The ‘Largest Illicit Online Marketplace’ Ever Is Growing at an Alarming Rate, Report Says

Adding an in-house communication service known as “ChatMe,” a cryptocurrency exchange (Huione Crypto), and US dollar-backed stablecoin (“USDH”) suggests that Huione Guarantee is looking to become a truly full-service, self-sufficient platform. The website for USDH, the Elliptic researchers say, describes it as “not restricted” by regulators around the world and says that it “avoids the common freezing and transfer restrictions” that can be applied to other cryptocurrencies.

In its work last year, Elliptic found that in the first three years of its operation, Huione Guarantee sellers moved around $11 billion on the platform. Less than a year later, the researchers now estimate that cumulative total to be $24 billion. The platform’s various expansions are all contributing to the increase, but ultimately its escrow and transfer services are the core service.

“With Huione Guarantee, the primary thing being sold is actually laundering of the proceeds of online scams,” Robinson alleges. “The vast majority of the funds that are going through the marketplace is in relation to vendors that are openly offering money laundering services who talk about the types of fraud proceeds that they’re willing to accept.”

Meanwhile, as business booms, the researchers say that the platform’s owner, Huione Group, has worked to downplay its association with the marketplace and the connection between Huione Guarantee and other linked services, like Huione Pay. The marketplace has even been rebranded as “Haowang Guarantee,” though Huione Group confirmed to the researchers that Huione Guarantee is still a “strategic partner and shareholder.”

“The Huione Guarantee Group on Telegram continues to be used extensively, with over 139,000 users,” says Jason Tower, the country director for Myanmar at the United States Institute of Peace. “Telegram groups are used to move large sums of cryptocurrencies at a significant discount. By comparison, competing platforms have lost a significant number of users. This is likely a result of crackdowns by the Chinese government.”

Robinson says an initial analysis from Elliptic has found around $6 billion passing through one Telegram bot that is allegedly “used primarily for online gambling on Huione Guarantee.” The researchers’ analysis suggests this may also be allegedly linked to money laundering. Users deposit crypto into a wallet and then can move their balance into individual minigames that exist in their own Telegram groups. The “games” are extremely rudimentary, though, and don’t seem to involve any skill. Players also tend to bet consistently over very long periods of time, wager similar amounts, and leave precise intervals between their bets. All of this “together suggests automated gambling for the purposes of money laundering rather than entertainment,” Robinson alleges.

In spite of Huione Guarantee’s apparent too-big-to-fail strategy, the Elliptic researchers say that the platform is far from being totally self-sufficient. So far, Huione’s stablecoin and cryptocurrency exchange have failed to register significant volumes of transactions, Robinson says, despite some promotion within its existing communications channels. As the marketplace works to push the transition, its ongoing reliance on third parties could still be a weakness—at least for now.

“Huione Guarantee is still dependent on certain centralized infrastructure, Tether and Telegram,” Robinson says. “I think there is an opportunity now to suppress it through those service providers. I think if we wait too long, then there is a chance that they move to their own infrastructure and that becomes more challenging.”