Anatoly Legkodymov, founder of Hong Kong-registered cryptocurrency exchange Bitzlato, was arrested in Miami on Wednesday for running an unregistered money transfer business that flouted anti-money laundering laws and facilitated illegal fund transfers. The U.S. Department of Justice said he was indicted on suspicion of announced January 18th.
Russian citizen Reg Kodimov was a majority shareholder in Biturat and controlled the exchange.
Additionally, French authorities working with Europol, as well as authorities in Spain, Portugal, and Cyprus, dismantled Bitzlato’s digital infrastructure. French authorities and the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) are simultaneously cracking down on exchanges.
If convicted, Legkodimov could face up to five years in prison. He is due to be arraigned in the United States District Court for the Southern District of Florida on January 18.
The case is being jointly prosecuted by the National Security and Cybercrime Section of the U.S. Attorney’s Office for the Eastern District of New York and the National Cryptocurrency Enforcement Team (NCET).
The Deputy Attorney General of Monaco said at a press conference:
“Today’s actions send a clear message: Whether you’re breaking the law from China or Europe or abusing the financial system from a tropical island, you can expect your crimes to be answered within US courts. “
Collapse of Hydra’s second largest counterparty
Hydra served as a leading illegal darknet marketplace facilitating drug sales, stolen financial information, and other crimes, until it was seized and shut down in April 2022. – Largest destination for crypto transactions for Hydra users.
According to the complaint, by April 2022, Hydra Market users had exchanged over $700 million in cryptocurrency on Bitzlato, either directly or through intermediaries.
The complaint further alleges that Bitzlato has lax or non-existent Know Your Customer (KYC) requirements, allowing it to emerge as a safe haven for criminals such as drug traffickers and ransomware attackers. According to an on-chain analysis by the Federal Bureau of Investigation (FBI), the exchange said he received ransomware attack proceeds worth $15 million.
Bitzlato’s lax KYC rules allowed the use of a “strowman” or fake ID when registering with the exchange. The complaint further alleges that Bitzlato executives were aware of the proliferation of “dirty money” within the exchange — an internal spreadsheet summarizing the exchange’s own views contained a negative “dirty money” statement. It was stated that there was
The complaint cites several conversations in which Bitzlato executives helped Hydra users transfer money to and from illegal marketplaces. Additionally, Bitzlato executives assisted users with apparently fake identities.
In a conversation cited in the complaint, Legkodimov said Bitzrath’s customers were “known to be fraudsters.” An investigation uncovered conversations that Regkodimov had been advised by senior Bitzrat executives to fight drug traffickers only “nominal” so as not to harm the company’s business.
Additionally, although Bitzlato claimed not to accept US-based users, the exchange received significant traffic from the US, and Bitzlato customer service executives told users they could transfer funds from US institutions. advised, the complaint alleges. His Legkodymov, who has been running Bitzlato since last year in Miami, said he received reports containing reports that Bitzlato received 250 million visits from his US-based IP addresses. points out.