Report says 'largest illegal online market' is growing at alarming rate

The addition of an internal communications service called “ChatMe,” a cryptocurrency exchange (Huione Crypto), and a U.S. dollar-backed stablecoin (“USDH”) shows that Huioneguarantee is seeking to become a truly full-service, self-sufficient platform. USDH’s website describes it as “unrestricted by regulators around the world,” and says it “avoids common freeze and transfer restrictions that can apply to other cryptocurrencies,” Elliptic researchers said.

Elliptic's work last year found that Huioneguarantee sellers transacted approximately $11 billion on the platform in its first three years of operation. Less than a year later, researchers now estimate the cumulative total at $24 billion. Various extensions to the platform have contributed to growth, but ultimately its custody and transfer services are core offerings.

“The main items sold by Huioneguarantee are actually laundered proceeds from online scams,” Robinson claimed. “The vast majority of funds circulating in the market are associated with vendors who openly offer money laundering services and talk about the proceeds of the fraud they are willing to accept. type.”

Meanwhile, as business booms, the platform's owner, Huione Group, has been trying to downplay its ties to the market and the links between Huioneguarantee and other related services, such as Huione Pay, researchers said. The market was even renamed “Haowang Guarantee”, although Huiwang Group confirmed to researchers that Huiwang Guarantee remains a “strategic partner and shareholder.”

“The Huione guarantee group on Telegram continues to be widely used, with more than 139,000 users,” said Jason Tower, Myanmar country director for the U.S. Institute of Peace. “Telegram groups are used to move large amounts of cryptocurrencies at deep discounts. In contrast, competing platforms have lost significant numbers of users. This is most likely the result of a crackdown by the Chinese government.”

Robinson said Elliptic's preliminary analysis found that about $6 billion was passed through Telegram bots, which it said were “primarily used for Huioneguarantee's online gambling.” The researchers' analysis suggests it could also be linked to money laundering. Users deposit cryptocurrencies into the wallet and can then transfer their balance to various mini-games present in their Telegram group. However, these “games” are very rudimentary and don't seem to involve any skills. Players also tend to continue betting over a long period of time, betting similar amounts and leaving precise gaps between bets. All of this “together suggests that the purpose of automated gambling is money laundering rather than entertainment,” Robinson claimed.

Despite Huioneguarantee’s apparent “too big to fail” strategy, Elliptic researchers say the platform is far from fully self-sufficient. Huione’s stablecoin and cryptocurrency exchange has so far failed to register a significant number of transactions, Robinson said, despite some promotions within its existing communication channels. As the market strives to drive transformation, its continued reliance on third parties may still be a weakness – at least for now.

“Huione guarantees still rely on some centralized infrastructure, Tether and Telegram,” Robinson said. “I think there's an opportunity now to suppress it with these service providers. I think if we wait too long, then they risk moving to their own infrastructure and it becomes more challenging.”