The US Department of Justice announced the arrest of Anatoly Legkodymov, the founder of the Bitzlato crypto exchange platform, on charges of laundering $700 million related to the closed Hydra darknet marketplace.
Founder and Majority Owner of Bitzlato, a Cryptocurrency Exchange, Charged with Unlicensed Money Transmitting https://t.co/ojZq9TRF5M (announced with @TheJusticeDept and @NewYorkFBI)
— US Attorney EDNY (@EDNYnews) January 18, 2023
As part of the case January 17 FBI detained a Russian citizen living in China in Miami (Florida).
The Ministry of Justice investigated the case jointly with law enforcement officers of France. Assistance was provided by Belgian and Dutch colleagues, as well as Interpol.
According to the statement, 40-year-old Legkodymov, nicknamed “Gandalf”, ran a money transfer business that “transferred illegal funds and violated U.S. regulatory requirements, including anti-money laundering regulations.”
“Hydra Market users exchanged more than $700 million in cryptocurrency with Bitzlato directly or through intermediaries until the marketplace was closed by US and German law enforcement in April 2022. Bitzlato also received over $15 million in ransomware revenue,” the statement said.
According to US law enforcement officials, Lekgodymov deliberately built the work of the platform registered in Hong Kong, ignoring the rules for identifying users on the principle of “neither selfies nor passports are required.”
Prosecutors found confirmation in the correspondence that the founder of Bitzlato and other managers understood: the lack of KYC means the flow of “dirty money” through the platform. One of Legkodymov’s colleagues warned that “the client base consists of drug addicts buying substances on Hydra” and drug dealers.
As part of the case, the French authorities, together with partners from Spain, Portugal and Cyprus, arrested the infrastructure of the crypto exchange. The site displays a “stub” that informs about enforcement actions against Bitzlato.
On January 18, the Bitzlato team announced a hack and the withdrawal of part of the funds. A few hours later, the platform announced the suspension of the service.
US Deputy Attorney General Lisa Monaco called the operation against Bitzlato “a significant blow to the crypto-criminal ecosystem.”
“Today’s actions send a clear message: Whether you are violating our laws from China, Europe, or abusing our financial system from a tropical island, you can expect to be held accountable for your crimes in the courtroom of the United States,” she said.
According to the charges against Legkodymov, he could face up to five years in prison.
According to the involved FinCEN, among the main counterparties of Bitzlato, in addition to Hydra, are the Finiko crypto pyramid, the Local Bitcoins P2P platform and the Binance exchange. The representative of the latter stated Bloombergthat the company “provided substantial assistance to international law enforcement in support of this investigation.”
Recall that in August 2022, the French authorities extradited Russian Alexander Vinnik to the United States. He is suspected of laundering $4 billion through the BTC-e cryptocurrency exchange.
Read CryptoNewsHerald bitcoin news in our Telegram – Cryptocurrency news, courses and analytics.
Found a mistake in the text? Select it and press CTRL+ENTER
Comments (No)