The recent exit scam of the infamous Incognito Market has rocked the darknet community, leaving many users in a vulnerable position as they find their Bitcoin (BTC) and Monero (XMR) funds trapped or outright stolen. Known for its focus on narcotics trading, the market allegedly scammed users out of millions of dollars, prompting widespread concern and frustration among its vendors and buyers.
How the Exit Scam Unfolded
The first signs of trouble appeared in early March 2024, when users reported issues withdrawing their cryptocurrency from the platform. Despite reassurances from Incognito's administrator, "Pharoah," who claimed that the withdrawal issues were due to technical upgrades, suspicions quickly grew. By the time the market ceased operations, an estimated $10 million to $30 million had been siphoned off by the administrators, who timed the exit scam perfectly to coincide with Bitcoin reaching a new price peak
This exit scam followed a well-worn pattern: Incognito continued accepting new deposits while leaving withdrawal requests unresolved. Support tickets went unanswered, and by the time the market shut down, users were left without access to their funds.
The Extortion Twist
What sets this incident apart from other exit scams is the subsequent extortion attempt. After the market's closure, Pharoah resurfaced with a chilling message: Incognito had retained private transaction data from users and was threatening to release it unless a ransom was paid. This data allegedly includes over 500,000 order records and 800,000 transaction IDs, tying darknet purchases to real-world identities. The ransom demand was coupled with a threat to leak this information to law enforcement, adding a new layer of fear for both buyers and vendors
Pharoah's final message added insult to injury, revealing that many users had trusted Incognito's "auto-encryption" feature, which falsely promised privacy. This betrayal has raised alarms about the vulnerability of user data on darknet platforms, where privacy is a critical selling point.
Lessons for Darknet Users
The collapse of Incognito Market serves as a stark reminder of the risks associated with engaging in darknet marketplaces. While these platforms promise anonymity, the reality is that users are often at the mercy of their administrators. Here are some key takeaways from this event:
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Don’t Trust Market Wallets: Always withdraw funds immediately after transactions. Keeping funds in a market wallet increases the risk of loss in an exit scam
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Use Monero (XMR) When Possible: Monero’s enhanced privacy features make it a safer alternative to Bitcoin, particularly in an environment where transactions can be tracked
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Be Wary of Market Longevity: Markets that have been operational for more than two years are at higher risk of executing exit scams. Diversifying across multiple platforms can help mitigate this risk
As the dust settles, one thing is clear: constant vigilance is essential. Users need to verify the integrity of platforms before engaging, employ encryption tools, and always prioritize their privacy. The darknet may offer anonymity, but in the end, it's a place where trust can quickly turn to betrayal.
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