Federal Crackdown on Cryptocurrency Laundering
In a significant move against cybercrime, federal prosecutors in Michigan have dismantled E-Note, an alleged online cryptocurrency laundering service, and revealed an indictment against its purported operator, Mykhalio Petrovich Chudnovets, a 39-year-old Russian national. This operation, which was reportedly utilized by cybercriminal networks for international money laundering, is believed to have facilitated the movement of over $70 million in illicit funds derived from ransomware and various cybercrimes since 2017.
Details of the Operation
The U.S. Attorney’s Office for the Eastern District of Michigan announced this development on Wednesday, noting that the Federal Bureau of Investigation (FBI), collaborating with Michigan State Police and international law enforcement, conducted a thorough operation that led to the seizure of E-Note’s digital framework and associated mobile applications. The crackdown specifically targeted a network thought to be employed by transnational criminal entities, some of which have launched attacks against vital U.S. healthcare systems.
Charges Against Chudnovets
Chudnovets faces a charge of conspiracy to launder monetary instruments, an offense that can result in a maximum sentence of 20 years in prison. The indictment, originally filed in September, details how Chudnovets allegedly assisted cybercriminals in converting cryptocurrency gains back into fiat currency and facilitated the transnational transfer of these illicit proceeds.
Long-Standing Operations
Investigations reveal that Chudnovets has been offering laundry services as far back as 2010, later formalizing and expanding these operations through E-Note, which enabled users to move criminal earnings globally. Each transaction was supported by a network of so-called money mules. Authorities have confiscated servers used by E-Note along with three websites—e-note.com, e-note.ws, jabb.mn—and have discovered earlier server copies containing vital customer databases and transaction records, providing critical evidence for the ongoing investigations.
Under the Radar
Strikingly, despite its extensive alleged laundering activities, E-Note had operated under the radar, with many blockchain crime experts expressing unfamiliarity with the service. Online historical snapshots suggest it was registered under a company known as E Note International FZ-LLC, a name linked to businesses in the UAE’s Free Zones.
Broader Efforts Against Cryptocurrency Crimes
This action against E-Note is part of a larger U.S. effort to combat cryptocurrency-related crimes. Recently, Florida authorities seized approximately $1.5 million tied to an investment fraud scheme, highlighting the increasing scrutiny on crypto activities. Additionally, the FBI’s Internet Crime Complaint Center reported dealing with roughly 3,200 monthly complaints related to cryptocurrency investment fraud at the beginning of the year. While law enforcement ramps up these efforts, the problem persists; Chainalysis estimates that $3.4 billion in cryptocurrency has been stolen in 2023 alone, with actors linked to North Korea responsible for about 59% of these losses.
