Blockchain analytics agency Chainalysis has compiled a new report concerning crypto crime, crime involving cryptography, with a selected give attention to Darknet marketplaces and fraud stores which were fighting for customers within the wake of the Hydra collapse.

More specifically, it emerges that 2022 saw a decline in income from the earlier year for Darknet marketplaces and fraud stores. Indeed, whole darknet market revenues for 2022 ended at $1.5 billion, down from $3.1 billion in 2021.

Not solely that, four of the highest five Darknet marketplaces with the highest earnings in 2022 had been typical drug-centered Darknet marketplaces, while only one, Brian Dumps, was a fraud store.

Summary

Crypto crime in line with Chainalysis: Hydra closes and Darknets fallFraud shops

Crypto crime based on Chainalysis: Hydra closes and Darknets fall

Hydra Market led the way in which once once more, with the highest-incomes Darknet market in 2022. Regardless that it was sanctioned by OFAC and shut down in a joint US-Germany operation in April.

No different market beat the revenue benefit accumulated in those four months. All gained their preliminary market share in the wake of Hydra’s collapse, with on-chain information suggesting that these markets made concerted efforts to attract former Hydra customers and suppliers.

Hydra’s closure caused an industry-extensive decline in Darknet market revenues, with common each day revenues for all markets dropping from $4.2 million simply earlier than its closure and $447,000 immediately thereafter.

Though the collective income of the drug markets didn't totally get well, it slowly returned to previous levels in the second half of 2022. Whereas fraud stores continued to decline.

Fraud shops

Fraud shops are a unique segment of Darknet marketplaces that sell stolen information reminiscent of compromised bank card data and different types of personally identifiable data (PII) that can be used for fraudulent activities.

This decline was partly triggered by the closure of main fraud stores akin to Bypass Shop, which was shut down in March. Brian Dumps, the biggest fraud retailer overall for the yr, additionally appears to have been disrupted, as its revenue dropped to almost zero in October, although it is unclear precisely why.

While Darknet markets have largely recovered since Hydra’s closure and fraud shops have not, single vendor stores have proven a distinct development. Single vendor shops are unbiased stores arrange by individual drug distributors that usually collect a big buyer base on a larger traditional Darknet marketplace.

The creation of a single vendor store permits them to save on the fees that might usually go to the administrators of a standard Darknet market.

Throughout 2022, we've observed a damaging relationship between funds despatched to common Darknet marketplaces and funds sent to single vendor stores. For example, we see an increase in single vendor retailer income beginning in March, around the identical time that traditional Darknet marketplace revenue started to decline.

Similarly, single vendor store revenues declined as conventional Darknet markets recovered from June by way of the top of the 12 months.

After Hydra, the battle for market dominance

Before regulation enforcement shut down Hydra, it was the most important Darknet market on the planet. Prior to its demise, Hydra Marketplace captured 93.3% of all economic value acquired within the 2022 Darknet marketplace ecosystem.

The Russia-based mostly Darknet Marketplace enabled the sale of medicine and supplied money laundering services to cybercriminals. In the wake of Hydra’s collapse, several markets gained revenue, however three in particular dominated: Blacksprut, OMG!OMG! market, and Mega Darknet market.

Interestingly, every of the three led the market at completely different instances, although OMG’s interval of dominance immediately after the Hydra collapse was the strongest any of the three has ever had.

For many of April and may, OMG captured properly over 50% of the entire market share, peaking at 65.2% on 23 April. It additionally operated nearly unchallenged by its rivals, indicating its potential as Hydra’s successor.

In June, OMG suffered a Distributed Denial of Service (DDoS) assault, which likely triggered distributors and customers to migrate to darknet market and Blacksprut Market at the moment.

Similarly, Blacksprut was hacked in late November, which coincides with its decline from its peak income share of 68.5% a number of weeks earlier. Given the illicit nature of Darknet marketplaces, it isn't stunning that providers and customers would seek to leave a market that has suffered a data breach.

Chainalysis: crypto crime continues after Hydra, let’s see how

If we dig deeper into how Hydra’s three major successor markets fought for position after Hydra’s closure. We discover that capturing the precise prospects who beforehand relied on Hydra was key to the battle.

We can investigate this through the use of on-chain data to see the place former Hydra users migrated after the market closed. For this analysis, we are going to divide the remainder of 2022 after the Hydra shutdown on 5 April into two time periods.

Specifically, one is OMG dominance: the 50-day period instantly following Hydra’s closure, when OMG captured almost 100% of the Darknet market share.

Then, the publish-OMG dominance: the remainder of 2022, during which OMG turned one of the three necessary markets together with Blacksprut and Mega. Like the vast majority of all Darknet market customers, Hydra’s former counterparts in all classes. Both retail drug patrons and criminal shoppers. Transacted virtually exclusively with OMG during OMG’s interval of dominance.

Within the submit-OMG dominance interval, OMG retained a number of these former Hydra counterparts. But lost a significant share of their illicit exercise to the opposite two markets in all classes.

Two important conclusions might be drawn from this. First, indications are that these three markets launched cryptocurrency laundering providers just like those offered by Hydra, which might explain why so many of Hydra’s criminal customers migrated to those markets.

The second side is how dominant OMG was among Hydra’s counterparts instantly after Hydra shut down. This is particularly fascinating given the connections between OMG and Hydra.