The closure of the Huione Guarantee dark market has facilitated the emergence and strong development of smaller darknet platforms on Telegram. Blockchain analysis company Elliptic recently revealed this, pointing out a significant increase in bad actors on this messaging platform.
According to the report, over 30 guarantee dark markets have appeared on Telegram, providing bad individuals with access to illegal services and goods, including fraud tools and money laundering. Huione Guarantee was once prominent in facilitating these transactions.
However, Telegram removed Huione Guarantee on May 13, based on previous Elliptic studies showing bad actors had conducted transactions worth over $27 billion through this platform.
The closure affected thousands of channels and usernames related to this large-scale exchange, paralyzing operations and forcing Huione to only provide escrow services for a short time before completely ceasing operations.
However, Huione's collapse only opened up space for many other Chinese-language dark markets - where users can trade illegal goods and services. These channels, called guarantee dark markets, quickly increased following the event, while Telegram has not yet taken any specific measures.
The report emphasizes:
"The guarantee dark market ecosystem is very complex with many fake markets aimed at defrauding customers, but Elliptic is currently tracking over thirty actively operating markets. The closure of Huione Guarantee created opportunities for many competitors to fill this gap."
With the emergence of many new dark markets and user transfer from Huione, analysts believe Telegram needs a more robust sweep to eliminate these channels.
Meanwhile, Elliptic's report clarifies the difference between Huione Guarantee and other businesses in the Huione Group. Huione Guarantee ceased operations at the end of May when ending escrow services, contrary to some reports from other blockchain analysis entities suggesting the market was still active.
On-chain data shows USDT flows into addresses controlled by Huione significantly decreased from the end of May. However, other Huione Group businesses, especially the Huione Pay payment service, continue to operate.
This occurs despite the US Financial Crime Network (FinCEN) identifying this group as a "primary money laundering financial organization." In fact, other businesses in the Huione group even increased activity after being listed by FinCEN, with average daily trading volume higher than the still actively operating Huione cryptocurrency exchange.
Tudou Emerges as New Dominant Guarantee Dark Market
Meanwhile, a new platform is ready to replace Huione Guarantee. Tudou Guarantee is attracting increasingly more users, with inflow equivalent to Huione's peak. This is unsurprising as Huione previously promoted Tudou as a replacement for customers, possibly due to owning 30% of the platform's shares.
This promotion brought commercial success to Tudou, attracting most traders who previously used Huione. User scale doubled compared to normal, while current inflow is equivalent to Huione's peak period.
Other dark markets like Dali, Fully Light, YY, Shuangying, ShengFeng, and Jinbel also saw user number fluctuations since Huione's closure but have not maintained long-term growth momentum.
Telegram Faces Explosive Cryptocurrency Fraud Wave
Dark markets are not the only problem Telegram is facing. The platform also confronts a sudden increase in cryptocurrency fraud, with malware attacks rising by 2,000% this year.
According to an article from OKX, common tricks on Telegram include fake bots, fraudulent trading groups, and recruitment aimed at exploiting the platform's anonymity, large user base, and large community hosting capabilities.
Recently, a $50 million fraud was discovered on Telegram, causing many users to suffer losses after participating in OTC trades buying altcoins at discounted market prices and short-term token lockup periods.
