LISBON (Reuters) - Portugal has broken up a counterfeit money ring that used dark websites to sell fake banknotes in exchange for virtual currency, arresting five people including the suspected kingpin who was extradited from Colombia, police said on Monday.

In its two years of operation, the Portugal-based network produced over 26,000 fake banknotes nominally worth more than one million euros and found circulating in France, Germany, Spain as well as Portugal.

The ring was the second largest of its kind discovered in Europe, according to Europol, which assisted Portuguese police in the operation, code-named Deep Money.

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In a statement, Portuguese criminal investigation police said the five people taken into custody were suspected of counterfeiting and organized crime.

"Counterfeit notes were advertised in one of the darknet's main markets, and orders were received either through private messaging on that market or through encrypted chat platforms," the statement said.

The term "darknet" refers to networks and sites hidden from most internet users and accessible only to those shrouded in anonymity who seek to buy and sell illegal goods ranging from drugs to stolen data and fake IDs.

Police also seized 1,833 counterfeit banknotes worth nearly 70,000 euros during searches around Portugal, as well as objects used in counterfeiting including computers, printers, holographic stickers and ultraviolet inks.