03
May 19

Feds Bust Up Dark Web Hub Wall Street Market

Federal investigators in the United States, Germany and the Netherlands announced today the arrest and charging of three German nationals and a Brazilian man as the alleged masterminds behind the Wall Street Market (WSM), one of the world’s largest dark web bazaars that allowed vendors to sell illegal drugs, counterfeit goods and malware. Now, at least one former WSM administrator is reportedly trying to extort money from WSM vendors and buyers (supposedly including Yours Truly) — in exchange for not publishing details of the transactions.

The now-defunct Wall Street Market (WSM). Image: Dark Web Reviews.

A complaint filed Wednesday 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, accessible only through the use of networks designed to conceal user identities, such as the Tor network,” reads a Justice Department release issued Friday morning.

The complaint alleges that for nearly three years, WSM was operated on the dark web by three men who engineered an “exit scam” last month, absconding with all of the virtual currency held in marketplace escrow and user accounts. Prosecutors say they believe approximately $11 million worth of virtual currencies was then diverted into the three men’s own accounts.

The defendants charged in the United States and arrested Germany on April 23 and 24 include 23-year-old resident of Kleve, Germany; a 31-year-old resident of Wurzburg, Germany; and a 29-year-old resident of Stuttgart, Germany. The complaint charges the men with two felony counts – conspiracy to launder monetary instruments, and distribution and conspiracy to distribute controlled substances. These three defendants also face charges in Germany.

Signs of the dark market seizure first appeared Thursday when WSM’s site was replaced by a banner saying it had been seized by the German Federal Criminal Police Office (BKA).

The seizure message that replaced the homepage of the Wall Street Market on on May 2.

Writing for ZDNet’s Zero Day blog, Catalin Cimpanu noted that “in this midst of all of this, one of the site’s moderators –named Med3l1n— began blackmailing WSM vendors and buyers, asking for 0.05 Bitcoin (~$280), and threatening to disclose to law enforcement the details of WSM vendors and buyers who made the mistake of sharing various details in support requests in an unencrypted form.

In a direct message sent to my Twitter account this morning, a Twitter user named @FerucciFrances who claimed to be part of the exit scam demanded 0.05 bitcoin (~$286) to keep quiet about a transaction or transactions allegedly made in my name on the dark web market.

“Make it public and things gonna be worse,” the message warned. “Investigations goes further once the whole site was crawled and saved and if you pay, include the order id on the dispute message so you can be removed. You know what I am talking about krebs.”

A direct message from someone trying to extort money from me.

I did have at least one user account on WSM, although I don’t recall ever communicating on the forum with any other users, and I certainly never purchased or sold anything there. Like most other accounts on dark web shops and forums, it was created merely for lurking. I asked @FerucciFrances to supply more evidence of my alleged wrongdoing, but he has not yet responded.

The Justice Department said the MED3LIN moniker belongs to a fourth defendant linked to Wall Street Market — Marcos Paulo De Oliveira-Annibale, 29, of Sao Paulo, Brazil — who was charged Thursday in a criminal complaint filed in the U.S. District Court in Sacramento, California.

Oliviera-Annibale also faces federal drug distribution and money laundering charges for allegedly acting as a moderator on WSM, who, according to the charges, mediated disputes between vendors and their customers, and acted as a public relations representative for WSM by promoting it on various sites.

Prosecutors say they connected MED3LIN to his offline identity thanks to photos and other clues he left behind online years ago, suggesting once again that many alleged cybercriminals are not terribly good at airgapping their online and offline selves.

“We are on the hunt for even the tiniest of breadcrumbs to identify criminals on the dark web,” said McGregor W. Scott, United States Attorney for the Eastern District of California. “The prosecution of these defendants shows that even the smallest mistake will allow us to figure out a cybercriminal’s true identity. As with defendant Marcos Annibale, forum posts and pictures of him online from years ago allowed us to connect the dots between him and his online persona ‘Med3l1n.’ No matter where they live, we will investigate and prosecute criminals who create, maintain, and promote dark web marketplaces to sell illegal drugs and other contraband.”

