FBI traces crypto transfers to dismantle $100m dark web marketplace

The Federal Bureau of Investigation (FBI) arrested a dark web narcotics market owner after tracking illegal crypto transfers.

Rui-Siang Lin, 23, of Taiwan, was found guilty of operating a $100 million darknet narcotics market.

Lin, known online as “Pharoah,” was arrested May 18 at John F. Kennedy Airport in New York. FBI Deputy Director-in-Charge James Smith said in his official statement that he operated the ‘Secret Market’ for nearly four years and “reaped millions of dollars in personal profit.”

The illegal platform, one of the largest platforms of its kind, was an onion-based e-commerce platform accessible via the Tor web browser. The browser routes its traffic through a network of servers, allowing users to access the dark web and browse the internet anonymously.

The platform is powered by cryptocurrencies such as Bitcoin and Monero, allowing users to purchase a variety of drugs such as LSD, MDMA, and prescription amphetamines such as Adderall.

The arrest was possible mainly because the market encourages its users to use cryptocurrencies by offering discounts and escrow services.

With the help of other law enforcement agencies and various undercover operations, the FBI was able to trace transactions made on the platform back to Lin. Transactions were made to an anonymous central crypto exchange account that was KYCed by Lin.

At least four of the Bitcoin transfers tracked by authorities from Lin’s wallet were routed to an “exchange service” to convert it into XMR, a privacy-focused cryptocurrency. The XMR was then deposited into a crypto exchange account managed by Lin.

The FBI obtained Lin’s driver’s license, email account and a phone number from the exchange, leading to his arrest. The account had $63,000 available in 2021, growing to nearly $4.2 million in 2023. Another unnamed foreign exchange account linked to the case was seen to have deposited $4.5 million between July and November 2023.

The phone number was linked to a Namecheap account, a domain hosting platform. Funds from Lin’s wallet were used to purchase a domain promoting the dark web marketplace.

Lin also had accounts at crypto exchanges Binance and Kraken, which have now been seized by the FBI.

The marketplace was shut down in March 2024, according to the U.S. Department of Justice (DOJ).

Lin was charged with participating in a continuing criminal enterprise, which carries a mandatory minimum sentence of life in prison. He also faces a narcotics conspiracy count, which carries a minimum sentence of 10 years in prison and a possible maximum sentence of life in prison.

Lin is also charged with money laundering and faces a maximum sentence of five years in prison, as well as a charge of conspiracy to sell counterfeit and misbranded drugs.
Earlier this month, the FBI also uncovered a $43 million Ponzi scheme that was promoted as a crypto investment scheme offering huge returns.