Following a two-year international investigation in Germany and the Netherlands, three German nationals are facing charges of being the administrators of Wall Street Market (WSM), which was one of the world’s largest dark web marketplaces.
The marketplace allowed vendors to sell a wide variety of contraband, including an array of illegal narcotics, counterfeit goods and malicious computer hacking software, said U.S. prosecutors.
The three defendants from Germany –which include a 23-year-old resident of Kleve, a 31-year-old resident of Wurzburg, and a 29-year-old resident of Stuttgart – are in custody in Germany. The defendants were arrested in Germany April 23 and 24.
They 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, according to the criminal complaint filed Wednesday in U.S. District Court in Los Angeles.
Like other dark web marketplaces previously shut down by authorities like Silk Road and AlphaBay, 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, officials said.
For nearly three years, WSM operated on the dark web by the three men who now face charges in both the United States and Germany. An “exit scam” appeared to be conducted last month 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, prosecutors said. Exit scams are common among large darknet marketplaces, which typically hold money in escrow while a vendor delivers illicit goods.
A fourth WSM defendant 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 acting as a moderator who, among other things, mediated disputes between vendors and their customers, prosecutors said.
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.
“Just as international law-enforcement partners began dismantling Wall Street Market and taking action against its members, as alleged in the complaint, the site’s administrators decided to steal their customers’ money via an exit scam,” said Assistant Attorney General Brian Benczkowski. “This operation sends a crystal-clear message: dark markets offer no safe haven. The arrest and prosecution of the criminals who allegedly ran this darknet marketplace is a great example of our partnership with law enforcement authorities in Europe, with the support of Europol, and demonstrates what we can do when we stand together.”
“We continue to keep pace with sophisticated actors on the dark web by increasing our technical abilities and working even more closely with our international law enforcement partners,” said U.S. Attorney Nick Hanna. “While they lurk in the deepest corners of the internet, this case shows that we can hunt down these criminals wherever they hide.”
An affidavit in support of the criminal complaint filed in Los Angeles outlines how the defendants operated 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 affidavit also describes an international investigation that 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 created WSM, maintained the website, and operated the marketplace to ensure buyers could access vendor pages and that financial transactions were properly processed, officials said. 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.