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What just happened? German authorities say they have shut down the world's largest darknet marketplace, seizing 543 Bitcoin, worth around $25 million, in the process. Hydra Market had 17 million customers, 19,000 seller accounts, and what was likely the highest turnover of any illegal online platform.
Like other similar marketplaces, the Russian-language Hydra Market was a hotbed of drug trafficking and money laundering. The Frankfurt prosecutors' anti-cybercrime unit said it generated sales of 1.23 billion Euros ($1.35 billion) in 2020 alone, despite its customers being located mainly in Russia, Ukraine, Belarus, Kazakhstan, Azerbaijan, Armenia, Kyrgyzstan, Uzbekistan, Tajikistan, and Moldova, according to blockchain forensics firm Ciphertrace.
Germany's Central Office for Combating Cybercrime (ZIT) and the Federal Criminal Police Office (BKA) today said they seized the server infrastructure of Hydra Market, which launched in 2015. The investigation started in August 2021 and also involved US authorities.
The BKA said that the Bitcoin Bank Mixer, a service for obfuscating digital transactions provided by Hydra, made it extremely difficult for law enforcement to trace the source and destination of the crypto payments.
The image now greeting visitors at Hydra Market
According to Chainalysis, Hydra Market offered cash-out services designed to let users move large volumes of illicit cryptocurrency covertly, which allowed it to act as a money-laundering service for Russian entities. Surprisingly, however, it had not been used to evade sanctions placed on the country, and its transaction volume actually fell following the invasion of Ukraine.
This isn't the first time German authorities have shuttered a massive dark web marketplace. They led an investigation that brought down DarkMarket, used by around 500,000 people, in 2021. It mainly traded drugs, counterfeit money, credit card details, SIM cards, and malware.