Users of Cryptonator – an online digital wallet and cryptocurrency exchange – received an unpleasant surprise last weekend after the service was shuttered in a combined operation run by the FBI, the US Internal Revenue Service (IRS), and German police.
Cryptonator allows people to store crypto-coins remotely, transfer funds, and exchange cryptocurrencies for other types. It could be used for innocent purposes, though given it was happy to turn a blind eye to whoever was using it, it is no surprise it was allegedly utilized by questionable netizens, hence its seizure by the Feds.
According to testimony [PDF] from IRS special agent Justin Allen, Bitcoin wallet addresses controlled by Cryptonator have been used to send and receive $71 million to and from entities sanctioned by US authorities. Another $54 million passing through the service involved "hacked or stolen funds," $25 million was transacted with dark-web marketplaces or fraud outfits, and over $8 million linked to ransomware campaigns.
The court documents state that the exchange took a 0.9 percent cut of merchant transactions.
"The operation of Cryptonator involved an international money laundering scheme that, by virtue of its business model, catered to criminals," states a criminal indictment [PDF] filed by the Feds a Tampa, Florida court.
"Cryptonator facilitated crimes, including but not limited to, computer hacking, ransomware, fraud, and identity theft. Since its founding Cryptonator received criminal proceeds of, among other crimes, numerous computer intrusions and hacking incidents, ransomware scams, various fraud markets, and identity theft schemes," prosecutors allege.
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The accused CEO of the site, Roman Boss – who also uses the surname Pikulev – is a Russian national living in Germany. He is said to have set up the exchange in December 2013, using the email address trucksale@gmail.com.
When presented with a warrant to access the account, Google found it had a message in it from the address contact@cryptonator.com to a financial institution with the note: "I'm Roman, CEO of Cryptonator."
'I'm Roman, CEO of Cryptonator' ... Source: DoJ – Click to enlarge
In a sting operation in July, 2021, a FBI operative in Florida registered an account with Cryptonator. The agent spent around $4,195 in digicash at a known dark web site that, it's claimed, trades in stolen identification records. Court documents allege that Boss facilitated that purchase via Cryptonator, telling the agent all transactions were anonymous and currency would be "mixed" at his end to disguise its source.
In September another FBI agent, who had been operating undercover as an affiliate of a known ransomware group, is said to have used a Cryptonator account to offer the criminals fictitious stolen data in exchange for a cut of the proceeds. That agent received Bitcoin worth $14,500 in two transactions through Cryptonator, it's said.
Boss is charged with two offenses: Operating an unlicensed money transmitting business and conspiracy to commit money laundering. The DoJ and IRS are seeking his arrest and the forfeiture of all illegal funds. Neither agency has responded to The Register's request for comment at the time of writing. ®