Russian Darknet Marketplace Hydra Shut Down, $25M in Bitcoin Seized

Federal police have closed down the servers of a Russian darknet marketplace, Hydra, which experienced a sales boom during the COVID-19 pandemic.

On March 5, according to a statement from the German Federal Criminal Police (BKA), the German Federal Criminal Police, and the Frankfurt Cybercrime Prosecutor’s Office, German servers of Hydra, a Russian darknet market, used for selling drugs, forged documents, and intercepted data had been shut down.

Hydra served 17 million customers and was home to 19,000 seller accounts users who were anonymous and hidden behind the Tor encryption network. This security protocol hides users’ IP addresses. Using the Tor browser, Hydra users only knew each other by their online nicknames, making it nearly impossible for police to track them. Hydra products were advertised in many countries, including Russia, Ukraine, and Belarus.

Authorities also seized more than $25.3M in bitcoin from Hydra‘s crypto wallet in a series of 88 transactions. Hydra offered a crypto asset cash-out service used for laundering funds after the infamous 2016 Bitfinex hack.

Investigators say the halt to Hydra’s operations results from an extensive investigation that involved US and Russian authorities.

Hydra was a heavy-hitter as far as darknet markets go

The cyber security publication CPOmagazine reported Hydra’s astonishing growth of 634% between 2018 and 2020. At the time of the apprehension by law enforcement, the group accounted for 75% of transactions online. Hydra’s business grew as more illegal transactions moved online during the pandemic.

In a blog post, blockchain analytics firm Elliptic explained that the Russian darknet market was the most significant market operating on the darknet, with more than $5 billion in bitcoin transactions since its operation in December 2015. The FBI had estimated that Alphabay, another darknet marketplace, had processed $1 billion worth of transactions when it was seized.

Hydra’s success was based on many factors. It had been in operation since 2015 and was still the market leader until 2017 — something other markets can only dream about — but it also has a sizeable Russian user base with listings that target multiple Eastern European countries. Hydra served a dual purpose, used primarily to sell drugs and for laundering funds via cash-out listings.

No one arrested yet, say authorities

Hydra’s seizure today has created a substantial gap in the dark-web ecosystem. German law enforcement’s press release did not state that any arrests were made or Hydra staffers had been identified. It is possible, however, that these actions are ongoing.

Recent investigations have uncovered several Russian darknet markets that were used by cybercriminals to sell stolen credit card data. One such darknet market was Cannazon, which had over half a billion users and was shut down in late 2017.

Last year, a German-led police operation also took down DarkMarket, a notorious darknet marketplace with nearly 500,000 users and over 2,400 sellers worldwide.

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