FBI seizes crypto exchange allegedly used to launder $70 million from ransomware attacks

Federal prosecutors in Michigan, working with international partners, have an online cryptocurrency money laundering service known as E-Note and has filed charges against its alleged operator, a Russian national accused of helping cybercriminals move illicit funds across borders.

The U.S. Attorney’s Office for the Eastern District of Michigan said Wednesday that the FBI, Michigan State Police and foreign law enforcement agencies seized E-Note’s online infrastructure as part of a coordinated operation targeting a network allegedly used by transnational cybercriminal organizations, including groups that have attacked U.S. health care systems and critical infrastructure.

Prosecutors also announced charges against Mykhalio Petrovich Chudnovets, 39, who is accused of running the agency and conspiring to launder criminal proceeds. Chudnovets is charged with conspiracy to launder monetary instruments, a crime that carries a maximum penalty of 20 years in prison. The indictment, originally filed in September, was unveiled Wednesday.

“Chudnovets collaborated with financially motivated cybercriminals to transfer criminal proceeds across international borders and to convert cryptocurrency criminal proceeds into fiat currency,” the indictment said.

“Originally, Chudnovets offered what appeared to be a personally delivered service using individual ‘money mules,’” it continued. “Since about 2017, he has been offering his services through an online company called e-note.”

Since 2017, the FBI has identified more than $70 million in illicit proceeds from ransomware attacks, account takeovers and other cybercrimes transferred through the E-Note payment service and its associated money mule network.

According to court documents, Chudnovets began offering money laundering services to cybercriminals as early as 2010. Prosecutors allege he later formalized and scaled these activities through E-Note, which he controlled and operated, allowing clients to move criminal proceeds internationally and convert cryptocurrency into various fiat currencies.

Authorities seized servers hosting E-Note’s operations, as well as mobile applications, as well as the websites “e-note.com,” “e-note.ws,” and “jabb.mn.” Investigators also obtained previous copies of servers containing customer databases and transaction data, which are expected to support ongoing investigations.

Despite the scale of its alleged money laundering activities, E-Note appears to have maintained a low public profile. Several experts on blockchain crime have been contacted by Declutter said they were unfamiliar with the service and that it appears to have little online presence.

An old version of the site, accessed via the Wayback Machine, suggested that it was powered by a company called “E Note International FZ-LLC”. The designation “FZ-LLC” is a business type used primarily by entities located in Free Zones in the United Arab Emirates.

US crackdown on crypto crime

The takedown comes amid a broader U.S. law enforcement crackdown on cryptocurrency-fueled crime. In recent weeks, Florida authorities announced the seizure of approximately $1.5 million in cryptocurrency linked to investment fraud, federal prosecutors charged a Ukrainian woman in connection with pro-Russian cyber attack groups, and a California man became the ninth defendant to plead guilty to being part of a RICO-designated crypto theft ring linked to more than $263 million in stolen goods. Bitcoin.

However, crypto crime continues to increase. Chainalysis estimates that $3.4 billion worth of cryptocurrency has been stolen so far this year, with North Korea-linked actors accounting for approximately 59% of these losses. In addition, earlier this year the FBI’s Internet Crime Complaint Center reported receiving approximately 3,200 cryptocurrency investment fraud complaints each month.