With over 17 million customers and an estimated business of more than $1 billion in 2020 alone, Hydra Market was responsible for 80% of all darknet-related cryptocurrency transactions.
A joint effort by German and U.S. law enforcement led to the market’s downfall in early April 2022, ending in the arrest of the principal operator in Russia later that week.
This article goes over numerous aspects of the infamous and massively popular dark web bazaar, detailing how it came to dominate the murky world of dark web marketplaces and where it might be headed in the wake of its recent crash into controversy. So, let’s get started!
Hydra Market: A Brief Introduction
Hydra was the longest-running (by at least 2015) darknet online marketplace before its takedown. The first modern online marketplace Silk Road launched in 2011, and its sequel Silk Road 2.0, established in 2013, was subsequently shut down.
Along with drugs, anonymous buyers and sellers on Hydra traded stolen financial information such as credit card details, false I.D. documents, counterfeit bills, money laundering and mixing services.
Like Silk Road, cyber criminals participated in transactions using cryptocurrencies, with Hydra operators receiving a commission for each successful transaction.
Hydra served as a replacement for the systems that predated it. As the U.S. Department of Treasury found, its revenue grew from $10 million in 2016 to over $1.3 billion in 2020. In addition, the U.S. department of justice stated that Hydra received $5.2 billion in cryptocurrency since its inception in 2015.
Hydra had more than 19,000 registered seller accounts. Users ranked the vendors and their products on a scale of 1 to 5 stars, and customer reviews were displayed prominently on the Hydra website.
The bust by the German authorities also led to the seizure of around 543 bitcoins, which equated to approximately 23 million (about $25.2 million) at that time.
Hydra played a significant role in facilitating cryptocurrency laundering for cybercriminals residing in central and eastern European nation-states. With online cryptocurrency sites, users could cash out crypto anonymously for rubles from various exchange websites like Qiwi, Tinkoff, or Yandex. In addition, users also had the option to pick money physically in pre-arranged areas where it had been buried or hidden using a dead drop system called klad.
The same system Hydra used for distributing illicit drugs on a large scale when it was in operation. The system is still in process by many of the market’s successors but is now primarily operational for drugs only.
Hydra, a Russian language marketplace, operates in different countries, serving not only Russia but also Ukraine, Belarus, Kazakhstan, Azerbaijan, Armenia, Kyrgyzstan, Uzbekistan, Tajikistan, and Moldova. Bitcoin was the only cryptocurrency Hydra allowed to be traded on the platform, but it enabled cashouts and several money transfer services.
In addition to its reputation as a ruthless corporation, Hydra operated under a relatively conscientious set of terms of service that banned the sale of weapons, poisons, contract murder, explosives, carding, secret state information, fentanyl, pornographic materials, viruses,, and other tools for committing illegal activities through cyberattacks.
The Reason Behind the Name “Hydra”
The name Hydra refers to a supernatural beast in the shape of a serpent that inhabits rivers. It has a lot of different faces as well, suggesting that even if a portion of the whole marketplace were brought down, the rest of the market would still have the ability to regroup and continue to operate.
The collapse of the dark web marketplace Utopia in 2014 was a crippling blow to the dark web community, showcasing the strength and resilience of the community. The moderator of the Silk Road forum rallied the community with the words, “Show them that you, we, are a hydra—cut off one head and ten more spring up.”
Since then, the Hydra darknet market symbolised the ethos of the world’s illegal markets, demonstrating to law enforcement and the general public that operators would never surrender. It has also been the name of a few other dark markets elsewhere.
Following the closure of Hydra in early April 2022, many other Russian language darknet markets have risen to fill the old giant’s shoes, hoping to make some of the estimated hundred million dollars Hydra saw every month.
However, it is likely that no other darknet market of Russian or any other language will ever rival the size of Hydra’s supremacy in the Darknet Marketplace landscape.
Rivalry Between RAMP and Hydra
RAMP was considered one of the early Russian-language-based darknet markets that are said to be founded around 2012 and remained active till 2017. Although, the sale of illicit goods dates back to 2009 on the Russian darknet markets when people used to trade drugs on discussion forums through encrypted messages.
