Hydra Market was the only largest darknet market as well as the largest marketplace for narcotics in countries of the former Soviet Union. Unrivaled in its size, reach and vertically-built-in community, its turnover was more than $1B in 2020.

After all, that’s not the case.

The takedown of Hydra Market in April by joint German and US law enforcement was more than simply a major drug bust. It eliminated a key piece of the Russian-language illicit on-line ecosystem. Along with its drugs commerce, Hydra additionally increasingly hosted sellers of cybercrime tools and companies, akin to cryptocurrency laundering, as Flashpoint and Chainalysis detailed in an immensely common 2021 white paper.

On June eight at RSA, we'll speak concerning the rise and fall of Hydra and its role in the worldwide cryptocurrency laundering system. Our panel will present findings combining menace intelligence and blockchain investigations to point out how sellers and, more and more, cybercriminals used the market to launder their unwell-gotten good points, plus what lies ahead now that Hydra is gone. This article serves as a preview to those findings.

Following the takedown of the market, former Hydra users and sellers began organizing on the discussion board RuTor, with a big number of users within the thread awaiting the resurrection of Hydra. While initially, users hoped the market could be reopened from a backup, customers shortly grew to become suspicious of pretend sites run by legislation enforcement.

Users’ preliminary reactions additionally centered on the potential penalties of the seizing of the servers and the arrest of Dmitry Pavlov, Hydra’s cofounder, in Moscow. Law enforcement companies - both in Russia and in Germany - were thought to have obtained significant knowledge on internal communications and transactions associated to the market, which could result in further investigations.

One member tried to reassure different users that as a result of struggle in Ukraine there was little probability that Western law enforcement businesses would share this knowledge with their Russian counterparts. Within the weeks that adopted, this view turned extra widely accepted among former users, particularly 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 customers and sellers started organizing on the RuTor forum. Forum users set up threads to attach sellers and buyers active in various Russian regions. However, these threads were unable to replicate Hydra’s automated and environment friendly person interface or Telegram bots, so the dialog shortly turned toward what alternative marketplaces the now-unavailable retailers would reappear on.

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

Users on RuTor have talked about varied Hydra options - aside from RuTor itself, which has additionally been rumored to be favored by some former Hydra administrators as the new platform. However, a number of former Hydra customers have expressed frustration over the fact that the choice markets have been unable to handle the inflow, plus different issues which we detail below.

New and existing markets

As of early June, six weeks after the takedown of Hydra, Flashpoint analysts haven't seen a single dominant market emerge. Instead, sellers and patrons appear to have departed to Telegram and a number of other pre-current markets, which have seen a relatively large influx of products, services, and money.

It is possible that users favor current markets as a result of they fear that new sites popping up may very well be run by regulation enforcement. However, Solaris, a brand new market that seems to be run by former prime sellers on Hydra, appears to buck this pattern. The market skilled a fast progress of interest in May.

Taking problem

However, RuTor users have raised several issues with these markets, suggesting that none of them has thus far constructed the necessary infrastructure to replace Hydra. Users seem to primarily value high reliability and straightforward cash transfers, and as of early June 2022, not one of the sites has been able to provide this.

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

Phished accounts

Flashpoint analysts also observed threat actors on Telegram advertising phished accounts of each users and vendors from different retailers. Previously, the same market of phished Hydra accounts existed. The advertisements-which arose with outstanding speed as threat actors tailored to the brand new state of affairs-supports anecdotal proof of scammers on the new marketplaces.

Cryptocurrency laundering

Hydra’s takedown-and the sanctioning of the cryptocurrency exchanges Chatex and Garantex-has also had repercussions in the marketplace of cryptocurrency money-out companies, as, previous to the takedown, the market had been rising as a significant hub of unlawful cash-out companies.

So long as the choice markets proceed to face issues with their infrastructure, it is unlikely that any of them will take over Hydra’s place on this market. However, Flashpoint analysts have seen a growing number of money-out offers on OMG.

Similarly, analysts have observed a significant enhance in posts by Russian-talking risk actors in search of cryptocurrency mixers, one other key service beforehand provided by Hydra.

Telegram

Almost instantly following the takedown, many retailers that have been previously lively on Hydra relocated their activities exclusively to Telegram. The rise of Telegram outlets is notable (although not completely new), provided that these shops are often rudimentary and do not present important options reminiscent of a evaluation system or an escrow, which may strengthen belief between vendors and buyers.

However, Telegram shops are much less weak to takedowns and cyber attacks, they do not require customers to download Tor-risking repressive actions from the Russian authorities-and so they sometimes provide a quicker and smoother user expertise than most of the markets-even non-tech-savvy users can buy narcotics using Telegram on their phones. It stays to be seen if this ecosystem becomes a rival to darknet markets. Telegram outlets do not present a review system, but a Telegram channel briefly existed that listed precise and scam distributors from Hydra.

Assessment

The fight between numerous marketplaces for their place beneath the sun demonstrates the significance of Hydra in the Russian-language section of the Dark Web. And whereas narcotics sales can go local or go offline, offerings equivalent to cybercriminal instruments and cryptocurrency laundering can't. The ability to safely cashout illicit funds was a serious pull for plenty of large gamers in the cybercrime space: major ransomware collectives, in addition to market and card store operatives.

Circumstances haven't modified. The disruption of worldwide financial flows between the West and Russia, and the persevering with tightening of cryptocurrency regulations mean that menace actors will proceed to demand dependable money-out companies that additionally protect their anonymity. It stays to be seen how many heads this new Hydra will develop. Flashpoint will continue to observe and analyze the start of those new beasts.

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