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Crypto Trail Exposes Dark Web Drug Marketplace, Resulting in Owner’s Arrest

3 mins
Updated by Harsh Notariya
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In Brief

  • FBI tracked Rui-Siang Lin, head of Incognito Market, a dark web drug hub.
  • Lin's $100 million drug empire unraveled via crypto transaction analysis.
  • Lin faces charges, arrested at JFK Airport, risking lifetime imprisonment.
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The FBI tracked Rui-Siang Lin, a 23-year-old alleged to control a notorious dark web marketplace. This development marks a significant breakthrough in combating cyber-enabled drug distribution.

Lin, who reportedly oversaw a multimillion-dollar operation, was traced and captured through meticulous analysis of crypto transactions linked to drug sales.

How FBI Tracked Incognito Market Owner

Initiated in October 2020, Incognito Market quickly rose to infamy, facilitating over $100 million in illicit drug transactions until its closure in March 2024. Operating under the pseudonym “Pharoah,” Lin orchestrated all aspects of the operation.

His platform allegedly sold dangerous narcotics, including heroin, cocaine, and counterfeit pills.

The unraveling of Lin’s empire began when the FBI detected crypto transfers from Incognito Market to a centralized exchange. FBI task force officer Mark Rubens explained how Lin’s wallet received funds from the Incognito Market.

Lin used to convert the funds from Bitcoin (BTC) to Monero (XMR) through a swapping service, enhancing their anonymity. These funds were subsequently deposited into a centralized exchange account under Lin’s name.

“Documents from the centralized exchange indicate that its user provided a mobile number, email address, and a Taiwanese Driver’s License as proof of identity. The Taiwanese Driver’s License lists an address in Taipei, Taiwan, and the name is “林睿庠,” which is the Mandarin language spelling of Rui-Siang Lin,” Rubens wrote.

Read more: Anonymity vs. Pseudonymity: Understanding the Key Differences

Lin's Driver's License
Lin’s Driver’s License. Source: Court Document

Incognito Market mimicked legitimate e-commerce platforms, complete with customer service, branding, and a vendor registration system. Vendors paid a 5% commission on their sales, generating revenue that supported the site’s operations and Lin’s profits.

Court documents reveal that as Incognito Market grew, so did the deposits into Lin’s accounts, escalating from about $63,000 in 2021 to nearly $4.2 million by 2023.

The dangers of Lin’s operation were highlighted during undercover investigations, where drugs sold as safe medications turned out to be deadly. For instance, pills purported to be oxycodone were actually fentanyl, significantly increasing the risk to public health.

The US authorities arrested Lin at John F. Kennedy Airport on May 18, 2024, effectively ending his illegal activities. 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.

How do Authorities Track Bad Actors Through Their On-Chain Footprints

Various successful operations have tracked down bad actors through their on-chain transactions.

“As alleged, Rui-Siang Lin’s brazen operation resulted in the illicit sale of over $100 million in narcotics, including those that were mislabeled and later found to include deadly fentanyl.  The El Dorado Task Force’s Darkweb and Cryptocurrency Task Force leverages cutting-edge techniques to target even the Internet’s most savvy criminals,” HSI Special Agent Ivan J. Arvelo said

Indeed, Lin’s arrest is part of a larger trend in the fight against crypto-facilitated crimes. Last week, the Department of Justice arrested two brothers who allegedly conducted a $25 million theft on the Ethereum blockchain.

In an interview with BeInCrypto, Guillermo Fernandes, founder of blockchain analysis platform Blockpliance, shed light on the methodologies for tracing bad actors.

Read more: 10 Best Crypto Exchange Reviews for May 2024

“Crypto tracing leverages the power of immutable ledgers that’s innate to blockchain databases and combines it with traditional methods of following money through forensic accounting and pattern matching. Blockchain analysis and intelligence firms use direct attributions – obtained by making small transactions with actual services and sites to validate their control of the crypto wallet – and combine the 100% certainty addresses with mathematical clustering and behavioral pattern matching to group together all addresses potentially controlled by the same service or set of private keys,” Fernades said.

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Harsh Notariya
Harsh Notariya is a journalist and crypto expert that excels in delivering the latest Web3 and Crypto News. Previously, as a Growth Marketer at Sporty and a Community Consultant at Totality Corp, he significantly boosted community engagement and followers. Harsh also crafted engaging content for top crypto influencer Shivam Chhuneja, blending meme references for an educational yet fun experience. His versatile skills make him a notable figure in crypto journalism.