Analysis by blockchain forensics experts at Chainalysis revealed that the Russia-based Hydra darknet market is outpacing the growth of competition at an alarming rate. In a presentation broadcast live yesterday, researchers from Chainalysis and Flashpoint described the unprecedented growth of Hydra, noting that its monthly transaction volume was roughly 2.5x greater than all other darknet markets summed together.
By the end of 2020, Hydra was averaging roughly $160 million in transactions per month, while all other markets averaged about $35 million in total. The findings suggest that Hydra is single-handedly driving the growth of darknet market activity.
The presentation also included findings from Hydra’s 2021 activity thus far, as well, noting that transactions over $100,000 in size were on the rise in the first half of the year. A number of transactions over $1 million to the market were also reported.
Of all funds sent to Hydra, about 20% ended up going through Bitcoin mixing services and “high risk exchanges.” The research also found that Hydra was becoming increasingly popular as a cashout option among those looking to perform money laundering of their own.
“These crypto laundering services are significantly more popular and sought after as verification requirements are becoming more and more stringent,” said Vlad Cuiujuclu, Team Lead from Flashpoint.
According to the researchers, darknet market activity is “remarkably consistent,” and the only major disruptions experienced are due to market closures. They also found that fluctuations in the price of BTC are irrelevant to activity.
Chainalysis had previously pinpointed Hydra as the place where money trails come to an end. BTC sent to the market is largely traded into fiat through Russia’s clandestine network of unregulated money exchangers, making it impossible to trace where the funds go next. The local government’s apparent unwillingness to dismantle the market has increased its reputation as a haven for darknet vendors.
“Whatever is operating and based in Russia is only under the watch of Russian law enforcement,” commented Andras Toth-Czifra, Senior Analyst at Flashpoint. “And it’s up to them to shut down those marketplaces or arrest the owners.”