Bitzlato Founder to Be Released After Time Served

On July 18th, the U.S. District Court in Brooklyn, New York, sentenced Anatoly Legkodymov, founder of the cryptocurrency exchange platform Bitzlato, to 18 months in prison, crediting him for the equivalent time already spent in detention. This was reported by Bloomberg. 

Legkodymov was accused of running an unlicensed money transfer business that processed over $700 million from illegal gambling and drug trafficking. 

Since his arrest in Miami in January 2023, the entrepreneur has been under federal detention. He later pleaded guilty to transferring and laundering illicit funds. 

Additionally, Legkodymov agreed to shut down the platform and relinquish claims to approximately $23 million related to the exchange’s seized assets. As part of a plea deal, he filed a motion for release from custody.

Prosecutors had sought a minimum four-year prison term, arguing that Bitzlato continued operations despite repeated warnings that it had become a “haven for criminals” on the darknet.

The judge, however, described the Metropolitan Detention Center, where Legkodymov was held, as a “terrible place,” influencing the decision against extending the prison term. 

With time already served, the Bitzlato founder could be released soon. 

“I was confident that the court would side with my friend and former colleague Anatoly. The company did significant work to refute all accusations. This experience serves as a reminder of the need to use DeFi services now to avoid future pressures,” ForkLog was told by Anton Shkurenko, technical consultant for SmartSwap and former co-founder of Bitzlato.

Lawyers for the crypto exchange, without specifying names, informed our editorial team that some arrested team members were released on bail during the investigation.

Earlier, the French prosecutor’s office initiated an investigation into the company in January. According to Europol, Bitzlato converted criminally linked assets totaling approximately €1 billion ($1.08 billion). This includes $700 million for the darknet marketplace Hydra and $15 million for ransomware operators.

Authorities “seized” the platform’s hot wallet, which held “about 35% of user funds in all cryptocurrencies at the time of the operation.” 

Bitzlato suspended operations on January 18, 2023, the day after Legkodymov’s arrest.

From March 20th of that year, users of Bitzlato’s web version and app gained access to partial bitcoin withdrawals. However, in December, the platform halted operations in preparation for court hearings regarding the seized assets in France.