FBI tracks cryptocurrency to apprehend dark web market operator in New York

A 23-year-old man has been apprehended in New York and accused of being the owner, operator, and beneficiary of a $100 million illegal narcotics marketplace on the dark web. Authorities claim that they were able to uncover his true identity by tracking cryptocurrency transfers. Rui-Siang Lin, also known as “Pharoah,” was arrested at John F. Kennedy Airport on May 18 and appeared in federal court on May 20, according to a statement from the Manhattan United States Attorney’s Office. James Smith, the Assistant Director in Charge of the FBI, stated that Lin allegedly ran “Incognito Market” for nearly four years, which was one of the largest platforms for drug sales online. It facilitated $100 million in illicit drug transactions and earned Lin millions of dollars in personal profits. Incognito Market was an e-commerce platform that operated on the dark web, accessible through the Tor web browser. It allowed users to buy and sell drugs, including cocaine, LSD, MDMA, and prescription amphetamines such as Adderall, using Bitcoin (BTC) and Monero (XMR) as payment methods. The Department of Justice (DOJ) alleges that Incognito Market required buyers and sellers to use its own cryptocurrency services, which allowed the platform to take a 5% cut of each purchase and provide an escrow service. The market reportedly closed in March of this year, coinciding with an alleged exit scam that purportedly stole millions of dollars’ worth of BTC and XMR from customers. Lin has been charged with engaging in a criminal enterprise, narcotics conspiracy, conspiracy to sell misbranded medication, and money laundering. If convicted, he could face a mandatory life sentence for the criminal enterprise charge, while the narcotics conspiracy charge carries a maximum life sentence. The Justice Department has also issued a forfeiture for the cryptocurrency held in Lin’s Binance and Kraken accounts. The FBI was able to trace Lin’s involvement in the dark web site by following Incognito Market’s cryptocurrency transfers to an unnamed centralized exchange account in Lin’s name. FBI task force officer Mark Rubens stated in a deposition that a crypto wallet controlled by Lin received funds from Incognito Market’s wallet, which were then sent to an exchange account in Lin’s name. Rubens provided details of at least four transfers that allegedly show Lin’s crypto wallet transferring BTC derived from Incognito Market to a “swapping service” to convert it into XMR. The XMR was then deposited into a crypto exchange account that the FBI claims belongs to Lin. The exchange provided the FBI with Lin’s Taiwanese driver’s license, which was used to open the account, as well as an email address and phone number. The FBI linked the email and phone number to a Namecheap account that used funds from Lin’s alleged crypto wallet and account to purchase a domain for a website promoting Incognito Market. The deposition also revealed that deposits into Lin’s crypto exchange account increased alongside Incognito Market’s activity, with around $63,000 in 2021 growing to nearly $4.2 million by 2023. Another unnamed exchange account saw $4.5 million deposited between July and November of last year.