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Anatoly Legkodymov, the founder of Hong Kong-registered cryptocurrency exchange Bitzlato, has been charged by the U.S. Department of Justice with helping cybercriminals launder illegal funds.
Legkodymov was arrested in Miami on Tuesday night and will be arraigned in U.S. District Court today.
The French authorities also dismantled Bitzlato’s digital infrastructure as part of an operation with Europol and partners in Spain, Portugal, and Cyprus.
Bitzlato received over 2 billion in crypto between 2019 and 2021, over $966 million of which was illicit and risky (roughly 48%).
According to Chainalysis, the crypto exchange received $206 million from darknet markets, $224.5 million from scams, and $9 million from ransomware attacks.
As a result of “deficient know-your-customer (KYC) procedures, Bitzlato allegedly became a haven for criminal proceeds.”
In April 2022, U.S. German authorities shut down Bitzlato’s largest counterparty in cryptocurrency transactions, Hydra Market, the world’s largest darknet market.
Users of Hydra Market have exchanged more than $700 million in cryptocurrency with Bitzlato, directly or through intermediaries, and more than $15 million in ransomware proceeds, according to the DOJ.
Additionally, Legkodymov and other Bitzlato managers allegedly knew that illicit activity was widespread on Bitzlato accounts and that many users were registering with stolen identities.
In addition, Legkodymov received reports showing significant traffic to the platform from U.S.-based IP addresses, with over 250 million visits in July 2022 alone.
This morning, Bitslato notified users that the crypto exchange had been hacked but that all funds had been protected.
The funds are completely safe. Although some of the funds were withdrawn by the attackers, we guarantee a refund to all victims! The Blitzlato team said seven hours later, “We have disabled the service as a security measure. Please do not replenish the wallets of our service until the work is restored.
As part of its investigation of illicit Russian finance, the Financial Crimes Enforcement Network (FinCEN) also designated the Bitzlato crypto exchange as a “primary money laundering concern.”
Bitslato facilitates illicit transactions for ransomware groups operating in Russia, including Conti, a Ransomware-as-a-Service group with links to the Russian government, according to FinCEN.
FinCEN Acting Director Himamauli Das said Bittlato is a global threat because it allows Russian cybercriminals and ransomware actors to launder proceeds.
Update: Added information on Bitzlato warning users about a hack and alleged money laundering activity.
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Gabriella is the Social Media Manager and Cybersecurity Communications Officer at Heimdal®, where she orchestrates the strategy and content creation for the company's social media channels. Her contributions amplify the brand's voice and foster a strong, engaging online community. Outside work, you can find her exploring the outdoors with her dog.
