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The DOJ has ordered the arrest of Bitzlato founder Anatoly Legkodymov for allegedly aiding and abetting financial impropriety.
According to reports, the FBI recently arrested Bitzlato founder Anatoly Legkodymov late Tuesday in Miami for allegedly laundering $700 million. Legkodymov’s apprehension comes as part of broader plans by the US Department of Justice to topple a money laundering syndicate it believes “fueled a high-tech axis of crypto crime.” The Bitzlato founder’s arrest also follows an enforcement action brought by the Justice Department.
DOJ Allegations Following Bitzlato Founder Arrest
The DOJ alleges that Legkodymov operated a money-transmitting business that fell short of anti-money laundering requirements. In addition, the federal law enforcement department believes that the Bitzlato founder moved illicit funds tied to illegal Russian finance. Legkodymov is a Russian citizen who lived in China.
Commenting on the Bitzlato founder and majority shareholder’s arrest in Miami, Deputy Attorney General Lisa Monaco explained at a press conference:
“Overnight, the department worked with key partners here and abroad to disrupt Bitzlato, the China-based money laundering engine that fueled a high-tech axis of cryptocrime. Whether you break our laws from China or Europe – or abuse our financial system from a tropical island – you can expect to answer for your crimes inside a United States courtroom.”
Monaco also said that capturing Legkodymov would stop Bitzlato from catering to criminals linked to Russia. The Hong Kong-based platform was effectively shut down following Legkodymov’s arrest. Weighing in on this development at the news conference, Deputy Treasury Secretary Wally Adeyemo explained that “identifying Bitzlato as a primary money laundering concern effectively renders the exchange an international pariah.”
Illicit Services Rendered
According to the DOJ, the little-known Bitzlato offered peer-to-peer services and hosted wallets of criminals transacting illegal goods. This questionable operation involved $700 million worth of direct and indirect transfers in the last several years.
Prosecutors also allege that “despite it being a small name,” Bitzlato received more than $15 million in ransomware proceeds. Furthermore, Solidus Labs chief operating officer Chen Arad also moved to demystify any notion that ‘small players’ are not as significant a security threat. He said:
“Small actors are not safe, and they carry just as much risk as any big-name exchange (or) platform.”
Bitzlato has reportedly processed $4.58 billion in crypto transactions since May 3rd, 2018, and flouted rules requiring substantial customer vetting. Prosecutors believe that the crypto exchange knowingly serviced US customers and US-based exchanges with US online infrastructure.
Furthermore, officials allege that Bitzlato collaborated closely with the Hydra Market, a faceless online marketplace facilitating narcotics, stolen financial information, money laundering services, and fraudulent identification documents. US and German law enforcement shut down Hydra Market back in April 2022.
Following his arrest, Legkodymov was scheduled for a Wednesday arraignment in a Florida Southern District court.
The Department of the Treasury’s Financial Crimes Enforcement Network is also working closely with French authorities to take concurrent enforcement actions regarding Bitzlato.
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