The United States government recently sanctioned a pair of crypto exchanges and unveiled an indictment of a Russian individual, charging him with managing many money laundering operations for hackers. The two exchanges, PM2BTC and Cryptex, are alleged to have helped launder cryptocurrency potentially tied to cybercrime activities.
The operation was taken as part of a coordinated effort with the Dutch FIOD, or Fiscal Intelligence & Investigation Service, and the Netherlands Police under an ongoing crackdown: Operation Endgame.
As a result, the websites linked to the exchanges were seized, with their pages now displaying banners of seizure by law enforcement. Additionally, authorities confiscated crypto worth approximately $7.8 million.
The U.S. Treasury’s Office of Terrorism & Financial Intelligence stated that PM2BTC has been in operation since 2014 and allegedly enabled virtual currency laundering, particularly connected to ransomware as well as other Russian illegal actors. PM2BTC also offered direct currency-exchange services from cryptocurrencies to rubles, all while failing to meet Know Your Customer (KYC) and AML (anti-money laundering) standards demanded by U.S. law.
According to the treasury, PM2BTC is responsible for handling a much higher percentage of transactions linked to illegal activities in Russia than 99% of other crypto service providers. They also noted that the platform uses unusual methods to obscure transaction trails, making it difficult to trace and attribute illegal activities.
Similarly, Cryptex was charged with advertising its crypto services to cybercriminals and collecting more than $51 million in illegal proceeds from ransomware operations. The platform is said to have allowed users to register with complete anonymity.
It’s estimated that Cryptex handled more than $720 million in crypto transactions related to illicit services patronized by Russian cybercriminals. These services include mixing services, fraudulent sites and exchanges that lack KYC requirements.
Sergey Sergeevich Ivanov, a Russian citizen aged 44, has been accused of providing laundering services to various online crime groups as well as drug traffickers through platforms such as PM2BTC and Cryptex. Ivanov has also been implicated in assisting payment processing for the notorious carding platform Rescator in addition to laundering funds from Joker’s Stash, a well-known carding forum that voluntarily closed in early 2021.
Two payment processing service providers, PinPays and the Universal Anonymous Payment System (UAPS), are also tied to Ivanov. UAPS is said to have processed payments for various fraudulent platforms, such as Genesis Market and BriansClub.
According to blockchain analytics company Chainalysis, both Cryptex and UAPS have processed more than $7.5 billion in transactions from their establishment in 2018 and 2013, respectively.
Another Russian, 38-year-old Timur Shakhmametov, also known as JokerStash, faces charges for running Joker’s Stash, a carding marketplace that allegedly sold data from roughly 40 million cards each year over its seven-year lifespan. The operation is believed to have earned profits anywhere from $280 million to more th an $1 billion for the cybercriminals involved.
In connection with these actions, the United States Department of State has offered rewards of close to $10 million for information that results in the arrest and conviction of Shakhmametov and Ivanov. Additionally, a $1 million reward is being offered for information that can help identify other key players associated with Joker’s Stash, UAPS, PinPays and PM2BTC.
The seriousness of KYC requirements cannot be taken lightly by companies such as Bit Digital Inc. (NASDAQ: BTBT), since cases such as these seizures clearly show what could happen if a company relaxes in this regard, even for a little bit.
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