On April 5, 2022, the US Department of the Treasury’s Office of Foreign Assets Control designated Hydra Market, the world’s largest darknet market, and the virtual currency exchange Garantex, which recently lost its license to provide virtual currency services in Estonia after Estonian authorities uncovered critical anti-money laundering/combatting the financing of terrorism (AML/CFT ) deficiencies and connections to wallets used for criminal activity.
According to OFAC, Hydra is the most prominent darknet market in Russia, which promotes illicit Internet-based activity through the use of special software that obscures the identity and activities in which individuals engage. Hydra was sanctioned by OFAC as the result of an international cooperation between the US and the German Federal Criminal Police who were able to shut down Hydra servers in Germany on April 5, 2022 and seize $25 million in bitcoin. In addition to sanctioning Hydra, OFAC identified over 100 virtual currency addresses that were associated with the entity’s operations and used to conduct illicit transactions. Hydra was designated pursuant to Executive Order 13694, as amended, which targets persons engaging in significant malicious cyber-enabled activities.
OFAC’s designation of Garantex was the result of OFAC’s collaboration with Estonian authorities that led to discovery of more than $100 million in transactions associated with illicit actors and darknet markets, approximately $2.6 million of which was from Hydra. Garantex was designated pursuant to EO 14024 for operating or having operated in the financial services sector of the Russian Federation economy.
As a result of these designations, all property and interests in property of today’s designees within the United States or within the possession or control of a U.S. person are blocked, and U.S. persons are generally prohibited from engaging in transactions involving the designated persons. In addition, entities owned 50 percent or more by one or more blocked persons are also blocked.