Stanislav Moiseyev, co-founder of the darknet marketplace Hydra, used by thousands of drug dealers for illegal trade, has been sentenced to life imprisonment by a Russian court.

Hydra, which operated from 2015 until its closure in 2022, was the world’s largest platform of its kind, catering primarily to Russian customers. Alongside sentencing its founder Moiseyev to life imprisonment, the court imposed prison terms of eight to 23 years on 15 associates and issued collective fines amounting to RUB20mn ($188,000). Furthermore, the court confiscated assets belonging to the defendants, including land, vehicles and other properties.

A court in the Moscow region has found Moiseyev guilty of organising a criminal syndicate “responsible for manufacturing and distributing illegal drugs across Russia and Belarus.” Prosecutors alleged that the group operated a sophisticated network, including clandestine drug production laboratories and storage facilities hidden in homes, garages and vehicles equipped with secret compartments. Transactions were facilitated through Hydra, enabling anonymous cryptocurrency payments. Authorities seized nearly a tonne of illegal substances during raids on the suspects’ residences.

Hydra commenced operations in 2015, swiftly establishing itself as a dominant force in the global darknet marketplace. Beyond its trade in illicit drugs, the platform offered ransomware-as-a-service, hacking tools and services, stolen personal and virtual currency, counterfeit currency and other illicit commodities. By 2021, Hydra accounted for an estimated 80% of global darknet marketplace revenue, according to a report by Chainalysis. Hosting more than 19,000 vendors and 17mn registered users, it evolved into a lucrative hub for illegal activities. By 2020, its revenue surged to over $1.3bn. Hydra utilised the Tor network to maintain user anonymity and complicate law enforcement efforts.

In 2022, international collaboration resulted in Hydra’s servers being seized in Germany. The Russian police had already been investigating the platform since 2016, and was not made aware of the impending seizure by Berlin before it happened. Irina Volk, a spokesperson for the Russian Interior Ministry, stated that German authorities had "unilaterally seized the marketplace's servers located in Germany and handed all jointly collected materials over to US authorities." In April 2022 US authorities, who were also investigating Hydra, imposed sanctions on the platform, alleging it facilitated drug trafficking, money laundering and other criminal activities.

After the implementation of sanctions, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) described Russia as a "haven for cybercriminals." Subsequently, based on information provided by Berlin and Washington, Moscow detained individuals linked to Hydra.

Hydra's servers were reportedly operated by Dmitry Pavlov, a 30-year-old Russian businessman, through his family-run hosting provider Promservice, based in Cherepovets. Shortly after the United States accused Pavlov of involvement, he publicly denied the allegations. He was subsequently arrested in Russia on drug trafficking charges and has not yet been sentenced.

Hydra is not the only Russia-based cryptocurrency platform targeted by the US for cybercrime. Shortly before Hydra, OFAC sanctioned Moscow-based virtual currency exchanges Garantex, SUEX and CHATEX.