Launched in 2015 as a competitor to the now-inactive Russian Anonymous marketplace, Hydra became the main darknet hub for illicit activities, offering drugs, stolen credit card data, fake IDs, and counterfeit currency. According to the German Federal Criminal Police (BKA), Hydra was the world’s largest such platform, with its sales reaching $1.35 billion in 2020 alone. The marketplace had over 19,000 registered sellers and around 17 million customers.
In conjunction with the shutdown of Hydra, US officials indicted one of the platform’s key operators. The Russian resident Dmitry Pavlov, aged 30, will face charges of money laundering and distributing narcotics in connection with his role in administering Hydra servers. Additionally, the US Treasury’s Office of Foreign Assets Control (OFAC) added over 100 crypto addresses to the SDN (Specially Designated Nationals And Blocked Persons) list as identifiers. All of the addresses included in the list are already labeled in the blockchain data platform Chainalysis products.
Hydra accounted for over 75% of global darknet market revenue, according to the Chainalysis 2021 report on cybercrimes. What’s even more impressive is that Hydra served only Russian-speaking countries, being an influential driver of Eastern Europe’s crypto crime landscape. The platform collected most of its revenue in Bitcoin, providing users with a built-in Bitcoin mixer to launder and then process vendors’ withdrawals. The mixer also allowed customers, for a fee, to send Bitcoin without revealing the owner’s identity. Hydra’s money laundering service was so in-demand that some users would set up vendor accounts for the sole purpose of having access to the mixer, claims Justice Dept in its press release.
BKA claims the Bitcoin mixer “made crypto investigations extremely difficult for law enforcement agencies.” According to the blockchain analysis firm Elliptic, around 15% of all proceeds of crime were routed through mixers in 2021. Some analysts claim governments can use this technology to evade sanctions and, therefore, it should be regulated. The UK National Crime Agency already proposed a regulation that would force mixers to carry out KYC procedures and audit currencies passing through the service.
However, advocates of cryptocurrency mixers argue that the transparency of the blockchain technology can make users targets for fraudsters, so anyone should have the right to protect their privacy and sensitive financial data.
