April 24, 2022
In collaboration with the US law enforcement, German police seized and shut down Hydra Market, the world’s largest and oldest darknet marketplace for illegal goods and services. Criminal charges have also been filed against one of Hydra Market’s accused operators by the US Department of Justice. The market’s platform accounted for 80 per cent of all cryptocurrency transactions on the dark web.
The world wide web is a massive network of computers connected by the internet that hosts a massive collection of websites. The ‘surface web’ and the ‘deep’ web make up the web, and it is the area of the internet that ordinary internet users may access using common search engines such as Google, Yahoo, and others. But it can retrieve only an approximate 4 per cent of the search results, while the majority of the results are hidden.
From the market, the German Federal Criminal Police seized cryptocurrency wallets containing $25 million in bitcoin.
Hydra was a Russian-language dark web marketplace that facilitated illegal drug trafficking and financial services such as bitcoin tumbling for money laundering and crypto currency-to-Russian-ruble exchange services and the sale of documents.
On April 4, 2022, federal law enforcement agencies in the United States and Germany announced the seizure of the website’s Germany-based servers and cryptocurrency holdings. It was the longest-running dark web marketplace before it was shut down.
According to Frankfurt prosecutors, the Hydra Market platform is the world’s largest illicit marketplace.
One of Hydra Market’s putative operators was also charged with conspiracy to distribute narcotics and money laundering. One Russian man has also been charged by the US Department of Justice for his role in administering the website’s servers.
On the dark web, cryptocurrency is popular because it allows users to conceal their identities and transaction details. In August 2017, Bitcoin, monero, and Ethereum were stated to be the preferred currencies for dark web transactions.
This operation was the outcome of multinational investigations that began in August 2021. The “Hydra Market” has been used to sell illegal substances, counterfeit documents, intercepted data, and “digital services” since at least 2015.
Its sales in 2020 were at least €1.23 billion, making it “the unlawful market with the biggest turnover in the world.” The platform has over 19,000 registered sellers and over 17 million registered customers.
The darknet, also known as the dark web, is a collection of websites that are hidden from standard search engines and web browsers, with users accessing them via anonymous browsers. The Hydra Market, whose customers were mostly from Russian-speaking countries, represented around 80 per cent of all darknet market-related bitcoin transactions last year. The Hydra Market has received nearly $5.2 billion in bitcoin for transactions on the site since 2015, raking in millions of dollars in commissions. The Hydra Market allowed vendors of a wide range of drugs, including heroin, other opiates, cocaine, methamphetamine, and Lysergic acid diethylamide (LSD), to connect with buyers who could grade dealers on a five-star scale. The platform also allowed for the selling of forged identification cards, hacking tools and services, and bitcoin money laundering. In connection with this operation and administration of the servers used to host Hydra, it has obtained an indictment against Dmitry Olegovich Pavlov, a 30-year-old Russian resident, for conspiracy to distribute narcotics and conspiracy to launder money. Pavlov is accused of running a company that “allowed the market to operate as a platform used by thousands of drug dealers and other unlawful vendors to distribute large quantities of illegal drugs and other illicit goods and services to thousands of buyers and to launder billions of dollars derived from these unlawful transactions” beginning in late 2015.
Last week, US Attorney General Merrick stated, “We have seized the infrastructure of the world’s largest darknet market with our German law enforcement colleagues, but our job is far from over.”
“We will continue to cooperate with our international and interagency partners to disrupt and deconstruct darknet markets, and to hold those who conduct crimes on the dark web accountable for their actions,” the statement continued.
Scams and thefts hit an all-time low as a percentage of overall crypto transactions last year, despite a sharp increase in criminal behavior by total volume compared to 2020’s statistics. Total transaction volume increased by more than 550 percent in 2021, reaching $15.8 trillion. According to Chainalysis, illegal activity accounted for 0.15 percent of all blockchain transactions last year, a 75% decrease from 2020 and a nearly 96% decrease from 2019. “In 2021, there was a surge in on-chain activity,” It is just that the number of criminals hasn’t kept pace with the number of genuine use cases.” According to researchers, the limited expansion of crypto-based crime can be attributed in part to law enforcement and the inherent openness of blockchain technologies.
National Cryptocurrency Enforcement Team (NCET)
The Federal Bureau of Investigation (FBI) in the United States has established a dedicated team to investigate cryptocurrency-related crimes. The National Cryptocurrency Enforcement Team (NCET), which was established in October 2021, will assess whether various sorts of cryptocurrency crimes may require additional resources to investigate and prosecute.
In 2021, around $2.7 billion in bitcoin was stolen, and $7.8 billion in cryptocurrency was conned. Illegal activity accounted for 0.15 percent of all block chain transactions, a reduction of 75% from the previous year. According to blockchain research firm Chainalysis, cryptocurrency-related crime reached a new all-time high in 2021, with $14 billion worth of blockchain transactions, owing in part to the rise of decentralized financing (Defi) platforms. The value of illegal transactions increased by over 80%.
“Defi is one of the most interesting aspects of the wider cryptocurrency ecosystem, giving a significant opportunity to businesses and cryptocurrency users alike.” However, the same decentralization that makes Defi so dynamic also allows for widespread scamming and theft, so Defi is unlikely to reach its full potential.
Unlike traditional forms of fiat money transmission, every transaction on the blockchain is recorded in a publicly available ledger, making it transparent and allowing users to discover how much bitcoin activity is linked to criminal conduct. Authorities have had tremendous success using the transparency of blockchains to investigate and shut down illegal behaviour. Investors lost over $12 billion in ‘Defi last year, more than 80% of it due to scams and thefts.
Virtual Asset Crime Solving
A specialised team of cryptocurrency professionals is dedicated to providing research, support, and training across the FBI, as well as improving its cryptocurrency technologies to keep ahead of future threats. The team will concentrate on crypto exchanges, mixers, tumblers, and other forms of digital asset infrastructure providers that could enable “criminal exploitation of cryptocurrency,” according to the report. The NCET’s objective will be carried out across the Justice Department’s greater footprint, which includes the FBI, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and other federal agencies.
The creation of the team follows the Justice Department’s largest-ever financial seizure earlier this month, in which a New York couple was detained for allegedly laundering bitcoins worth over $4.5 billion stolen in the 2016 breach of the digital currency exchange Bitfinex.