A copy of the Justice Department’s criminal complaint in the case is here (PDF).

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65 comments

  1. So… Brian… you should get your wacky terbacky from your friendly neighborhood dealer instead.

    • Oh, and… FIRST!

    • Bill, Buffalo

      yeah when you take away people’s primary way of getting relief they are going to figure out a way sooner or later and it might be dangerous Just like contraband going through the mail. they should legalize medical cannabis so this type of stuff doesn’t happen and the real poisoners can be isolated from the good people. End marijuana prohibition! This is a joke.

      • cristobaldelicia

        there are problems with legalizing medical use; especially that any such system will be abused, not just by users faking conditions or doctors catering to them, but illegality in other jurisdictions inflates price and motivates medical users to divert their supply- as already happens with Adderall, and happened to alcohol in Prohibition (yes doctors prescribed drinks for “medical reasons” during that time) It has to be totally decriminalized; and federally, not just by state.

  2. So, I just had to go and look at the twitter account of @FerucciFrances and now I just gotta ask… What’s up with the dead rabbit necrophilia video? Is this supposed to be some sort of a message… like maybe “Brian Krebs sleeps with the rabbits?”
    🙂

    • The Shark™

      Yeah, that @FerucciFrances is special kind of stupid. Using Twitter to talk s*%! about how hard he and has “crew” are is laughable, at best. I’m not claiming anything outside of him/her being a complete twit.

      I almost wish he/she would come and comment on this thread.

      Almost.

  3. Crazy how long it still takes to come to shutter, would be interesting to see time of market place spawn, investigation open, and market place shut down. Great reporting as always.

  4. And what’s this harping about you writing about sim swapping?

  5. So, I had thought “dark web” was run on clandestine fiber, routers, servers, not on the “real” Web using actual websites with “back rooms”…
    Shows how little I know about it.

    • Dark web runs on the exact same equipment as everything else. You could host a dark web site on your computer even.
      The difference is just the application you use to access it.

      Like if you used snapchat to do one thing, and skype to do another. They use all the same equipment to get from one place to another.

      In this case, dark web is usually accessed through TOR browser

      • interestingly enough, I’m using tor right now to read this web site (because it’s not the local police’s business to watch everything I read)…

        thanks brian for not blocking or restricting tor exit nodes like some sites do…

      • Dark Web can be hosted on the exact same servers on which you are hosting your conventional hosting and it could be some of the best hosting provider that are available in the industry as the likes of DigitalOcean, AWS, or even the managed hosting providers
        like: cloudways.com/en/linode-hosting.php

      • And it’s not the local PD that owns TOR, it’s the FBI.

  6. Johnny mnemonic

    When will krebs make his website mobile-friendly? Sick and tired of scrolling horizontally, zooming in and out, etc, just to read his bitchin articles.

    • not sure about the rest of what you’re saying ….but you’re part right about making the site mobile friendly….that should help a lot more people 🙂

    • It works fine for me on a phone.

      “Mobile friendly” means extra javascript and bloated webpages.

      This site works the same with javascript turned off. It works with all devices.

      Why would you want to screw that up?

      • You can make a website mobile friendly without Javascript by using straight HTML 5 and CSS via relative font sizes and layout.

        I agree with that this needs to be mobile friendly.

      • Not necessarily* – responsive design (the technique used for modern mobile-friendly sites) only requires CSS media queries. And since this site is running WordPress, it should just be a matter of creating/building a responsive theme.

        *Granted, most responsive sites are probably using Bootstrap or a similar framework, which comes with JQuery, etc (though this site is already using JQuery).

  7. Thank you Brian for posting the PDF of the criminal complaint. It had a HUGE bit of information that I don’t think is widely known, namely, that LEA can “unmix” Bitcoin that has been through a “mixing” service !

