Law enforcement has once again demonstrated its ability to catch criminals, despite their use of technologies such as blockchain in an attempt to cover their tracks, reminding users about the risks of darknet marketplaces.
The US Attorney's Office for the Southern District of New York’s announcement about a sentenced darknet marketplace operator has revealed more cryptocurrency-related details about how this platform operated.
The operator, Rui-Siang Lin, a.k.a. Pharaon, 24, of Taiwan, was sentenced to 30 years in prison for operating Incognito Market, which was deemed "one of the world’s largest online narcotics marketplaces." Per the attorneys, Lin sold more than $105 million worth of drugs to customers worldwide and profited more than $6 million from fees paid by vendors on Incognito.
"Today’s sentence puts traffickers on notice: you cannot hide in the shadows of the Internet. And our larger message is simple: the internet, ‘decentralization,’ ‘blockchain’—any technology—is not a license to operate a narcotics distribution business," US District Judge Colleen McMahon was quoted as saying in the announcement.
Unspecified cryptocurrency was first used to facilitate more private trades on the marketplace before these transactions became a weapon against the buyers and vendors. According to the attorneys, the marketplace even had its own Incognito Bank, which was used to deposit cryptocurrency into users’ own "bank accounts" on the website.
"After a narcotics transaction was completed, cryptocurrency from the buyer’s ‘bank account’ was transferred to the seller’s ‘bank account,’ less the 5% fee that Incognito collected," the attorneys said, adding that this scheme helped buyers and sellers stay anonymous.
However, when Lin closed the marketplace in March 2024 after more than four years of operation, he also stole $1 million from Incognito Bank users. What's more, he tried to extort them, threatening to publish their user history and cryptocurrency addresses online, saying that "we got one final little nasty surprise for y'all". Lin further admitted that their "auto-encrypt" functionality was fake, and users’ messages and transaction IDs were never deleted after the "expiry."
Another unusual detail from this case is that, while still managing Incognito, Lin led a four-day training for St. Lucian police officers about "Cybercrime and Cryptocurrency," and even bragged about it on his personal Facebook page.
Meanwhile, in addition to the prison term, Lin was sentenced to five years of supervised release and $105 million in forfeiture.
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