Hydra Market was the one largest darknet market as well as the largest market for narcotics in nations of the previous Soviet Union. Unrivaled in its measurement, attain and vertically-integrated network, its turnover was more than $1B in 2020.

Of course, that’s now not the case.

The takedown of Hydra Market in April by joint German and US regulation enforcement was more than simply a significant drug bust. It eliminated a key piece of the Russian-language illicit on-line ecosystem. Along with its drugs commerce, Hydra also more and more hosted sellers of cybercrime instruments and services, comparable to cryptocurrency laundering, as Flashpoint and Chainalysis detailed in an immensely popular 2021 white paper.

On June eight at RSA, we are going to speak about the rise and fall of Hydra and its position in the worldwide cryptocurrency laundering system. Our panel will current findings combining risk intelligence and blockchain investigations to show how sellers and, more and more, cybercriminals used the market to launder their ill-gotten gains, plus what lies forward now that Hydra is gone. This text serves as a preview to these findings.

Following the takedown of the market, former Hydra users and sellers began organizing on the forum RuTor, with a major variety of users within the thread awaiting the resurrection of Hydra. While initially, customers hoped the market can be reopened from a backup, customers quickly grew to become suspicious of fake websites run by regulation enforcement.

Users’ initial reactions also focused on the potential penalties of the seizing of the servers and the arrest of Dmitry Pavlov, Hydra’s cofounder, in Moscow. Law enforcement agencies - each in Russia and in Germany - had been thought to have obtained vital information on inner communications and transactions related to the market, which might result in further investigations.

One member tried to reassure other users that because of the war in Ukraine there was little chance that Western law enforcement businesses would share this information with their Russian counterparts. Within the weeks that adopted, this view became more extensively accepted amongst former users, especially as proof emerged of an actual breakdown in communication between Western and Russian authorities on cybercrime.

RuTor

Following the takedown of the market, former Hydra users and sellers started organizing on the RuTor forum. Forum customers set up threads to connect sellers and patrons energetic in varied Russian areas. However, these threads have been unable to replicate Hydra’s automated and environment friendly consumer interface or Telegram bots, so the conversation shortly turned towards what different marketplaces the now-unavailable outlets would reappear on.

The nice Cyber Exit: Why the Variety of Illicit Marketplaces Is Dwindling

Users on RuTor have mentioned various Hydra alternate options - other than RuTor itself, which has additionally been rumored to be favored by some former Hydra directors as the new platform. However, several former Hydra customers have expressed frustration over the fact that the alternative markets have been unable to handle the influx, plus different issues which we detail below.

New and current markets

As of early June, six weeks after the takedown of Hydra, Flashpoint analysts have not seen a single dominant marketplace emerge. Instead, sellers and patrons appear to have departed to Telegram and several pre-existing markets, which have seen a comparatively massive inflow of merchandise, services, and money.

It is feasible that users favor present markets as a result of they concern that new sites popping up might be run by law enforcement. However, Solaris, a new market that appears to be run by former high sellers on Hydra, appears to buck this development. The market skilled a speedy progress of curiosity in May.

Taking challenge

However, RuTor users have raised a number of issues with these markets, suggesting that none of them has thus far constructed the mandatory infrastructure to exchange Hydra. Users seem to mainly worth high reliability and simple cash transfers, and as of early June 2022, none of the websites has been in a position to offer this.

As of early June, OMG, which performed an aggressive advert campaign following Hydra’s takedown, nonetheless had an edge over the others, however no clearly dominant position. In response to a mid-May survey of narcotics patrons on the "DrugStat" Telegram channel, 28 percent of respondents who purchase narcotics from online platforms used OMG; 22 percent used Telegram; 18 % used Mega, and 10 % used Solaris.

Phished accounts

Flashpoint analysts additionally observed threat actors on Telegram promoting phished accounts of both customers and vendors from different outlets. Previously, the same market of phished Hydra accounts existed. The advertisements-which arose with remarkable speed as risk actors tailored to the brand new scenario-helps anecdotal evidence of scammers on the brand new marketplaces.

Cryptocurrency laundering

Hydra’s takedown-and the sanctioning of the cryptocurrency exchanges Chatex and Garantex-has additionally had repercussions in the marketplace of cryptocurrency money-out services, as, prior to the takedown, the market had been emerging as a major hub of unlawful cash-out services.

As long as the alternative markets continue to face problems with their infrastructure, it's unlikely that any of them will take over Hydra’s position in this market. However, Flashpoint analysts have seen a growing quantity of money-out gives on OMG.

Similarly, analysts have observed a significant increase in posts by Russian-speaking threat actors searching for cryptocurrency mixers, another key service beforehand supplied by Hydra.

Telegram

Almost instantly following the takedown, many outlets that had been previously active on Hydra relocated their activities solely to Telegram. The rise of Telegram retailers is notable (although not fully new), provided that these stores are often rudimentary and don't present very important options comparable to a review system or an escrow, which might strengthen trust between distributors and buyers.

However, Telegram shops are much less susceptible to takedowns and cyber attacks, they don't require customers to obtain Tor-risking repressive actions from the Russian authorities-and so they typically provide a quicker and smoother user expertise than most of the markets-even non-tech-savvy customers can purchase narcotics using Telegram on their telephones. It remains to be seen if this ecosystem becomes a rival to darknet markets. Telegram outlets don't provide a evaluation system, however a Telegram channel briefly existed that listed actual and scam distributors from Hydra.

Assessment

The fight between numerous marketplaces for his or her place beneath the solar demonstrates the significance of Hydra within the Russian-language segment of the Dark Web. And whereas narcotics sales can go local or go offline, choices similar to cybercriminal instruments and cryptocurrency laundering cannot. The power to safely cashout illicit funds was a major pull for quite a lot of big gamers in the cybercrime house: major ransomware collectives, in addition to marketplace and card store operatives.

Circumstances haven't modified. The disruption of global monetary flows between the West and Russia, and the continuing tightening of cryptocurrency rules mean that menace actors will proceed to demand dependable money-out services that additionally protect their anonymity. It remains to be seen what number of heads this new Hydra will develop. Flashpoint will continue to observe and analyze the delivery of these new beasts.

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