  8. Now thatthe site has been taken down, I assume the US must be satisfied. I can’t see how they can make any legal claims against german citizens, sitting in germany, and creating a website.

    I assume US law covers criminal actions performed in the USA ? Or that you can’t stand trial twice for the same crime, so if they germans has been on trial in Germany, they are free in the USA ?

    • Fun fact: If you commit a crime in a foreign country, that country has the right to charge you with the crime.

      If you run a website that exists to facilitate crimes committed in a foreign country, that country has every right to come after you. You can even be charged with the same kinds of crimes in both countries since in country 1 you broke their law, and in country 2 you also broke their laws. Different laws, different charges, different cases.

      If you really go out of your way to make a name for yourself you can even get charged by local jurisdictions once you’ve been found guilty in higher courts. So once you’re done serving time in country 1’s prison, you get shipped off to a local prison to serve more time, then once you finally get out of there you get shipped off to country 2’s prison to rot away for longer.

      It’s almost like crime doesn’t pay.

      • This might be true in The US with federal and local courts, the German feds dismissed that possibility in their press conference though. Once they have served time in Germany they can’t face the same charge in the US, at least that’s what the prosecutor claimed.

  9. What a waste of taxes being spent on shutting down a non-violent way to distribute products that customers want.

    This is government at its worst, interfering with a good, safe business model.

    • Answer honestly…
      Do you even pay all your taxes?

      You seem to defend illegal businesses so often here I swear you must own one.

      Even if you or I think these products and services should be legal to sell… these businesses are still trying to avoid paying taxes.
      Why don’t you demand that these business pay their taxes, so you don’t have to worry about the rest of our tax money being “wasted”?

      • These businesses are run on the dark web because they handle illegal drugs, not to avoid taxes.

        No one is accusing them of tax evasion. They’re not criminals, like Amazon.

        • RE: To Dumb Dumb

          “they’re not criminals like Amazon”

          Yet you said, “they handle illegal drugs” two sentences beforehand. Boy, I could be wrong, but doing something illegal makes you a criminal…

          I honestly can’t tell if you’re trolling or if you’re just that delusional. I’m at a loss for words at the stupidity in your statements. Great job, you achieved a whole other level of dumb!

        • Riiiiight.. Tax evasion is not their main reason for being on the dark web. Drugs are primary, and they also deal in carding and other fraud. Nothing legal there.

          And if suddenly all drugs were legal to sell, I am sure they would go legit and start paying taxes too. /s

    • “interfering with a good, safe business model”

      Wut?…

      How is that business model considered good or safe? Please enlighten me, I’m honestly interested in hearing how you think an illegal darkweb marketplace is even remotely good and safe. Also, judging by one of the leaders’, @FerucciFrances, messages to Krebs, is that behavior good and safe for someone who runs a good and safe marketplace?

      • No, you’re not. You’re looking for an argument.

      • cristobaldelicia

        He has a point when it comes to illegal drugs, especially marijuana. The alternative is often visiting dangerous people in dangerous neighborhoods. To paraphrase a guns’ rights motto: when drugs are criminalized, only criminals have drugs. If you’re lucky, a friendly acquaintance will risk criminal persecution by growing some plants, but often that doesn’t happen. Darkmarkets are a safer alternative. Unless you live in a place like Colorado where it’s decriminalized.

        • This theory of glorification of drug dealers is ridiculous. Even if I agree that drugs should be legalized, these are NOT the people who would sell on the open market if they were legal.
          These are black market merchants who would just move onto other illicit products because that is their skill, to evade law.
          This is proven by their willingness to deal in carding, counterfeits, malware and other fraud. The Jewelry and Gold category is at zero. Why? Because the illegal market for a legal good isn’t sustainable.

          These guys are criminals… and legalizing their primary wares won’t undo that.

