Alleged Crypto Ransomware Money Launderer Extradited to US

The Russian citizen was extradited from the Netherlands to face charges of laundering proceeds from crimes paid in crypto

article-image

Blockworks exclusive art by axel Rangel

share

key takeaways

  • Denis Dubnikov is alleged to have laundered more than $400,000 as part of a ransomware scheme involving crypto
  • The Ryuk ransomware threat attempts to lock up systems in a bid to extract bitcoin payment

A 29-year-old Russian citizen has been extradited from the Netherlands to the US to face money laundering charges involving tens of millions of dollars in crypto-ransomware proceeds.

The US Department of Justice accuses Denis Dubnikov of laundering more than $400,000 in funds lifted from Ryuk ransomware attacks as part of a $70 million scheme, according to a statement by the Department of Justice on Wednesday.

Dubnikov and others involved in the scheme are alleged to have laundered funds from the attacks through various national and international transactions in a bid to conceal the funds’ provenance.

First appearing in 2018, Ryuk is designed to infiltrate private networks and gain administrative access to multiple systems. Once inside, Ryuk encrypts local files to lock up multiple computers before soliciting payment in crypto — usually bitcoin — to restore services.

Ryuk along with several other high-profile ransomware threats have been used to extract payment from government institutions, healthcare providers, hospitals and other businesses. 

In May of last year, Colonial Pipeline was forced to halt its services and pay more than $4 million in bitcoin following an attack that subsequently ignited fuel shortage fears across the US.

Weeks later, the world’s largest meat producer by total sales, JBS Holding, shelled out $11 million in bitcoin in an attempt to circumvent ransomware impacting its business and supply chains.

Efforts from North Korea’s Lazarus Group, Eastern Europe’s Darkside and others have been linked to various hacks across the industry, including a $625 million hack of the on Axie Infinity-tied Ronin Network bridge earlier this year.

Cryptocurrencies have repeatedly been blamed by law enforcement officials for facilitating anonymous transactions and assisting hackers in their attempts. However, the ability to transparently track transactions on-chain, has also helped law enforcement trace and reclaim stolen funds. 

Lazarus and others are said to have used crypto mixing service Tornado Cash in a bid to launder proceeds and conceal provenance. The Office of Foreign Asset Control banned its use for US citizens as well as 45 Ethereum addresses on Aug. 8.

Roughly three-fourths of funds passing through the privacy tool, however, are unconnected with criminal activity or sanctions evasion, and only 10.5% are stolen funds, according to on-chain analytics firm Chainalysis.

A five-day jury trial is expected to commence on Oct. 4 where Dubnikov faces a maximum sentence of 20 years in prison for his alleged involvement.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (6).png

Research

In recent months, a number of highly accretive developments were implemented across the protocol to improve fee capture, expand product functionality, and ultimately drive value accrual to the RUNE token, with more upgrades on the immediate horizon. These developments include hiking the minimum swap fee parameter to increase revenue, adding a Burn System Income Lever to reduce the RUNE supply, the addition of COSM-WASM smart contracting and IBC to enable an application layer, new chain integrations, and more.

article-image

Blockworks Advisory helps protocols coordinate their launch and growth through white-glove, bespoke services

article-image

The app has just two tabs, one for making swaps and one for viewing your wallet balance

article-image

Delta comes out of stealth with $11 million in funding, and some novel ideas

article-image

HBO documentary Money Electric presents a fun theory that sadly falls flat

article-image

Has Satoshi Nakamoto been here the whole time, working on Bitcoin Core?