FBI Arrests Founder of Ransomware Negotiation Firm

Agents with the Federal Bureau of Investigation (FBI) on Thursday arrested the co-founder of a Canadian cybersecurity firm in connection with an investigation into the ShinyHunters hacking group that recently relieved the FBI of sensitive data on thousands of agents, multiple sources tell KrebsOnSecurity.

The New York Times reported today that the FBI has arrested a Canadian man in Pennsylvania on suspicion of assisting ShinyHunters. The Times story did not identify the man, nor did a statement on Twitter/X about the arrest from FBI Director Kash Patel.

One source close to the investigation told KrebsOnSecurity the Canadian person arrested this week was visiting Pennsylvania for a cyber insurance conference, and that the suspect’s company specialized in handling ransomware negotiations with cybercrime groups. Another shared that control over the ShinyHunters investigation has been centralized at an FBI field office in Texas.

An online search reveals the Cyber Risk Summit was held at the Loews Philadelphia Hotel between Oct. 5 and Oct. 7. The conference had several sponsors, but according to the summit’s website its biggest sponsor was a Canadian security company called Cypfer.

According to LinkedIn, Cypher was co-founded by a Canadian man named Edward Dubrovsky, who is now associated with another Canadian security firm called CyberSteward. In a post to LinkedIn approximately one month ago, Dubrovsky said he had plans to attend the Cyber Risk Summit with the rest of the CyberSteward team.

“Looking forward to continuing conversations around strategy & compliant driven coercive (ransomware, extortion) advisory, negotiations and settlement services that are global and truly agnostic,” Dubrovsky wrote.

Federal court records show that on October 8, an Edward Dobrovsky (note the slight misspelling of the last name) was arrested in Pennsylvania on cyber extortion and conspiracy charges. Several of those documents — including the core complaint — are now sealed. But a handful of them were indexed at Courtlistener.com, including a summary of the complaint, which charges the defendant with “conspiracy to threaten to impair the confidentiality of information with the intent to extort money,” and “interference with commerce by threats.”

The inmate locator at the U.S. Bureau of Prisons website reports that a 54-year-old Edward Dubrovsky is currently being held at a federal facility in Philadelphia. But the court records indexed by CourtListener include a notice filed on October 9 that moved the case to the Eastern District of Texas, which sources say is now the epicenter of the FBI’s ShinyHunters investigation. The FBI declined to comment for this story.

Dubrovsky’s LinkedIn profile states he is the author of Cyber Extortion Strategic Response, a 252-page book that promises to “take readers beyond the ransom note and into the decisions that determine how an organization responds, recovers, and protects what matters.”

“At the heart of the book is a critical distinction: communicating with a criminal is not the same as negotiating a payment, and negotiating is not a commitment to pay,” reads an excerpt from the book’s listing on Amazon. “Engagement can serve other objectives, including testing claims, gathering information, creating time, and preserving options while the organization evaluates its next move.”

Mr. Dubrovsky could not be immediately reached for comment. KrebsOnSecurity also sought comment from the other co-founder of CyberSteward, and will update this post in the event they respond. The available court records in Dubrovsky’s case show that he does not currently have an attorney and has yet to be appointed a public defender by the courts.

ShinyHunters typically uses phishing and stolen credentials to siphon data from software-as-a-service companies, and then threatens to publish the stolen data online unless a ransom demand is paid. According to the FBI, the group has extorted more than $70 million from victims so far this year.

Sources tell KrebsOnSecurity the FBI has been poring over devices that were seized last month when the Dutch police arrested the convicted cybercriminal Pepijn van der Stap in connection with the ShinyHunters investigation, and that charges against principals at other companies that specialize in ransomware negotiation may be forthcoming.

Immediately after Van der Stap’s arrest, another member of ShinyHunters named “Rey” assumed control over the group and began taunting the FBI over data the group stole from the agency’s online recruitment portal, which included each’s person’s unit and specialization, as well as medical and psychiatric records.

Last week, Reuters reported that Rey — identified as a teenager named Saif Al-din Khader — had been detained and was cooperating with FBI investigators. On October 7, we detailed how Rey allegedly sought to extort a navigation and digital aviation unit recently spun off from Boeing just prior to his detention by Jordanian authorities.

This is likely to be a fast-moving story. Updates will be noted along with timestamps.