Joint Action in U.S. and Europe Takes Down Prolific Dark Web Marketplaces

Following a nearly two-year international investigation involving U.S. law enforcement and authorities in Germany and the Netherlands, federal prosecutors have charged three German nationals with being the administrators of Wall Street Market (WSM), which was one of the world’s largest dark web marketplaces that allowed vendors to sell a wide variety of contraband, including an array of illegal narcotics, counterfeit goods and malicious computer hacking software.

A criminal complaint filed May 1 in U.S. District Court in Los Angeles alleges that the three defendants, who currently are in custody in Germany, were the administrators of WSM, a sophisticated online marketplace available in six languages that allowed approximately 5,400 vendors to sell illegal goods to about 1.15 million customers around the world.  Like other dark web marketplaces previously shut down by authorities – Silk Road and AlphaBay, for example – WSM functioned like a conventional e-commerce website, but it was a hidden service located beyond the reach of traditional internet browsers on the Tor network, a service designed to conceal user identities.

For nearly three years, WSM allegedly was operated on the dark web by the three men who now face charges in both the United States and Germany.  An “exit scam” was allegedly conducted in April when the WSM administrators took all of the virtual currency held in marketplace escrow and user accounts – believed by investigators to be approximately $11 million – and then diverted the money to their own accounts.  Exit scams are common among large darknet marketplaces, which typically hold money in escrow while a vendor delivers illicit goods.

The three defendants charged in the United States were arrested in Germany on April 23 and 24.  They are a 23-year-old resident of Kleve, Germany; a 31-year-old resident of Wurzburg, Germany; and a 29-year-old resident of Stuttgart, Germany. These defendants also face charges in Germany.

A fourth defendant linked to Wall Street Market was charged in a criminal complaint filed in U.S. District Court in Sacramento, California.  Marcos Paulo De Oliveira-Annibale, 29, of Sao Paulo, Brazil, also faces federal drug distribution and money laundering charges for allegedly acting as a moderator who, among other things, mediated disputes between vendors and their customers.  Annibale, who used the online monikers “MED3LIN,” also acted as a public relations representative for WSM by, among others things, promoting WSM on websites such as Reddit, according to the complaint.  The case naming Annibale was unsealed when Brazilian authorities executed a search warrant at his residence.

The defendants are accused of operating a sophisticated online marketplace that offered encrypted communications between buyers and sellers, as well as an online forum to discuss vendors and the quality of their wares.  The international investigation was able to identify the three administrators of WSM, show how they previously operated another German-based darknet marketplace that shut down in 2016, and link them to computer servers in Germany and the Netherlands that were used to operate WSM and process virtual currency transactions.

The three defendants allegedly created WSM, maintained the website, and operated the marketplace to ensure that buyers could access vendor pages and that financial transactions were properly processed.  The investigation outlined in the complaint affidavit linked the three defendants to WSM in a number of ways, including their access to the WSM computer infrastructure.  One defendant, for example, used virtual private networks to access WSM computers, but when a VPN connection would fail, his IP was revealed and authorities were able to identify his specific location.

The three defendants charged in the Central District of California were arrested in Germany after the WSM administrators conducted an exit scam in the wake of WSM recently becoming regarded as the world’s pre-eminent dark web marketplace and gaining a significant influx of new vendors and users, according to the affidavit.  On April 16, vendors realized they could not collect the virtual funds that had been placed in escrow by their customers, which prompted German authorities to execute a series of arrest and search warrants.

The complaint affidavit identifies several cases that have been filed in the United States against WSM vendors. One darknet vendor who advertised on WSM is currently serving a 12-year federal prison sentence after being convicted in the Western District of Wisconsin for distributing a fentanyl analogue resulting in the overdose death of a Florida resident who ordered a nasal spray laced with the powerful opioid from the vendor.

Two of the “top vendors” on WSM – identified by the online monikers Platinum45 and Ladyskywalker – were based in the Los Angeles area and were major drug distributors.  One of these, “Ladyskywalker,” operated on several darknet marketplaces, where the individual advertised and sold opioids such as fentanyl, oxycodone and hydrocodone.

The second top vendor – who used the moniker “Platinum45” and operated on at least two darknet marketplaces, including WSM – advertised and sold drugs such as methamphetamine, Adderall and oxycodone to customers in the United States and around the world, including in Germany and Australia.  “Platinum45” also manufactured Adderall tablets and advertised the sale of up to 1 kilogram quantities of methamphetamine on WSM.

Meanwhile, authorities and law enforcement on Europe also took down The Silkkitie (known as the Valhalla Marketplace) and its contents. The Silkkitie was seized by Finnish Customs in close cooperation with the French National Police.

The Silkkitie has been operating on the The Onion Router (Tor) network since 2013. Based on the findings of the investigation, Finnish Customs also made a significant Bitcoin seizure. For several years, narcotics and other illicit goods have been sold via this marketplace. The Silkkitie is one of the oldest and internationally best-known Tor trade sites. After the site was shut down by the authorities, some of the Finnish narcotics traders moved their activities to other illegal trade sites in the Tor network, such as Wall Street Market, only for this site to also be thwarted by the authorities.

Kylie Bull has 20 years' experience in reporting and editing a wide range of security topics, covering geopolitical and policy analysis to international and country-specific trends and events. She is an editor and contributor for Jane's by IHS Markit, a columnist for security and counter-terror publications, and a former managing editor for Homeland Security Today.

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