Revenues earned by darknet markets fell from $2.6 billion in 2021 to $1.3 billion in 2022, according to new research.
Much of the decline was attributed by researchers at blockchain analysis firm Chainalysis to the shutdown of Hydra Market, which was taken down by law enforcement agencies in Germany and the U.S. in April 2022. Even with that shutdown, Hydra Market led the way for 2022 as the highest-earning darknet market.
The leading markets still in operation – Mega Darknet Market, BlackSprut Market, and OMG!OMG! Market – all “gained their initial market share in the wake of Hydra’s collapse, with on-chain data suggesting these markets made concerted efforts to attract former Hydra users and vendors.”
Four of the top five highest-earning darknet markets were drug-focused markets, followed by a fraud shop called Brian Dumps.
“Hydra’s closure prompted a sector-wide decline in darknet market revenues, with average daily revenue for all markets falling from $4.2 million just prior to its closure and to $447,000 immediately after,” the researchers explained.
“While drug markets’ collective revenue hasn’t recovered fully, it climbed slowly back toward previous levels in the second half of 2022. Fraud shops, however, have continued to decline.”
Fraud shops typically sell stolen data like credit card information or other personal information from hacks and leaks. Several of the most prominent fraud shops – including Bypass Shop and Brian Dumps – appeared to face issues or shut down in 2022, according to Chainalysis, but it is still unclear why.
Before it was shut down in April 2022, Hydra accounted for 93% of all economic value received by darknet markets in 2022 — about $357.4 million. The platform, based in Russia, specialized in facilitating drug sales, money laundering services and other illicit offerings.
Chainalysis found that in the wake of Hydra’s closure, some of its biggest participants set up “single vendor shops” that allowed them to reroute their customers and save on the kind of fees that typically would go toward the administrators of darknet platforms.
While single-vendor shop revenue grew in March and April as Hydra and other markets shut down, there was a drop in revenue by June as competitors took the place of the big market players.
BlackSprut, OMG!OMG! Market, and Mega Darknet Market each had moments of dominance in 2022, with OMG!OMG! Market seeing the biggest, but brief, spike in interest. The market took more than 50% of the market share in April and May, reaching a peak of 65% on April 23.
Similar to Hydra, OMG!OMG! Market offers access to illicit drugs, hacking utilities, banking information and more. It began operation in July 2020 but was almost non-existent in the darknet market before the downfall of Hydra.
“The migration of vendors, plus the timing and source of OMG’s initial revenue suggests that Hydra administrators may have been involved with the development of OMG. Additionally, the two markets show certain operational similarities. For instance, Hydra was unique from its competitors in that it offered location-based courier services,” the report said.
“Upon account creation, the user would select their location and arrange “dead-drop”-style exchanges from vendor to buyer. Upon sale, the vendor would send the buyer geographic coordinates and a picture of where their well-hidden purchase could be found. OMG offers this same service, too.”
Chainalysis was able to track the switch to OMG!OMG! Market by looking at the personal wallets associated with known Hydra vendors subsequently transacting with OMG.
Blockchain data also showed an overlap in the central wallets of OMG that indicate it may have been operated by the same people in charge of Hydra.
But Chainalysis said the market was hit with a distributed denial-of-service attack in June that forced users to turn to Mega Darknet Market and BlackSprut Market. BlackSprut suffered its own hack in late November which led to a similar decline in interest.
“Like the vast majority of all darknet market users, former Hydra counterparties across all categories — both retail drug buyers and criminal users — transacted almost exclusively with OMG during the OMG dominance period,” the researchers said.
“In the post-OMG dominance period, OMG retained a number of those former Hydra counterparties, but lost a significant share of their activity to the other two markets across all categories.”
Part of why these three markets dominated in the post-Hydra world is because each launched money laundering services similar to what Hydra offered. In January 2023, Blacksprut began offering the services of RedBull Exchange and BestChange as options for those looking to take their funds out.
Over the weekend, BlackSprut caused controversy when it put up electronic billboards across Moscow advertising its services. It is unclear whether the billboards were hacked or the owners simply did not know BlackSprut was an illicit market.
But The Record reported that BlackSprut is known for backing the Kremlin and supported Russia’s invasion of Ukraine. Its administrators allegedly donated cryptocurrency to pro-Russian paramilitary fighters who could use it to buy equipment and body armor.