          • ^^^This guy gets it

            I am shocked at how people are so immoral that they will publicly defend illegal activities. It’s like how scammers defend what they do because it’s “just a job” and “people are willingly giving up their information, so why not?” I’ve heard these excuses online before from scammers who were exposed. It’s bizarre. It’s no different from people defending this by saying “it’s a legit business model” and “Darkmarkets are a safer alternative”.

            • Did you ever consider that some people are intelligent enough to see that morality != legality?

              As there are many things that are immoral that are perfectly legal, there are also many thinks that are illegal that are perfectly moral.

              • He used the word “immoral” to describe the people here defending obvious illegal activity. Not to describe the people doing the illegal activity.
                So it seems Howard does, in fact, understand that defending these guys is legal, but still can be immoral.

                The devil is in the details… and despite attempts to ignore the obvious and focus only on the recreational drugs, these merchants are not “good people”. You would have to purposefully blind yourself to everything else they are selling (malware, credit cards and other fraud). Not to mention the exit scam, defrauding their own customers.

                Do not make the mistake of grouping these guys in with the victimless drug offenses that many people commit. There are many many people who only break the laws that are not inherently immoral. Marijuana users, growers and sellers may not be immoral (I don’t think they are)… that is unless they cross the line and commit violence to protect their business or get into other products that are definitely victimizing people.

                Just because 60% of their business is victimless, does NOT excuse the rest.
                Violent cartels have the same business model… selling drugs to customers that demand them… but since they are black market, they get involved in a lot of activities that have victims.

    • “good, safe business model”

      “They’re not criminals, like Amazon.”

      So, are we just… ignoring the bit where the 3-4 of these knuckleheads did their damnedest to pilfer escrow- not just from the site- but from all the site’s users as well?

      I’m just curious.

      • KrebsOnSecurity attracts like-minded criminals to comment and defend the criminals who are being caught. They cannot help themselves, their egos are too big.

        This is why Brian gets so many threats. He is messing with their business. And the comment section is also frequently visited by other criminals trying to justify their illegal activities.

      • Skunk,

        Yes, I’m ignoring the exit scam and doxxing threats, because it is unclear if the defendant doing that had anything to do with the daily operation of the website and it seems immaterial to the central business plan.

        • That is some world class denial. Anything to avoid cognitive dissonance and justify obvious illegal activity.

          Brian is right, these criminals are stupid. They and their defenders seem to think they can out smart the legal system and claim that they weren’t the ones committing fraud and threats, even though there was nobody else in charge.

        • “…and it seems immaterial to the central business plan.”

          I can’t imagine how.

          I’m sure if asked (and you could get them to answer honestly) any of these folks would say the escape hatch- complete with Madoff-esque moustache-twirling- was ~part~ of the central business plan.

          I mean, it’s a safe business plan I suppose… if it only covers the one’s executing it, maybe.

          Others might be wise not to invest.

          • He is also ignoring the other criminal activity that couldn’t even be argued to be “victimless”.

            Fraud, malware, etc… nothing safe about that.

            These apologists would have you think that these guys are just making an honest living trading in drugs that shouldn’t be illegal in the first place.
            This is BS. They are criminals and their primary skill set is not the business of sales… but in evading the law.
            That is why they deal in many different illegal activities like carding and other fraud.

            They are perfectly fine with defrauding victims, and it is a very small step from helping other criminals commit fraud, and defrauding those other criminals. That is why exit scams are so prevalent. Because it is the same type of crime, just a quick change in victim.

          • Skunk,

            I imagine you might be right. But I don’t believe anyone ever starts a business by planning how they’d end it, especially young entrepreneurs.

            • I don’t count myself among them- and in fact I have a hard time understanding the point of view- but I know lots of people who are thinking ahead years, or even decades in terms of their career paths and business plans.

              They’re usually in the habit of questioning why you’re not taking the same longview, and unsurprisingly, a lot of them are those who have those spans of time still to plan for.

