Feds nabs dark web drug marketplace transacting $80 million in cryptocurrency

The principal administrator behind Incognito Market, an illegal dark web marketplace facilitating crypto-based drug sales, has been arrested, according to the U.S. Department of Justice.

Incognito Market facilitated the sale of substances containing cocaine, heroin, methamphetamine, lysergic acid diethylamide (LSD), marijuana, oxycodone, ketamine, MDMA, amphetamine and fentanyl into the United States and across the globe.

An FBI complaint into Incognito Market revealed that the marketplace accrued $100 million in transactions — $80 million in cryptocurrency, mainly bitcoin and the privacy-focused coin Monero (XMR).

The owner, a Taiwanese national named Rui-Siang Lin, also known as Pharoah or faro, was arrested at the John F. Kennedy Airport on May 18. The FBI investigation charged Lin with continuing criminal enterprise, narcotics conspiracy, money laundering concealment, money laundering promotional, money laundering conspiracy and conspiracy to sell adulterated and misbranded medication.

How Incognito Market worked

The illegal dark web marketplace, also called "Marketplace-1" in the FBI's January investigation, had over 200,000 customers and at least one other employee assisting Lin.

The marketplace did not directly sell narcotics to customers. Instead, it registered customers and vendors, and allowed customers to select drug options to purchase from vendors on the platform. Vendors had to pay a $750 fee to join.

Incognito Market enabled the sale of 364 kilograms of cocaine, 295 kilograms of methamphetamine and 92 kilograms of MDMA and other drugs, taking a fee of 5% of the narcotic's purchase price.

The FBI complaint adds that Lin earned “millions in personal profits” as the marketplace’s principal administrator. 

"As alleged, Rui-Siang Lin operated a sophisticated and dangerous online narcotics marketplace through which he profited millions of dollars at the community’s expense," said U.S. Attorney Damian Williams for the Southern District of New York in a DOJ statement. "The dedicated prosecutors from the Southern District of New York and our law enforcement partners will pursue criminal actors regardless of whether they operate on street corners or in the dark corners of the internet. The so-called ‘dark web’ is not a safe haven for those who seek to break the law."