, agents were able to correlate the amounts and timing of transactions from the identified wallet to deposits at a certain exchange, effectively following the money despite the detour into Monero. He tried to swap large amounts of Bitcoin for Monero (to obscure their origin) and then cash out through a cryptocurrency exchange. In other words, the Bitcoin transaction from the Incognito wallet to Namecheap could be linked via Namecheap’s records to “Rui-Siang Lin,” providing a direct connection between the anonymous dark web revenue and a real individual.
“This is an alleged dark-net market admin standing in front of police officers, showing them how to use blockchain analytics tools to track down criminals online,” says Robinson. “This arrest underscores the dedicated, ongoing efforts of law enforcement to identify and dismantle illicit drug networks operating from every shadowy recess of the marketplace,” NYPD Commissioner Edward A. Caban said in a statement. A 23-year-old man from Taiwan has been arrested on charges of selling at least $100 million worth of illegal drugs online through a site on the dark web known as the “Incognito Market.”
Exit Scam & Extortion
Incognito Market’s rise and dramatic collapse, along with Lin’s arrest, sent shockwaves through the darknet economy. Those wishing to trade on Incognito Markets can register by paying a vendor fee of €650 (payable in XMR). Incognito Link is committed to keeping our platform secure by using the latest security measures to protect the identity and information of Incognito users.
By keeping transactions on-platform and abstracting them behind user accounts, Incognito ensured that buyers and sellers never needed to exchange wallet addresses directly, thereby preserving mutual anonymity. When a buyer purchased an item, they would transfer cryptocurrency from their on-site wallet (“bank account”) to the seller’s on-site account. The site supported at least Bitcoin and Monero for transactions, the two most popular digital currencies on the dark web.
McDonald operated under the monikers “Malachai Johnson,” “SouthSideOxy,” and “JefeDeMichoacan.” McDonald created, monitored, and maintained the darknet vendor profiles, including by updating drug listings and shipment options, tracking drug orders, and offloading Monero cryptocurrency received as drug deal payments into cryptocurrency wallets that McDonald controlled. According to court documents and statements made in court, these three prolific darknet vendors were collectively responsible for fulfilling over 13,000 drug orders shipped throughout the United States, ranging in size from user quantities, e.g., 5 pills, to “reseller” quantities, e.g., 10,000 pills. Operation RapTor resulted in the highest number of seizures of any JCODE operation, including more than $200 million in currency and digital assets, over two metric tons of drugs, 144 kilograms of fentanyl or fentanyl-laced narcotics, and over 180 firearms. The marketplace was closed in March 2024 when Rui-Siang Lin, under his online pseudonym “Pharoah” or “Faro,” allegedly committed an exit scam.
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The exit scam contributed to a growing sense of distrust among users in the darknet ecosystem. The announcement that data supposedly deleted through the years were about to be released to law enforcement agencies heightened the stakes. They threatened to leak the contents unless users paid a ransom commensurate with the volume of their transactions on the platform. Court documents reveal that the FBI executed search warrants on the marketplace’s servers in 2022 and again in 2023. The name registered to the Namecheap account was Rui-Siang Lin, again directly connecting him to the dark web marketplace. WIRED reached out to Chainalysis to ask about Lin’s Reactor certification and what sort of safeguards prevent criminals from using the company’s software, but the company declined to comment.
- Attorney’s Office for the Southern District of New York of narcotics conspiracy, money laundering, and conspiracy to sell adulterated and misbranded medication for owning and operating Incognito Market, one of the largest narcotics marketplaces on the internet.
- Agents posing as customers made purchases on Incognito Market to gather evidence of illegal activity and to sample the products being sold.
- For instance, an undercover law enforcement agent bought tablets on Incognito Market in November 2023 that were supposed to be oxycodone, but were actually fentanyl.
- Another trend signaled by Incognito’s story is the blurring of lines between the cyber underworld and the legitimate tech world.
- The Department of Justice said Rui-Siang Lin has been arrested in connection to allegedly operating the Incognito Market, which the DOJ says helped trade narcotics anonymously around the world.
- And if that weren’t enough, the platform’s finals days were allegedly spent extorting its users between $100 and $20,000, under threat of revealing they had participated in the purchase and sale of illegal drugs.
At the exchange, Lin had again used his real identity to register the account, so when law enforcement subpoenaed the exchange, they obtained his passport and personal details, email, and phone number on file. In retrospect, several critical vulnerabilities and operational security (OpSec) mistakes led to the market’s downfall. The site’s interface, as described in court documents, was polished and “incorporated many features of legitimate e-commerce sites” – including a graphical splash page, branding elements, and even a wiki or knowledge base for drug information.
That revenue funded Incognito Market’s operations, including paying “employee” salaries and for computer servers. For example, in November 2023, an undercover law enforcement agent received several tablets that purported to be oxycodone, which were purchased on Incognito Market. After logging in with a unique username and password, users were able to search thousands of listings for narcotics of their choice. Incognito Market was designed to foster seamless narcotics transactions across the internet and across the world and incorporated many features of legitimate e-commerce sites such as branding, advertising, and customer service. Since that time, and through its closing in March 2024, Incognito Market sold more than $100 million of narcotics — including hundreds of kilograms of cocaine and methamphetamines. In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting.
“That is a potentially risky situation, where someone who’s in the process of laundering proceeds of crime can check in commercially available tools whether they have laundered them such that they can get away with it.” Running certain checks in those tools might even allow someone to determine if they’re being actively investigated by law enforcement, Robinson says. But it raises the troubling possibility that a former dark-web kingpin—one who was still extorting his own users—was perhaps playing both sides of the crypto tracing game, says Elliptic’s Tom Robinson. His last X post shows a Chainalysis diagram of money flows between dark-web markets and cryptocurrency exchanges. “Stay posted and fuck LE,” Pharoah wrote, using the abbreviation LE to mean “law enforcement.” Antinalysis eventually returned, however, and pivoted last year to acting instead as a service for swapping bitcoin for monero and vice versa. A sketch of a dark-web market’s infrastructure that Lin emailed to himself eight months before allegedly creating Incognito Market, according to the DOJ. It describes functionality such as how “vendors” and “buyers” would register, make purchases, and encrypt shipping addresses.
Abacus Market, once the undisputed leader of darknet marketplaces in the West, suddenly went offline in mid-2024, leaving users and users a… His arrest brought to light the scale of his operation, revealing that Incognito Market was responsible for millions of dollars’ worth of illicit transactions, including the sale of narcotics, counterfeit goods, and more. Following the collapse, users became more vigilant in their dealings on darknet marketplaces, leading to a greater emphasis on safety protocols and risk management. It wasn’t enough that the dark web marketplace facilitated the exchange of dangerous drugs and illegal activities. In the summer of 2021, during Incognito Market’s relatively quiet first year, Lin’s alleged alter ego, Pharoah, launched a service called Antinalysis, a website designed to analyze blockchains and let users check—for a fee—whether their cryptocurrency could be connected to criminal transactions.
In fact, Lin had meticulously planned the marketplace’s design – even emailing himself a hand-drawn diagram of the site’s workflow in March 2020, months before launch. He set a deadline of April 1, 2024 for vendors to send him payments in exchange for his silence. Its success also coincided with a broader rebound of darknet commerce; by 2023, dark web markets collectively grossed about $1.7 billion in cryptocurrency revenue, recovering from a slump after the 2022 takedown of the infamous Hydra market.
