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Russian darknet marketplace ICO: expansion or exit scam?

By Charlotte Ricca

Funds will allegedly create an international, decentralised marketplace

Hydra, Russia’s largest darknet marketplace, is looking to raise $146m (£110m, €130m) in a token sale to fund its global expansion, although the Russian media believes it could be an exit scam.

Hydra’s sale, which starts on December 16, will offer bundles of 100 tokens for $1,000 (£745, €895), in exchange for a 0.003 per cent share of company profits.

According to a memorandum, which is only accessible via dark web browsers, Hydra will release 1,470,000 tokens, which is a 49 per cent share of the project.In return, investors will receive $500 worth of Bitcoin each month, per token, as dividends.

Hydra said the company’s expansion “will start a new era in the West” at a scale that is “hard to imagine”.

The money will allegedly be used to create a new international, decentralised marketplace called Eternos. This would feature an encrypted messenger service, crypto exchange, anonymous browser, AI dispute resolution and an over-the-counter (OTC) marketplace.

However, the Russian media is suspicious about the initial coin offering (ICO). Forklog warns the sale could be an exit scam, which it says is a common occurrence in darknet markets. Chief editor of Lenta.ru, one of Russia’s leading news portals, reportedly said that the messages from Hydra "do not contain a single word of truth".

Hydra started in 2015 and is now the largest dark marketplace selling illegal goods such as drugs, counterfeit documents and money, and hacking services. Users pay for products and service with cryptocurrencies, which are hard to trace back to the customer or the vendor.

The company claims it has a user base of more than three million, with more than 100,000 daily transactions.

FURTHER READING: Russian electricity grid tests blockchain for retail payments

FURTHER READING: Australian minister claims crypto currencies fuelling terrorist operations

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