In the dark web, taking down another cryptocurrency-based black market for drugs has become almost a semi-annual routine, with plenty of competitors ready to smother any law enforcement agency. which market law goes bankrupt. The takeover of Russian-speaking dark web site Hydra, however, could have further implications than most: It represents the disruption not only of the post-Soviet world’s largest online drug hub but It is also a money laundering activity of cybercriminals. and a withdrawal service that has been used in crimes against victims around the world.
German law enforcement announced early Tuesday morning, the German federal police called the BKA — in a joint activities with FBI, DEA, IRS Criminal Investigation and Homeland Security Investigations in the US — seized Hydra’s Germany-based servers, shut down the website, and seized $25 million in bitcoins stored there . In doing so, they have, by some measure, ended the oldest and most crowded black market in the history of the dark web, with 19,000 merchant accounts and more than 17 million customer accounts, according to BKA. Concurrent US Treasury impose new sanctions on the market and its over one hundred crypto addresses.
In total, Hydra Facilitating over $5 billion dollars in illicit cryptocurrency transactions since it launched in 2015, according to blockchain analytics firm Elliptic. Elliptic says the majority of those transactions are illegal drug trade, which is strictly limited to Hydra’s target market of former Soviet states. But Hydra also plays a more important and global role for cybercriminals: It offers “mixing” services designed to launder cryptocurrencies and make traceability, along with services the exchange allows customers to trade cryptocurrencies obtained from any form of crime against Russian rubles — in some cases, even packages of cash buried in the ground for customers to dig up later .
“It has the dual function of being a drug market and a service for cybercriminals – and especially Russian cybercriminals,” said Jess Symington, head of research at Elliptic. “So it’s not just impacting the drug community, and it’s forcing these people to now potentially rethink how they’re going to raise money or withdraw their money.”
About half of the roughly $2 billion in transactions that go into Hydra crypto addresses in 2021 and early 2022 are from illegal or “risky” sources, such as stolen funds, dark web markets, ransomware, online gambling, scams and individuals and organizations face sanctions, according to crypto tracing firm Chainalysis. In other words, the nearly one billion dollars worth of money that went into Hydra during that time was not clean money used to buy drugs or other contraband available for sale on the site, but dirty money that Hydra is helping wash and exchange for rubles.
Chainalysis has so far only tracked just over $200 million in stolen crypto going into the site’s vaults in 2021 and 2022. It has also tracked much smaller amounts associated with other crimes. , with about $4 million from sanctioned sources, $5 million from fraud, and $4 million from ransomware. (Chainalysis has seen nearly $9 million in total ransomware payments go into Hydra over the lifetime of the market but says the relatively small number is a conservative estimate.) Another large number of incoming payments to the site during that time, nearly $310 million, was from the dark — the web marketplace — including some from Hydra that was recycled back to the site — as users seek to launder proceeds from the sale of drugs and other illegal products and services and withdraw cash.
