Blockchain analytics firm Chainalysis has compiled a new report concerning crypto crime, crime involving cryptography, with a selected focus on Darknet marketplaces and fraud shops that have been fighting for customers in the wake of the Hydra collapse.

More specifically, it emerges that 2022 saw a decline in income from the previous 12 months for Darknet marketplaces and fraud shops. Indeed, total darknet market revenues for 2022 ended at $1.5 billion, down from $3.1 billion in 2021.

Not only that, four of the top five Darknet marketplaces with the very best earnings in 2022 had been standard drug-targeted Darknet marketplaces, while just one, Brian Dumps, was a fraud store.

Summary

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

Crypto crime according to Chainalysis: Hydra closes and Darknets fall

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

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

Hydra’s closure prompted an business-broad 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.

Despite the fact that the collective income of the drug markets didn't absolutely recuperate, it slowly returned to previous levels in the second half of 2022. Whereas fraud shops continued to decline.

Fraud shops

Fraud stores are a singular segment of Darknet marketplaces that sell stolen knowledge such as compromised credit card info and other types of personally identifiable info (PII) that can be utilized for fraudulent activities.

This decline was partly triggered by the closure of main fraud shops similar to Bypass Shop, which was shut down in March. Brian Dumps, the biggest fraud store total for the 12 months, also seems to have been disrupted, as its revenue dropped to nearly zero in October, though it's unclear precisely why.

While Darknet markets have largely recovered since Hydra’s closure and fraud shops have not, single seller shops have shown a unique development. Single vendor shops are unbiased shops arrange by individual drug distributors that usually collect a large buyer base on a bigger traditional Darknet market.

The creation of a single vendor retailer permits them to avoid wasting on the charges that would usually go to the administrators of a conventional Darknet marketplace.

Throughout 2022, now we have observed a destructive relationship between funds despatched to regular Darknet marketplaces and funds sent to single vendor stores. For instance, we see an increase in single vendor retailer revenue beginning in March, around the identical time that traditional Darknet marketplace income began to decline.

Similarly, single vendor retailer revenues declined as traditional Darknet markets recovered from June by the top of the year.

After Hydra, the battle for market dominance

Before regulation enforcement shut down Hydra, it was the largest Darknet market on this planet. Previous to its demise, Hydra Marketplace captured 93.3% of all financial worth acquired within the 2022 Darknet marketplace ecosystem.

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

Interestingly, every of the three led the market at totally different occasions, although OMG’s period of dominance instantly after the Hydra collapse was the strongest any of the three has ever had.

For most of April and should, OMG captured effectively over 50% of the overall market share, peaking at 65.2% on 23 April. It also operated just about unchallenged by its rivals, indicating its potential as Hydra’s successor.

In June, OMG suffered a Distributed Denial of Service (DDoS) attack, which likely triggered distributors and prospects to migrate to mega darknet 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% just a few weeks earlier. Given the illicit nature of Darknet marketplaces, it isn't stunning that providers and customers would seek to depart a marketplace that has suffered a knowledge 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 specific customers who beforehand relied on Hydra was key to the battle.

We are able to investigate this by using on-chain data to see where former Hydra customers migrated after the market closed. For this analysis, we will 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 immediately following Hydra’s closure, when OMG captured nearly 100% of the Darknet market share.

Then, the submit-OMG dominance: the rest of 2022, wherein OMG grew to become one of many three vital markets together with Blacksprut and Mega. Just like the vast majority of all Darknet market customers, Hydra’s former counterparts in all categories. Both retail drug consumers and criminal shoppers. Transacted nearly completely with OMG during OMG’s interval of dominance.

Within the post-OMG dominance interval, OMG retained a number of those former Hydra counterparts. But misplaced a significant share of their illicit activity to the other two markets in all categories.

Two fundamental conclusions may be drawn from this. First, indications are that these three markets launched cryptocurrency laundering services just like those provided by Hydra, which might clarify why so a lot of Hydra’s criminal customers migrated to these markets.

The second facet is how dominant OMG was among Hydra’s counterparts instantly after Hydra shut down. This is especially attention-grabbing given the connections between OMG and Hydra.