RAMP dominated the metropolitan areas of Russia, but Hydra gave cost-effective drugs to customers in rural locations.
RAMP made headlines for often launching DDoS attacks on competitors and reporting the names and addresses of competing entities to authorities. When the market went down in 2017 as a Russian Law Enforcement operation, sellers and users of RAMP migrated to Hydra.
RAMP’s principal administrator went by the name DarkSide (also known as Big Boss and Maharaja), who used the image of Edward Norton as his icon. The market was estimated to be earning around $5.5 million annually. Rather than earning commissions on each item sold, RAMP charged sellers for registering their shop on the platform and also for everything they offered for sale. In addition, the market also charged a certain amount for advertising on the platform’s homepage.
As mid-2015 neared its end, only two principal competitors of RAMP survived, WayAway and LegalRC. Both of these markets catered to the manufacturing, selling, and distributing of advanced synthetic compounds, like the THC alternative spice. Fearing RAMP would steamroll them, the two markets collaborated under a new name called Hydra.
Consequently, these events proved to be an extremely beneficial boost to Hydra. The succession of prosecution of corrupt customs officers in 2016 incurred severe damage to the drug trafficking networks of RAMP that helped service their customers.
In response to the absence of imported drugs, local drug production exploded as numerous cannabis farms emerged, and underground drug labs that produced meth and mephedrone were created across the country.
The importation of chemical precursors from China, which Hydra dominated then, was significant for RAMP to survive in the market. RAMP subsequently tried to bribe former manufacturers of Legal R.C. Eventually, this effort failed, which thrust the Hydra members into conflict with RAMP by launching a series of intense DDoS attacks against their competitors.
By early 2017, several RAMP sellers could no longer sell their products; supply and demand declined exponentially due to dissolved supply lines. After Orange, one of the market’s co-admin departed from the company; this accelerated the market saturation.
Orange even considered assassinating Hydra’s admins because he believed they had compromised his identity. The new co-admin, known as Stereotype at RAMP, forbade the sales department from cooperating with or collaborating with Hydra in any way, threatening those who disregarded this with not only being kicked out from the site but also having their identities compromised and handed over to the law authorities.
This event devastated the morale of RAMP sellers, who saw their earnings negatively impacted by the site’s enduring problems due to DDoS attacks.
In mid-2017, a mass migration of RAMP’s suppliers and manufacturers to Hydra was underway, followed by smaller stores and individual clients. The final hit that RAMP took was in July 2017 when Russian Entrepreneur Alexander Vinnik, BTC-E founder, was arrested.
BTC-E was a cryptocurrency exchange where most of RAMP’s funds were held. It was estimated about $60 million in customer deposits that law agencies confiscated.
In Sept 2017, Russia’s Ministry of Internal Affairs removed RAMP from the dark web. Two years later, in Sept 2019, it was found that the original market architect was dead due to Heroin Overdose in Aug 2015, and the co-admin, Orange, had been operating the market on his behalf for two years.
The Emergence of Hydra
Due to the disintegration of RAMP, HYDRA effectively spearheaded the darknet market industry in Russia. The market’s popularity reached far and wide, and it is extensively involved in several areas of operation, including professional public relations and marketing campaigns on the clear web.
Some sections of the campaign also included video advertisements on Youtube under the same name, Hydra; whenever the ad was brought down by Youtube, a similar one used to emerge on the same or other channels.
Hydra’s YouTube videos and channels were finally blocked, which resulted in the market quickly migrating to Russian video hosting provider VKontakte, where their channel videos rack up tens of millions of additional views. Hydra invested a lot of resources in email spam, then moved to spamming communication services like WhatsApp and Viber.
Hydra’s most impactful social media campaign had to do with its Telegram channel. This campaign resulted in giving them profit several millions of dollars over the course of the market being online. Starting from July 2017, Hydra published posts to multiple popular Russian language Telegram channels, but its channel represented a dedicated system for other media operations.
They utilised telegram to highlight the vast array of drug-related content, market-related memes, and special deals by dealers, which were their most significant source of revenue.
