Federal authorities have shut down Silk Road, the most notorious of these online marketplaces, known for the trade of illegal drugs and guns.
The FBI arrested Silk Road owner Ross William Ulbricht, 29, known as "Dread Pirate Roberts," in San Francisco on Tuesday.
Federal prosecutors in New York charged Ulbricht with one count each of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy.
Silk Road, accessible only from through Tor Network, generated big business, according to the court filing.
Total revenue generated from the site's launch until July 23, 2013, resulted in some 9,519,664 Bitcoins -- 614,305 Bitcoins of which were commission for Silk Road itself. At Bitcoins' current value, that converts to roughly $1.2 billion in revenue and $79.8 million in commissions.
"Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the Internet today," FBI agent Christopher Tarbell said in the criminal complaint, adding that the marketplace was a hub for "several thousand drug dealers."
In addition to drugs and guns, Silk Road had listings for counterfeit currency, fake identifications and even hacking services.
The government says a routine border search of a package shipped from Canada to an address in San Francisco that contained nine counterfeit IDs led them to Ulbricht.
The government then identified the primary Silk Road server and obtained an image of its hard drive in July, providing federal investigators with a treasure trove of information about the Dread Pirate Roberts and Silk Road's operations.
Ulbricht reportedly earned a bachelor's degree in physics from the University of Texas in 2006, and later attended the Pennsylvania School of Materials Science and Engineering.
The government shuttered the Silk Road site and seized some 26,000 Bitcoins worth approximately $3.6 million -- the largest Bitcoin seizure yet. The price of Bitcoins plummeted on news of Silk Road's closure.