Federal Taskforce Disrupts Largest Darknet Market, Russian National Indicted on Conspiracy Charges
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The Justice Department (DOJ) announced last week that a taskforce of federal law enforcement in collaboration with the German Federal Criminal Police seized Hydra Market—the world’s largest and longest-running darknet exchange—confiscating $25 million in bitcoin.
Since 2015, Hydra has accumulated $5.2 billion in cryptocurrency, serving as the platform for approximately 80 percent of all darknet market-related cryptocurrency transactions. According to federal prosecutors, Hydra enabled drug traffickers to engage with customers, facilitated sales of false identification documents, provided hacking tools and services, and handled money laundering services for bitcoin.
The Joint Criminal Opioid and Darknet Enforcement (JCODE) Team at Justice supported the U.S. Postal Inspection Service (USPIS), Federal Bureau of Investigation (FBI), Drug Enforcement Administration (DEA), Internal Revenue Service Criminal Investigations (IRS-CI), and Homeland Security Investigations (HSI), in the investigation.
“The Hydra darknet site provided a platform for criminals who thought they were beyond the reaches of law enforcement to buy and sell illegal drugs and services,” said IRS-CI Chief Jim Lee, "Denying criminals a space to operate freely to conduct their nefarious activities is the first step in stopping this activity from happening altogether.”
The taskforce did not specify how long Hydra's investigation took, though they indicated the investigation may be ongoing as agents continue to examine seized accounts and hardware.
“The seizure of the criminal marketplace, Hydra Market, reflects the effective collaboration of law enforcement to stop criminal enterprises from their illicit activity," stated USPIS Chief Gary Barksdale.
In connection with his operation and administration of Hydra's servers, DOJ unsealed an indictment against Russian national Dmitry Olegovich Pavlov, age 30, for conspiracy to distribute narcotics and money laundering. Pavlov has allegedly operated Hydra’s server through his company since 2015, providing thousands of drug dealers and other unlawful vendors with a platform for selling illicit goods to thousands of buyers, and laundering billions of dollars derived from these illegal transactions.
In Eastern Europe, where Hydra was most prominent, the operation has likely disrupted the preferred operations platform of many cyber criminals. When law enforcement seized Pavolv's servers in Germany, Hydra had 17 million customers and more than 19,000 registered vendor accounts.