© Reuters
U.S. Attorney for the Eastern District of New York Breon Peace and Kenneth Pollitt, Assistant Attorney General of the Department of Justice’s Criminal Division announced details of the arrest of the majority shareholder and co-founder of Hong Kong-listed virtual currency exchange Bitzlato Ltd for allegedly handling hundreds of millions of dollars in illegal means
US authorities said on Wednesday they had arrested the majority shareholder and co-founder of Hong Kong-listed virtual currency exchange Bitzlato Ltd for allegedly exchanging $700 million in illicit funds.
Anatoly Legkodimov, a Russian living in China, was arrested in Miami on Tuesday on charges that he operated the exchange as an unlicensed money-exchange business that “in his own words catered to ‘known crooks,'” a senior Justice Department official said , quoted by Reuters.
Authorities believe that Legkodimov “engaged in the transfer of money obtained through criminal means” and that he made money transfers that “did not meet US standards, including anti-money laundering requirements.”
According to prosecutors, Bitzlato exchanged more than $700 million in cryptocurrency with the Hydra Market, which they describe as an illegal online marketplace for drugs, stolen financial information, fake IDs and money laundering services that US and German law enforcement agencies shut down in April 2022. Mr.
“Whether you’re breaking our laws from China or Europe or abusing our financial system from a tropical island — you can expect to answer for your crimes in a United States courtroom,” said Deputy Attorney General Lisa Monaco.
Bitzlato has also received over $15 million in revenue from ransoms taken in ransomware cyber attacks.
Authorities described Legkodimov as a co-founder of the cryptocurrency exchange, saying the 40-year-old Russian citizen helped run the company from the Chinese city of Shenzhen, not far from Hong Kong.
Since May 2018, Bitzlato has processed $4.58 billion worth of cryptocurrency transactions, a significant portion of which, according to prosecutors, are “proceeds of crime.”
The accusations
The company violated rules requiring due diligence on customers and failed to comply with requirements aimed at preventing money laundering, authorities said. Archived versions of Bitzlato’s website show that customers of the site can register using “only your email”.
Deputy Finance Minister Wally Adeyemo said Bitzlato had repeatedly facilitated transactions for Russian-linked ransomware groups, including the gang behind Conti, which he said had ties to the Russian government and Russia-linked dark markets.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) said it has barred certain transfers of funds involving Bitzlato from any financial institution, designating Bitzlato Ltd as a “money laundering concern” linked to with Russian illicit finance.
By midday Wednesday, Bitzlato’s website had been replaced by a notice saying the service had been seized by French authorities “as part of a coordinated international law enforcement operation.”
Last week, the Bulgarian prosecutor’s office, acting on behalf of foreign countries, raided the offices in Sofia of another international company dealing with cryptocurrencies – Nexo. It was reported that four people have been charged with participating in an organized crime group for the purpose of money laundering, tax fraud, computer crimes and unlicensed banking.
