The report says the “largest illegal online marketplace” of all time is growing at an alarming rate
The addition of an internal communication service called “ChatMe,” a cryptocurrency exchange (Huione Crypto), and a U.S. dollar-backed stablecoin (“USDH”) suggests that Huione Guarantee aims to become a truly self-sufficient, full-service platform. The website for USDH, Elliptic researchers say, describes it as “unrestricted” by regulators around the world and says it “avoids the usual freeze and transfer restrictions” that can be applied to other cryptocurrencies.
In its work last year, Elliptic found that Huione gave sellers a guarantee for the first three years of its existence moved around $11 billion on the platform. Less than a year later, researchers now estimate the total at $24 billion. The various extensions to the platform all contribute to growth, but ultimately the escrow and transfer services are the core service provider.
“The Huione Guarantee primarily sells money laundering from online scams,” Robinson claims. “The vast majority of funds flowing through the market come from operators who openly offer money laundering services and talk about the types of fraud proceeds they are willing to accept.”
Meanwhile, while business is booming, the platform’s owner, Huione Group, has worked to downplay its connection to the marketplace and the connection between Huione Guarantee and other related services such as Huione Pay, according to researchers. The marketplace was even renamed “Haowang Guarantee,” although Huione Group confirmed to researchers that Huione Guarantee is still a “strategic partner and shareholder.”
“The Huione Guarantee Group on Telegram remains heavily used with over 139,000 users,” said Jason Tower, country director for Myanmar at the United States Institute of Peace. “Telegram groups are used to move large amounts of cryptocurrencies at a significant discount. In comparison, competing platforms have lost a significant number of users. This is probably a consequence of that Raids from the Chinese government.”
Robinson says an initial analysis by Elliptic found that around $6 billion flows through a Telegram bot that is said to be “used primarily for online gambling on Huione Guarantee.” The researchers’ analysis suggests that this could also be a suspected connection with money laundering. Users deposit crypto into a wallet and can then transfer their funds into individual mini-games that exist in their own Telegram groups. However, the “games” are extremely rudimentary and do not seem to require any skill. Players also tend to bet consistently over very long periods of time, betting similar amounts and keeping precise intervals between their bets. All of this “suggests that automated gambling is more for money laundering than entertainment,” Robinson claims.
Despite Huione Guarantee’s apparent too-big-to-fail strategy, Elliptic researchers say the platform is far from completely self-sufficient. So far, Huione’s stablecoin and cryptocurrency exchange has failed to register significant transaction volumes despite some advertising within its existing communication channels, says Robinson. As the market works to advance the transition, continued reliance on third parties could still be a weakness – at least for now.
“Huione Guarantee is still dependent on certain centralized infrastructures, Tether and Telegram,” says Robinson. “I think there is now an opportunity to suppress it through these service providers. I think if we wait too long, there is a possibility that they will switch to their own infrastructure and that will be more difficult.”