              There are also plenty of examples (even in the “legitimate” business world) of the personality and disposition of a business leader being more or less inseparable from the business plan. This is why Elon Musk is having issues with the SEC, why Travis Kalanick was forced out of Uber, and so on.

              Now, there’s maybe an interesting side conversation here- about whether the “illicitness” of the business atmosphere simply attracts the already-unscrupulous, or does it actually forge those qualities where they were not before.

              I don’t know the answer to that- but I do know anyone who’s at peace with the idea of fleecing their customers- even if it’s only under the most extreme of circumstances- isn’t a person you probably want to do much business with- in any span of time.

    • in the article it says, these people in particular made an “exit scam” and proceeded to try to extort vendors for their personal info a month before their arrests. not a safe marketplace

  10. Darkweb technology is unbreakable if used properly. Unfortunately, just like enigma, users don’t seem to understand how to use it.

    Those of you applauding the arrests should remember that the same techniques used to catch these guys can (and will) eventually be used to arrest someone you agree with, like a dissident or whistleblower.

    Eventually the technology will be good enough that it prevents misuse. Then society will have to remedy its ills or suffer them, rather than externalize via punishment of e.g. drug dealers. Or as one commentator put it: “Society prepares the crime; the criminal commits it.”

    • I think any of us who really understand how “this technology” (or really, most technology) works know this is a constant arms race that never really reaches a point where either side has “won completely and for all time”.

  11. The man behind AlphaBay was killed weeks after his incarceration…. I wonder how long these “masterminds” will last, especially with them pulling an exit scam shortly before their arrest.

    • Well, that 26 year old committed suicide in his cell.

    • It’s hardly a sign of weakness to be murdered by Thai police in a jail cell.

      Nor would it be the first suspicious death in a Thai prison without the courtesy of a criminal conviction.

    • There was no exit scam in the Alpha Bay takedown. No grand conspiracy or even a hint of a reason for Thai police to care about this guy.

      Just another case of a young man who has his entire self esteem and sense of worth, tied to some digital identity. He can’t handle the real world, let alone prison. Suicide is a very common statistic in this situation. Way more common than some ‘murdered in prison’ by experts in faking suicide.

      Occam’s Razor is pretty clear here… he didn’t want to spend his time in jail, and decided he wouldn’t.

  12. A certain Marcos Paulo Paulo de Oliveira Annibale owns a company called Czar International Services:

    https://www.empresascnpj.com/s/empresa/marcos-paulo-de-oliveira-annibale-nome-fantasia-czar-international-services/24265706000143

  13. people don’t engage in these things because there skill is to evade law @Joe lol.

    it has demand and with demand comes money, you think they wouldn’t sell lemonade if it didn’t make them good money?

    legalizing would only hurt them because all the huge companys would come in and ruin the village going on, so its a good fresh start without all the unfairness.

    the government is the real thugs and criminals..look up “Freeway Rick Ross”.. today they shove pharmaceuticals down every ones throats and have more deaths then illegal drugs.. then they go and raid all the competition and praise themselves as heroes and get huge salaries.

    it’s just control and power nothing about morals or peoples safety, government wiping out small time competition like bullies. it’s really sad how the world has become

    • “engage in these things” is too vague of an argument to mean anything.
      The topic at hand is running Wall Street Market. Not someone just buying, or some vendor selling… but running the marketplace. That requires the skill to evade law.

      “these are NOT the people who would sell on the open market if they were legal.”
      … is a correct statement.
      And not just because large companies would run them out, which is true… but because EVERYONE could compete without having skill of online anonymity.

      So no, they wouldn’t sell lemonade even if it made them “good money”. There are LOT of profitable products for smart people to sell. Selling on the dark web takes a certain skill set and without that, there is no advantage over the competition.

