Hydra, a dark web marketplace that appears in the Russian language, has discovered to be a new hotspot for various criminal activities, hauling in a whopping $1.37 billion equivalent of cryptocurrencies in 2020, up from $9.4 million in 2016, thriving at a staggering 624% year-over-year with a consecutive jump over three years from 2018 to 2020.

"Further buoying Hydra's growth is its ability—or its good fortune—to remain running and unscathed against competitor attacks or law enforcement scrutiny; it's the only downtime of note that occurred during a short period at the beginning of the COVID-19 global pandemic in late March 2020," Flashpoint mentioned in a report jointly published with blockchain analysis firm Chainalysis.

Hydra has been actively operating since 2015 as a competitor to the now-defunct Russian Anonymous Marketplace (aka RAMP), primarily promoting narcotics trade, prior to growing as a marketplace for all things criminal, including offering BTC cash-out services and SIM cards, peddling stolen credit cards, documents, IDs, and counterfeit currency, with the operators profiting as the intermediary for every transaction completed on this platform.

Hydra accounted for over 75% of the darknet market revenue across the globe in 2020, placing itself as a significant contender in the crypto crime landscape in Eastern Europe, according to a report by Chainalysis published in February 2021. While it may be a result of the demise of RAMP in September 2017, which triggered a mass migration of cybercrime gangs to Hydra.

The researcher also suggests that strict requirements were imposed on sellers as another contributing factor, effected in July 2018. The guidelines mandate that outbound withdrawals of cryptocurrency proceeds from sellers' wallets are routed through regionally-operated cryptocurrency exchanges and payment services, thereby exchanging the funds into Russian fiat currency.

Moreover, the involvement of restrictions that disables seller withdrawals until they either complete more than 50 sales transactions or maintain an account balance of at least $10,000.

Flashpoint pointed out that the significant policy changes have more likely aided Hydra administrators and permitted sellers, entities, and service providers, who can still operate and fulfill transactions under these stricter e-wallet restrictions, consequently contributing to the "blistering growth" in annual transaction volumes.

"Upon completion of the buyer portion of the transaction, the money trail goes dark as more veiled, in-region financial operators and service providers manage the sellers' finances and convert cryptocurrency withdrawals into difficult-to-trace Russian fiat currencies as the next step in the financial chain," mentioned by the researchers.

These withdrawal restrictions have also made Hydra seller accounts a hot commodity on various underground forums, fostering a new offshoot market where cybercriminals purchase an established seller account to gain direct access to the marketplace and entirely sidestep Hydra policies and enforcement controls.

Besides, cash-out services of Hydra allows bitcoin to be converted into gift vouchers, prepaid debit cards, Russian rubles, or even physical cash that's concealed at a discreet location, aka "hidden treasure" have made crypto laundering a lucrative way for criminals to exchange their bitcoin pull without being identified and reported.

"Hydra's expansion to other illicit trades may endanger more industry sectors," the researchers cautioned. "While Hydra currently supports the selling of many illicit goods and services, its strongest market, by far, remains narcotics sales. Should Hydra continue to grow, its support of other cybercriminal trades will likely expand along with it."