European and American investigators have broken up one of the world’s largest online criminal marketplaces for drugs, hacking tools and financial-theft wares in a series of raids in the United States and Germany.
- The “Wall Street Market” darknet platform had more than a million customer accounts and hosted over 5,000 sellers
- Academic believes takedown will not have a lasting impact on online criminal markets
- When Silk Road was taken down in 2013, it took overall trade about four to five months to recuperate
Three German men, ages 31, 22 and 29, were arrested after the raids in three southern states, on allegations they operated the so-called “Wall Street Market” dark net platform, which hosted about 5,400 sellers and more than 1 million customer accounts, Frankfurt prosecutor Georg Ungefuk told reporters in Wiesbaden.
A Brazilian man, the site’s alleged moderator, was also charged.
The three Germans, identified in US court documents as Tibo Lousee, Jonathan Kalla and Klaus-Martin Frost, face drug charges in Germany on allegations they administrated the platform where cocaine, heroin and other drugs, as well as forged documents and other illegal material, were sold.
They have also been charged in the US with conspiring to launder money and distribute illegal drugs, according to a criminal complaint filed in Los Angeles Federal Court.
“The charges filed in Germany and the United States will significantly disrupt the illegal sale of drugs on the dark net,” US Assistant Attorney Ryan White told reporters in Germany.
“We believe that Wall Street Market recently became the world’s largest dark net marketplace for contraband including narcotics, hacking tools, illegal services and stolen financial data.”
German prosecutor Mr Ungefuk said Wall Street Market was at least the second biggest, refusing to name others for fear of jeopardising other investigations.
In the nearly-two-year operation, involving European police agency Europol and authorities in the Netherlands as well as the US and Germany, investigators pinpointed the three men as administrators of the platform on the dark net.
It is part of the internet often used by criminals and hosted within an encrypted network and accessible only through anonymity-providing tools, such as the Tor browser.
Transactions were conducted using cryptocurrencies, and the suspects took commissions ranging from 2 per cent to 6 per cent, Mr Ungefuk said.
The site trafficked documents such as identity papers and drivers’ licences but an estimated 60 per cent or more of the business was drug-related, he said.
Authorities swept in quickly after the platform was switched into a “maintenance mode” on April 23, and the suspects allegedly began transferring funds used on the platform to themselves in a so-called “exit scam”, Mr Ungefuk said.
The US Department of Justice said the administrators took approximately $US11 million in the exit scam from escrow and user accounts.
The US identified a fourth defendant as Marcos Paulo De Oliveira-Annibale, 29, of Sao Paulo, Brazil. It was not clear if he had been arrested and federal police in Brazil would not comment.
Annibale, who went by the moniker “MED3LIN” online, faces federal drug-distribution and money-laundering charges in the United States for allegedly acting as a moderator on the site in disputes between vendors and their customers.
He also allegedly promoted Wall Street Market on prominent websites such as Reddit, the Justice Department said.
Brazilian authorities searched his home on Thursday after investigators linked his online persona to pictures he posted of himself years ago, US officials said.
Takedown unlikely to make dent in online criminal markets
University of Manchester criminology researcher Patrick Shortis, who follows activity on dark web markets, said the takedown was widely anticipated after Annibale leaked his credentials and the market’s true internet address online. That led to an exodus of savvy users.
Knocking out Wall Street Market is unlikely to have a lasting impact on online criminal markets, although law-enforcement officials make it clear they are going after sellers and customers, Mr Shortis said.
In Los Angeles, two drug suppliers were arrested and authorities confiscated about $1 million in cash, weapons and drugs during raids. They were only identified by their online monikers, “Platinum45” and “Ladyskywalker”, and characterised as “major drug traffickers” dealing methamphetamine and fentanyl.
After the first big takedown of such a marketplace — Silk Road in 2013 — it took overall trade about four to five months to recuperate, Mr Shortis said. And after law enforcement took out Hansa and AlphaBay in 2017, it took about a month, he said.
Mr Shortis said one threat he does see to the market, in the short term at least, are so-called denial-of-service cyberattacks that effectively knock web servers offline by flooding them with traffic.
“An extortionist is currently targeting Empire and Nightmare, who are both in the running to replace Wall Street as the top market,” he said.
The raids in Germany culminated on Thursday with the seizure of servers, while federal police confiscated 550,000 euros ($878,270) in cash, bitcoin and monero cryptocurrencies, hard drives, and other evidence in multiple raids.
Because of the clandestine nature of the operation and the difficulty of tracing cryptocurrencies, Mr Ungefuk said it was difficult to assess the overall volume of business conducted by the dark net group but said, “We’re talking about profits in the millions at least”.