Blockchain Tracing Uncovers $105M Incognito Dark Web Marketplace
A complex blockchain investigation has shut down one of the largegest drug markets on the dark web in the last few years, and the market’s owner was sentenced to 30 years in prison, which is a record.
The U.S. Department of Justice that Rui-Siang Lin, a Taiwanese citizen who owned Incognito Market, was convicted in a federal court in Manhattan for running a site that used cryptocurrencies to handle more than $105 million in illegal narcotics sales.
The case shows how can be used to hide illegal business and how law enforcement is getting better at breaking that anonymity through constant transaction tracing.
How the Marketplace Works and How large It Is
Incognito Market launched in October 2020 and abruptly closed in March 2024. People all over the world could purchase and trade illegal drugs, like cocaine, methamphetamine, and fentanyl-laced drugs, on the platform, which was a centralized dark web bazaar that could be accessed using Tor. and Monero (XMR) were the main payment methods.
The site handled more than 640,000 cryptocurrency transactions from more than 400,000 purchaviewr accounts, and Incognito took a 5% cut of each sale. Prosecutors said that during its time, the marketplace assisted the distribution of more than one ton of illegal drugs.
Exit Scam and Extortion Attempt
In March 2024, Lin the platform, which investigators called a “exit scam,” and took at least $1 million in user deposits with him. He then made the treachery worse by trying to extort people. He posted a message that said “YES, THIS IS AN EXTORTION!!!” and threatened to disclose their transaction history, chat logs, and BTC addresses unless they paid payments that ranged from $100 to $20,000.
Arrest Made Possible via Blockchain Trail
Blockchain research was a large part of the FBI’s investigation that linked Lin to the marketplace. Investigators followed money from Incognito-controlled wallets to Lin’s accounts at a cryptocurrency platform. Some significant steps were:
- Connecting a wallet that gets Incognito money to transfers transferred to a provider that swaps BTC for Monero before putting it in the wallet.
- Getting identification documents from the platform, such as Lin’s Taiwanese driver’s license photo, email address, and phone number.
- Putting those pieces together with a Namecheap domain registration account used to purchase a promotional website for Incognito, with payments tracked from Lin’s crypto wallets.
As the market grew, deposits into Lin’s platform accounts increased significantly. They went from about $63,000 in 2021 to about $4.2 million in 2023, and then another $4.5 million at a diverse platform between July and November 2023.
In May 2024, Lin was taken into custody at New York’s John F. Kennedy Airport. In December 2024, he pleaded guilty to charges that included conspiracy to trade drugs, and conspiracy to trade drugs that were not properly labeled.
Sentencing and the Official Response
A federal judge Lin to 30 years in jail and 5 years of supervised release, and ordered him to forfeit more than $105 million. U.S. Attorney Jay Clayton for Manhattan said, “Today’s sentence sends a message to traffickers: you can’t hide in the shadows of the Internet.”
The main point we want to make is that no technology, whether it’s the internet, “decentralization,” or “blockchain,” permits you to run a drug distribution business.
The case shows that cryptocurrencies have two sides in illegal markets: they assisted Incognito develop by allowing anonymous payments, but the fact that many blockchains are public and can be traced ultimately led to the operator’s demise through forensic investigation.
Asmarketplaces evolve, law enforcement’s growing ability to trace blockchain transactions may prompt people to think twice about using them, even in locations where they can be completely anonymous.
