Russia-linked darknet marketplace Hydra shut down in joint operation
Hydra has collected about $5.2 billion in cryptocurrency since 2015, according to the US Department of Justice
German federal police (BKA) said Tuesday they have taken down servers of the world's largest illegal darknet marketplace Hydra in a coordinated operation with US law enforcement agencies, seizing 543 bitcoins worth €23 million (£20 million) stored there.
In doing so, the BKA said they have put an end to what was, by some measures, the longest-running and busiest black market in the history of the dark web, which had approximately 17 million customer accounts and more than 19,000 vendor accounts.
Since August 2021, the BKA and Germany's Central Office for Combating Cybercrime (ZIT) have been conducting intensive investigations, which culminated in this week's seizures.
Hydra, which was founded in 2015, was an online criminal marketplace where predominantly Russian users purchased and sold unlawful goods and services such as narcotics, stolen financial information, forged identity papers, money laundering and mixing services.
Every transaction made on the Hydra market was accompanied by a commission charge, which allowed the market's operators to generate income.
The Tor encryption network was used to hide the identity of persons engaged.
The Bitcoin Bank Mixer, a tool for obfuscating digital transactions that made crypto investigations increasingly difficult for law enforcement organisations, was a key service provided on Hydra.
Hydra aided the laundering of some of the $7 billion in bitcoin stolen from the Bitfinex exchange in 2016, according to blockchain analysis company Elliptic, which also claimed that the darknet site assisted in the laundering of funds extorted by the Dark Side ransomware group in a breach of Colonial Pipeline last year.
On Tuesday, the US Treasury Department also announced new sanctions on the Hydra Market, as part of an "international effort to disrupt proliferation of malicious cybercrime services, dangerous drugs, and other illegal offerings available through the Russia-based site."
Along with the sanctions, the Office of Foreign Assets Control (OFAC) revealed a list of over 100 cryptocurrency addresses linked to Hydra's operations to conduct illicit transactions.
In a related move, the US Justice Department (DOJ) this week filed criminal charges against one of Hydra Market's suspected operators.
The DOJ said it had secured an indictment against Dmitry Olegovich Pavlov, a 30-year-old Russian resident, for conspiracy to distribute drugs and launder money through Hydra.
Pavlov allegedly ran a company, beginning in late 2015, that managed Hydra's servers, allowing the market to function as a platform for thousands of drug dealers and other illegal vendors to distribute large quantities of narcotics and other illicit services to thousands of buyers.
According to the DOJ, Hydra accounted for over 80 per cent of all cryptocurrency transactions on the darknet market, and has collected about $5.2 billion in cryptocurrency since 2015.
"The Department of Justice will not allow darknet markets and cryptocurrency to be a safe haven for money laundering and the sale of hacking tools and services," said Deputy Attorney General Lisa O. Monaco.
"Our message should be clear: we will continue to go after darknet markets and those who exploit them. Together with our partners in Germany and around the world, we will continue our work to disrupt the ecosystem that allows these criminal actors to operate."
Chief Jim Lee of US IRS - Criminal Investigation said: "The Hydra darknet site provided a platform for criminals who thought they were beyond the reaches of law enforcement to buy and sell illegal drugs and services.
"Our Cyber Crimes Unit once again used their cryptocurrency tracking expertise to help take down this site and identify the criminal behind it. Denying criminals a space to operate freely to conduct their nefarious activities is the first step in stopping this activity from happening altogether."