According to the DoJ, Bitzlato failed to meet U.S. regulatory safeguards, including anti-money laundering requirements, and enabled criminals to profit from their wrongdoing, including ransomware and drug trafficking.
Anatoly Legkodymov, the owner of Bitzlato Ltd., was arrested in Miami on Tuesday night for his alleged operation of helping to process over $700 million in illicit funds, according to the indictment unsealed on Wednesday.
The Department of Justice stated that Bitzlato failed to meet U.S. regulatory safeguards, including anti-money laundering requirements, and enabled criminals to profit from their wrongdoing, including ransomware and drug trafficking,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division.
The 40-years-old Russian National, a resident of Shenzhen, People’s Republic of China, oversaw the exchange in Hong Kong, Bitzlato. He was expected to be arraigned Wednesday afternoon in the U.S. District Court for the Southern District of Florida.
Bitzlato’s business flourished in its absence of required identification from users. Customers did not have to submit any proof of identity such as selfies or passports and in the few cases where it did direct users to submit identifying information, they were able to get away by providing information belonging to “straw man” registrants.
The company often conducted business with its counterpart, the $5.2 billion Hydra Market, world’s largest and longest running dark web marketplace. Hydra was seized and shut down in April 2022 for sale of drugs, stolen financial information, fraudulent identification documents, and money laundering services.
“Today’s actions send the 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 said in a press release.
The arrest was a result of a joint effort by the federal law enforcement agencies and European partners to push back against international cryptocurrency schemes and illegal transactions. They are determined to crack down specifically on the activities of Chinese- and Russian-based companies and people operating in the unregulated corners of cyberspace.
Legkodymov could face charges of up to five years in prison if convicted; however, it is not yet known whether he has retained a lawyer.
Five other Russian and Ukrainian nationals were also arrested in Spain, Portugal and Cyprus in connection with the investigation which revealed that in the encrypted internal company communications, Legkodymov and other executives were aware the exchange was trafficking in “dirty money,” including deposits made by drug dealers.
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