Crypto Exchange Bitzlato Founder Collared, Charged With $700 Million Financial Fraud

Federal officials announced on Wednesday that a Russian national who operated a crypto exchange that became a harbor for the proceeds of illegal activities has been arrested.

U.S. authorities have collared 40-year-old China-resident Anatoly Legkodymov on claims that his Hong Kong-registered crypto trading platform, Bitzlato, processed a whole lot of tens of millions of dollars in dirty money.

Tuesday night, agents of the Federal Bureau of Investigation apprehended Legkodymov in Miami.

The DOJ said on Wednesday that Bitzlato has been taken offline as a part of an “international cryptocurrency enforcement operation.”

Lisa Monaco, the deputy attorney general, described the arrest as a “major blow to the crypto criminal ecosystem.”

Dirty Money Flowing From Crypto Exchange Bitzlato

The DOJ alleged that Bitzlato, either directly or through third-party conduits, exchanged greater than $700 million in cryptocurrencies with users of Hydra Market, a darknet marketplace for drugs, fraudulent IDs, and other illegal goods.

The DOJ and German law enforcement took motion against Hydra Market, leading to its closure in April of last 12 months.

Image: The Moscow Times

In accordance with U.S. Attorney Breon Peace:

“Institutions that trade in cryptocurrency should not above the law and their owners should not beyond our reach.” 

The personalities involved within the operation, in accordance with Monaco, engaged in a “coordinated campaign of disruption” that included law enforcement activities in quite a few European nations and the confiscation of Bitzlato’s computer networks.

The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department issued an order naming Bitzlato as a “major money laundering concern” in relation to Russian illegal funding.

Bitzlato And Its U.S. Customers

Legkodymov can also be accused of executing Bitzlato transactions from Miami between 2022 and this 12 months, in addition to receiving reports of “significant traffic” to its website from IP addresses situated in america. In accordance with the DOJ, this includes greater than 250 million visitors in July 2022.

Reuters reported that Bitzlato’s website was replaced on Wednesday with a notification stating that the service had been deactivated by French authorities.

Bitzlato was a little-known crypto company prior to Wednesday’s motion and has processed roughly $4.5 billion in bitcoin transactions since 2018, in accordance with regulators.

Within the meantime, the proprietors of Bitzlato revealed via Telegram that the exchange had been compromised.

They informed customers that withdrawals were suspended indefinitely and requested that they desist from sending coins to the positioning until the difficulty was rectified.

Crypto total market cap at $924 million on the day by day chart | Chart: TradingView.com

On Wednesday, Legkodymov was in detention, and it was unknown whether he had an attorney who could speak on his behalf.

In accordance with the DOJ, if convicted of operating an illegal money transmission business, he faces a maximum of 5 years in jail.

Chainalysis, a blockchain analytics startup, revealed last week that illicit crypto transfers reached an all-time high of $20 billion in 2022, primarily because of this of the surge in sanctioned crypto addresses.

Featured image by Ronstik/Alamy

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