US authorities arrest founder of Bitzlato crypto platform
The United States Department of Justice has announced the arrest of the founder of the cryptocurrency exchange Bitzlato, Anatoly Legkodymov, on charges of laundering $700 million tied to the Hydra darknet marketplace.
Founder and Majority Owner of Bitzlato, a Cryptocurrency Exchange, Charged with Unlicensed Money Transmitting https://t.co/ojZq9TRF5M (Announced with @TheJusticeDept and @NewYorkFBI)
— US Attorney EDNY (@EDNYnews) January 18, 2023
As part of the case on January 17, the FBI detained in Miami (Florida) a Russian citizen residing in China.
The Department of Justice conducted the case in cooperation with French law enforcement. Belgian and Dutch colleagues, along with Interpol, assisted.
According to the statement, the 40-year-old Legkodymov, nicknamed “Gandalf,” ran a money-transfer business that “transferred illicit funds and violated American regulatory requirements, including anti-money-laundering rules.”
«Hydra Market users exchanged more than $700 million in cryptocurrency with Bitzlato directly or through intermediaries, until the marketplace was closed by law enforcement in the United States and Germany in April 2022. Bitzlato also received more than $15 million in ransomware proceeds», — according to the statement.
According to U.S. law enforcement, Legkodymov deliberately built the operation of a Hong Kong-registered platform with a policy of “no selfie, no passport.”
Prosecutors found in correspondence confirmations that the Bitzlato founder and other managers understood that the absence of KYC would mean a flow of “dirty money” through the platform. One colleague warned Legkodymov that “the client base consists of drug addicts buying substances on Hydra” and drug traffickers.
As part of the case, French authorities together with partners from Spain, Portugal and Cyprus arrested the exchange’s infrastructure. The site shows a “stub” informing of enforcement actions against Bitzlato.
On January 18, the Bitzlato team reported a hack and withdrawal of part of the funds. A few hours later, the platform announced that the service had suspended operations.
Deputy Attorney General Lisa Monaco called the operation against Bitzlato “a significant blow to the crypto-criminal ecosystem.”
«Today’s actions send a plain message: whether you violate our laws from China, Europe or abuse our financial system from a tropical island — you can expect to answer for your crimes in a United States courtroom», she said.
According to the charges, he faces up to five years in prison.
According to FinCEN, among Bitzlato’s major counterparties, besides Hydra, are the crypto pyramid “Finiko,” the P2P platform Local Bitcoins and the Binance exchange. A Binance spokesperson told Bloomberg that the company “provided substantial assistance to international law enforcement in support of this investigation.”
Earlier, in August 2022, French authorities extradited to the United States Russian Alexander Vinnik. He is suspected of laundering $4 billion through the cryptocurrency exchange BTC-e.
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