Bitzlato Co-Founder Pleads Guilty, Agrees to Dissolve the Crypto Exchange
On Wednesday, December 6, the co-founder of the Hong Kong-based crypto exchange Bitzlato Anatoly Legkodymov pleaded guilty of running an unlicensed money transmitter that supported several financial crimes. In January, the Russian crypto mogul was arrested by the US regulators for operating a money laundering haven.
During his arrest, Mr Legkodymov was accused of facilitating the transfer of $700 million to illicit schemes. The regulators noted that the Legkodymov-led exchange supported the transfer of funds obtained from ransomware attacks, drug dealers and other financial crimes.
Anatoly Legkodymov Pleads Guilty
The US Department of the Treasury organized the arrest of Legkodymov in collaboration with the Financial Crimes Enforcement Network (FCEN) and other foreign law enforcement units. The regulators noted that criminals use Bitzlato to conceal the transfer of measurable funds since the disgraced crypto exchange had fewer requirements than other platforms.
The arrest of the Russian crypto investor was described as a knockdown to the crypto crime ecosystem. In his arraignment at the New York Eastern District Court in Brooklyn, Legkodymov agreed with Judge Eric Vitaliano, who ordered the dissolution of Bitzlato.
Judge Vitaliano instructed the 40-year-old crypto investor to settle a court fine of $23 million in crypto assets. The court report demonstrated that Legkodymov had submitted a criminal case for pleading.
A review of Legkodymov’s submission demonstrated that the disgraced crypto investor was pleading guilty. A statement from the United States Attorney for the Eastern District of New York, Breon Peace, demonstrated that the suspect knew Bitzlato operations violated the law.
Bitzlato Ex-CEO Faces Charges
He argued that Legkodymov knew that Bitzlato was used as an engine for money laundering by criminals seeking to bypass the existing regulations. A review of Biztlato’s past operation demonstrated that the crypto exchange lacked sufficient know-your-customers (KYC) and anti-money laundering (AML) measures.
The report illustrated that the deficiencies in Biztlato compliance controls encourage criminals, including the notorious Hydra darknet marketplace, to take advantage of the law.
In an earlier report, the European Union police (Europol) accused Bitzlato of supporting the transfer of illicit funds worth $1 billion. Following the discovery of Bitzlato’s unlawful activities, Europol took potential action against the crypto exchange and suspended digital wallets with assets worth 18 million euros.
Additionally, the Europol noted that approximately 46% of assets transferred by Bitzlato were tied to criminal activities. The Europol report supported the Department of Justice’s finding that Biztlato’s main client was the Russian darknet marketplace Hydra.
US Regulators Vows to Convict Criminals in Crypto Industry
The two regulatory agencies observed that the Hydra group used the embattled crypto exchange to transfer a measurable amount of funds using falsified documents, including the ID. The DOJ and Europol noted that Binance was an active counterparty receiving a measurable amount of Bitcoin from Bitzlato.
The regulators observed that between 2019 and 2021, the Bitzlato supported the transfer of $206 million from darknet markets, $224 million from scams and $9 million from ransomware attacks.
A report from Deputy Attorney General Lisa Monaco revealed that Bitzlato’s non-compliance has become a hiding place for criminals. The attorney vowed that the US law enforcers seek to disrupt the activities of the crypto crime ecosystem using advanced intelligence tools.
Monaco was pleased to state that the court ruling on the Bitzlato case demonstrated that regulators are committed to bringing down criminals in the crypto industry.
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