- Bitzlato owner Anatoly Legkodymov was detained in Miami on accusations of money laundering.
- The exchange was used to launder money from darknet transactions and ransomware operations.
- US officials have lauded the action as a global “blow to the cryptocrime ecosystem.”
Bitzlato Ltd, a cryptocurrency exchange located in China, was named a “money laundering concern” by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) on Wednesday in connection with illicit financing coming from Russia. The authorities have detained the exchange’s proprietor on money laundering charges, which they call a “blow to the cryptocrime ecosystem.”
At a press conference, the Department of Justice announced the arrest of 40-year-old Russian national Anatoly Legkodymov in Miami. Legkodymov had been residing in Shenzhen, China. The arrest was executed with the help of an overseas investigation team and local resources in the United States.
The U.S. Justice Department alleges that Bitzlato, a Hong Kong-based firm with a global reach, traded over $700 million in cryptocurrency with Hydra Market, the largest darknet marketplace in the world, until its closure in April 2022. In addition, the Justice Department added that Bitzlato received upwards of $15 million in ransomware proceeds.
Prosecutors claimed that since May 3, 2018, the exchange has processed $4.58 billion in cryptocurrency transactions, a large amount of which constituted “the proceeds of crime.”
Furthermore, Bitzlato performed extensive business with U.S.-based clients while claiming not to accept users from the United States because it lacked appropriate know-your-customer processes to check users’ identities as required by U.S. anti-money-laundering regulations.
“Today’s actions send a clear message: 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,” Deputy Attorney General Lisa Monaco stated in a comment, referring to Sam Bankman-Fried, the former CEO of failed cryptocurrency firm FTX, who was arrested last month in the Bahamas.
FinCEN has also restricted certain transmittals of assets involving Bitzlato by any covered financial institution. Authorities in France have followed suit with the United States, shut down Bitzlato’s digital infrastructure, and seized its cryptocurrency holdings simultaneously.