Anatoly Legkodymov, founder of the crypto exchange Bitzlato, which had operations in Kenya, was arrested last week in Miami, Florida, in connection with a vast money laundering operation, accused of laundering more than $700 million in illicit funds in the past four years, according to the US Justice Department.
Legkodymov and his executive team members allegedly run a high-tech network for known crooks,” including cybercriminals and drug dealers seeking to process dirty money between Bitzlato and Hydra, a popular darknet marketplace which was shuttered by U.S. and German authorities last year.
The arrests were made in Cyprus and Spain and another questioned in Portugal. The founder was arrested in the US while the CEO, Financial director and Marketing director were arrested in Spain. There have been 8 house searches so far, 4 in Spain, 1 in Cyprus, 2 in Portugal, 1 in US and the authorities are taking down the digital infrastructure for further analysis and investigation. At the moment, seizures include crypto wallets worth about EUR 18 million in cryptocurrency, vehicles and electronic equipment.
Also over 100 accounts at other crypto exchange frozen, involving a total of EUR 50 million of the Hong Kong-registered Bitzlato which was allegedly used a “critical financial resource” for the Hydra dark web market, the world’s largest criminal dark web marketplace.
Legkodymov and the team might face more than five years in prison for their unlicensed money transmitting business if found quilty. Bitzlato allegedly processed illegal funds including millions of dollars in ransomware gains, according to a Justice Department statement. Legkodymov, 40, who lives in Shenzhen, China, and in Russia opened the platform to crooks knowingly and the Justice Department wants him to be responsible of the criminal-networked he created and operated.
According to Deputy Attorney General Lisa Monaco, “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.” This comes at a time when FTX co-founder Sam Bankman-Fried is under fire for fraud charges using his crypto network.
Legkodymov and his executive team are accused of providing a safe haven for criminals who using their crypto accounts to purchase illegal drugs, stolen financial information, and hacking services. Bitzlato was also accused of letting users open accounts on the exchange without a passport or a photo, using only an email address. Users could also buy crypto with cash and conversion into Russian roubles without a trace. Bitzlato has allegedly facilitated about $1 billion in crypto money laundering since 2019 in the case registered as U.S. v. Anatoly Legkodymov, 23-m-17, U.S. District Court, Eastern District of New York (Brooklyn).
The Bizlato operation is being led by French and US authorities, the Europol and law enforcement and judicial authorities from Belgium, Cyprus, Portugal, Spain and the Netherlands. According to the authorities, almost half of all Bitzlato transactions linked to criminal activities. The authorities claim Bitzlato allowed the rapid conversion of bitcoin, ethereum, litecoin, bitcoin cash, dash, dogecoin and USDT into Russian roubles. It is estimated that half of the transactions on the crypto exchange platform were linked to suspicious criminal activties. The platform allegedly received a total of assets worth EUR 2.1 billion (BTC 119 000). The investigations showed that 1.5 million BTC transactions were made directly between Bitzlato users and the Hydramarket.
It has also been reported that crypto exchange Binance processed almost $346 million in bitcoin for Bitzlato before its seizure by authorities and Binance is working with international law enforcement to support their investigation of Bitzlato.