Hydra was also helped by an efficient administrative structure, which gave the power to a single chief administrator (who was nicknamed Admin) to oversee six highly loyal moderators, each of whom had the responsibility of resolving disputes, reviewing comments, and communicating with VIP customers.
Moderators reported directly to the site administrator, Resident, who was supervised by a Deputy admin known as Burning Man. The Hydra team also included a lead developer who used to report to Admin and Hydra’s P.R. director. In addition, Hydra had three other executive-level staff members, Observer and Satoshi Nakamoto, who acted as advisors to the Admin on significant issues.
Elaborate command hierarchy and rigid distribution channels helped create Hydra’s success. In addition, those recruited to hide drugs in the dead drops ( kladsmen ), for whom facing jail time was an utmost certainty, were quite helpful to the Hydra management team, moderators, manufacturers, wholesalers, and vendors.
Since everyone was making money, there were little to no disputes. At the same time, monopolised powers ensured that any potential opposition was quickly brushed off or ignored.
Throughout the first half of 2019, Hydra saw an influx of visitors from across the region in Russia. By late July, some provinces were sending 10 times more traffic to the marketplace than they initially were. It was estimated that over 13,000 dead drops were collected by buyers every workday by the end of October, amounting to $3.5 million in drug purchases.
Roughly 86% of the illicit virtual currencies received directly by Russian-based virtual currency trading platforms in 2019 came from the Hydra. The market also had rife with ransomware profits, approximately $8 million from ransomware gangs such as Ryuk, REvil Sodinokibi, and Conti.
Darknet marketplaces, such as Hydra, were often used to launder crypto money due to their advanced exchange systems that helped cybercriminals to evade law enforcement detection.
Hydra vendors offered various money-laundering cash-out services for Hydra customers looking to exchange their BTC for multiple sorts of currency which Hydra vendors supported.
By 2020, Hydra was responsible for 80 per cent of all crypto funds flowing to the dark web and was driving 800,000 daily visitors to the page. Hydra was also the sixth biggest Eastern Europe cryptocurrency service provider; in no other region of the world did a darknet market surpass its top 10 cryptocurrency service providers.
In 2021, Chainalysis estimated that $8 billion U.S. dollars of cryptocurrency were laundered through darknet marketplaces such as Hydra. Chainalysis discovered that significant sums of cryptocurrency were laundered through centralised exchanges.
The Fall of Hydra
Hydra was the first dark-market platform to raise money via an ICO in December 2019; they raised $146 million for expansion to western audiences. The hype for an ICO in dark markets couldn’t have been exaggerated, as the scale of the project’s implantation was challenging to imagine.
Although the Eternos project was scheduled to take place in September 2020, the launch date was temporarily delayed because of the coronavirus. The project never materialised due to the advancing crisis.
Although at the same time, the Eternos ICO, Lenta.ru, demonstrated a breathtaking expose of Hydra’s battle with RAMP, which earned several accolades. This led the Russian government to pass a law calling for stiffer drug laws in the country, which led to several Hydra vendors’ arrests at that time.
In 2021, a wave of cybercrime swept the world, further increasing pressure on Hydra after it was found that a significant amount of ransomware-generated money was passing through the market, flushed through the standard untouchable payment platform it used. 2021 proved to be Hydra s most profitable year to date in terms of revenue generated, as malware attacks became the primary source of income in their revenue
As a result of a joint operation in international law enforcement resulted in sanctions against Hydra by the U.S. State Department, and its servers were finally shut down in April 2022. Several individuals in the darknet community presumed Hydra would recuperate after the takedown, but this was proven untrue.
Surprisingly, there were no accounts of seizures or arrests made in Germany on the servers located in that region. However, Hydra’s Admin, Dmitry Pavlov, was arrested in Russia the following week, subsequently telling BBC news in an interview that the charges against him were false.
“We are a hosting company and have all the necessary communications licences,” he said. “We don’t administer any sites but only provide servers for rent as intermediaries.” Dmitry is currently in custody, waiting for his trial in Moscow.