      “its a good fresh start without all the unfairness”

      This is world class self-justification. It is pathetic that people try to justify such BS illegal and immoral behavior. WSM isn’t just selling drugs to a customer base without victims. They sell malware, credit cards, and other fraud. I haven’t checked if they deal in kiddie porn too. These are criminals without morals and no honor among thieves.
      And you have the nerve to attempt to deflect by suggesting government misdeeds justify this anarchistic criminal behavior? Nice try, but not taking bait to change the subject with your attempted deflection.

      • government does far worse then steal credit cards, it’s just that they justify it in ways that work on easily manipulated people.

        • No alias will succeed in changing the subject. Deflecting and changing the subject works only on the weak minded.
          What the government is or isn’t doing doesn’t excuse these criminals and their blatant criminal activity.
          These guys deal in stolen credit cards, malware, and other unjustifiable activities.

          Criminal apologists here are pathetic in their attempt to defend the indefensible. No, you won’t make this about recreational drug use, no you won’t make this about government taxes, and no you won’t be able to justify your own illegal behavior by defending these criminals.

          This thread is about the admins of Wall Street Market, their ignorance, and their willingness to defraud their own customers because switching from card fraud to an exit scam, isn’t much more than same old criminal behavior with a quick change in victim. No honor among thieves.

    • Benjamin,

      +1

  14. The bigger criminals are the corporations who FEED off CORPORATE WELFARE. They do more damage than any of these markets ever will. Talk about a waste of tax dollars.

  15. Hey man, I know you want to make like it’s a joke like, haha, you (sarcastically) bought some heroin…

    Sometimes in our field, there’s times when we’re under great pressure to get a lot of things done. You don’t need to be ashamed that you found something that, for a time, gave you superhuman energy levels and made work enjoyable enough to spend every 20/hours a day on it. These things happen to the best of us. There’s quite a few people in the medical field with the same problem as you. You should know that you’re not alone in this struggle. It might seem like you’re supposed to feel shame about this, but it was likely that in trying to avoid the shame of not living up to your potential that got you into this mess in the first place.

    Maybe the first time when you thought, “well, maybe I’ll just sniff a bump, that’s no like in the junky movies” and you experience the joy and wonder you hadn’t seen since your childhood. Maybe that changed your life. Maybe some people are just meant to be on that stuff. Some of the antidepressant medications people are prescribed these days have equally awful withdraw symptoms. And, aside from the impurities, and inconsistencies resulting from prohibition, much greater danger to your health. All of that may very well be true, and we could argue the morality of the choice to or not to use for the rest of the year if we wanted to. The fact is, it’s illegal, and that makes it dangerous and unsustainable to live with a habit. It’s not the heroin so much as the police, the people who would cut it with fentanyl, and the brainwashed masses who would judge you that are risks to your well-being.

    I understand you want to dance around it, it’s totally understandable you would feel this shame. But you should know there’s people out there who won’t judge you when you’re ready to talk about it, and they’re not all loser junkies like society has led you to believe. They’re doctors, tech professionals, lawyers, architects, chemists. There’s a forum where they share information about living with the disease. Some choose to accept it, others to fight it. It’s a difficult fight, and some just aren’t cut out for it. Some have tried all the options Suboxone, Methadone, Ibogaine. Some have tried experimental shots that we’re supposed to make them immune to opiates, but instead killed their ability to feel any kind of pleasure or anything but permanent dope-sickness. Eventually they had no choice but suicide. Can you imagine what an awful fate? Surely you’ve experienced dope-sickness. Forever though?… sounds like the closest thing to hell that exists in this world.

    I wish you strength in however you choose to move forward with this. You’re not alone brother.

  16. On one hand, it’s likely true that in the course of one article .05 Bitcoin was worth both ~$286 and ~$280 (and in only a paragraph’s amount of time at that!).

    On the other hand, I thought I’d mention it and finally claim all the Internet Points I’m certain I deserve.

    Finally, on a third hand, not only am I polydactyl but I would also give my left arm to be ambidextrous.

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