January 19, 2023—The U.S. Justice Department arrested and charged the operator of Bitzlato, a Hong Kong-registered cryptocurrency exchange that conducted a substantial amount of business with U.S.-based customers.
Anatoly Legkodymov is a Russian national and senior executive of the exchange. On Wednesday, law enforcement officials in Miami, Florida arrested him and scheduled his arraignment for that afternoon in the U.S. District Court for the Southern District of Florida.
The crackdown is a sign that federal investigators have stronger tools at their disposal in targeting money laundering and illicit crypto networks.
A Crypto Exchange For Crooks, Traffickers, And Addicts
The arrest warrant and complaint said Bitzlato failed to establish an effective anti-money laundering program and facilitated large transfers of funds from criminals through blockchain analysis. Furthermore, it says Bitzlato’s senior managers, including Legkodymov, knew the service they provided served criminals, drug traffickers and addicts, and ransomware actors.
Also, according to federal records, the exchange is “a financial institution of primary money laundering concern in connection with Russian illicit finance,” including those involved with ransomware and Russian darknet markets.
Federal investigators tracked say the exchange processed more than $700 million in illicit funds through an online marketplace called Hydra Market.
“Today, the Department of Justice dealt a significant blow to the cryptocrime ecosystem,” said Deputy Attorney General Monaco, according to a DOJ release.
Additional Investigations And Arrests Possible
The federal agencies are working with French authorities and the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) on taking additional enforcement actions.
“We, along with our federal and international partners, will work relentlessly to disrupt and dismantle these types of criminal enterprises,” said Brian Turner, associate deputy director of the FBI. “Today’s arrest should serve as a reminder the FBI will impose risk and consequences upon those who engage in these activities.”
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