The principal shareholder and co-founder of the Hong Kong-registered virtual currency exchange Bitzlato Ltd. was detained, according to US officials, on Wednesday for allegedly handling $700 million in illegal money. Russian native Anatoly Legkodymov, who resides in China, was detained on Tuesday in Miami on suspicion of running an unregistered money exchange company that “in his own words, catered to known thieves,” according to a senior Justice Department official.
According to the prosecution, Bitzlato traded more than $700 million in cryptocurrencies with Hydra Market, which they described as an illegal online market for drugs, stolen financial information, forged identification documents, and money-laundering services that was shut down by US and German law enforcement in April 2022. At a news conference at the Justice Department, Deputy Attorney General Lisa Monaco told reporters that “you can expect to answer for your crimes inside a United States courtroom, whether you break our laws from China or Europe or abuse our financial system from a tropical island.”
According to the prosecution, Bitzlato also got more than $15 million via ransomware. It was not feasible to get in touch with Hydra Market for feedback right away. According to Chen Arad, the chief operating officer of Solidus Labs, a crypto market monitoring firm, “Despite having a minor brand, it carries a lot of weight.”
Small actors don’t bear any less danger than any well-known exchange or platform, he said.
The 40-year-old Russian helped administer the business from the Chinese city of Shenzhen, according to the authorities, who identified Legkodymov as a co founder of the bitcoin exchange. Questions sent to Legkodymov through email did not get a prompt response, while messages left on Bitzlato’s automated Telegram support chat service were met with the response “Oops, sorry.” According to authorities, Bitzlato has handled bitcoin transactions totaling $4.58 billion since May 3, 2018, with a significant amount being “the profits of crime.”
Authorities said that it also failed to comply with standards meant to prevent money laundering and violated regulations mandating extensive client verification. Clients of Bitzlato may register using “just your email,” according to archived versions of the website. According to the prosecution, Bitzlato knowingly provided services to US clients and engaged in business with US-based exchanges using US online infrastructure. It was run by the defendant while he was in the United States for at least a short while, they claimed.
The charges were brought by the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department, which claimed to have banned certain fund transfers involving Bitzlato by all covered financial institutions after designating Bitzlato Ltd as a “primary money laundering concern” associated with Russian illicit finance.