On November 1, 2021, the co-founder of EGGCHANGE Denis Dubnikov was captured in the Netherlands. Law enforcement accused him of money laundering and cooperating with ransomware groups. The information regarding his arrest was not published until Friday, November 5.
Denis Dubnikov is captured for money laundering
Denis, a 29 years old man, is a co-founder of several cryptoprojects, such as EGGCHANGE and Coyote Crypto. These projects offered a live exchange of the cryptocurrencies into fiat money. That operation is pretty popular in Russia, Ukraine and other CIS countries. In these lands, large transactions to the bank card may cause a lot of questions from tax authorities. Another part of the audience of such exchange services is people who receive payments in cryptocurrency for illegal activities. Drug dealers, black market actors, ransomware affiliates – these people need such services pretty often.
Russian telegram channels report that a russian national Denis Dubnikov, co-founder of EGG CASH, crypto-lockers and ransomware cash-out service in Moscow City as described yesterday by Bloomberg has been detained by US FBI in Amsterdam 2 days ago. pic.twitter.com/T0stsvW7U5
— Pavel Vrublevsky (@RNP_1) November 4, 2021
Dubnikov is accused of interaction with the last ones. The projects he established did not pay any attention to the sources of crypto wealth they are dealing with. No one knows the exact details of who and how laundered the money through EGGCHANGE (the accusations touched only this project), since the FBI does not want to share this information. Possibly, we will see it in future. Moreover, there are several documents that confirm Dubnikov’s role in data theft cases that took place in 2018. Currently, he is awaiting extradition to the USA in the Netherlands.
Dubnikov’s arrest was not unexpectable
The charges were brought to Dubnikov some time earlier – when he vacationed in Mexico. It was obvious that if he accepted these accusations there, the extradition would happen the next day: Mexico collaborates with U.S. law enforcement pretty closely. Denis chose to have a so-called “forum-shopping” – choosing the place where he will deal with all charges. Moving to the Netherlands was a strategic step. Besides the fact that Holland law enforcement has the same close relationship with the FBI, the extradition can be declined if the imprisonment term is too long. And the possible term for him is long – U.S. law enforcements say about 20 years in jail.
Nonetheless, this step will just delay the finale of this story. The accusations which U.S. authorities mention when asked for the extradition do not suggest a long term in prison. Hence, law enforcement in the Netherlands will likely apply to deport Denis Dubnikov. Of course, extradition does not equate to applying for 20 years in prison. The attorney Dubnikov hired is an infamous Arcadiy Buch, who already took part in several other lawsuits for cybercrime and online frauds.
Why do illegal business actors work with EGGCHANGE and Coyote Crypto?
Just like people who obtain cryptocurrencies in a legal way, crooks need to go in cash sometimes. And while in Western countries people used just to sell their coins on cryptocurrency platforms and withdraw the money on their bank card, fraudsters from Russia face several problems. First, the account on crypto platforms is much easier to link to a person, than the crypto wallet itself. Their anonymity may suffer if they do this operation “normally”. Another thing to worry about was already mentioned – tax authorities. After a big transfer to your card, you will see their agents at your door. And they will be very happy to see where you get this money (or to get a bribe).
Crypto-to-fiat exchange points are the best remedy for fraudsters among all that currently exist. Sure, there are a lot of law-abiding citizens who mine cryptocurrencies, for example, and need to have their profit in their pocket. But it is obvious that in the country which is accounted for so many ransomware attacks there are a lot of crooks who want to get fiat money instead of their Bitcoins.
