Russian crypto exchange founder charged with laundering $700 million

At a press conference in Washington on Wednesday, the U.S. Justice Department and Treasury Department announced they have charged Bitzlato Ltd. with money laundering, and arrested its founder in Miami. Anatoly Legkodymov, 40, was arrested in Miami on Tuesday night and will appear in the U.S. District Court for the Southern District of Florida. He is the founder, majority owner and senior executive of Bitzlato Ltd., which is based in Hong Kong.

Bitzlato allegedly allowed its users to use its services with loose restrictions, allowing users to create accounts based on false information, which they used to engage in transactions with an “illicit” black market called Hydra Market. Hydra Market is a black market platform where narcotics, stolen personal and financial information and money laundering services can be procured; the Justice Department said it is the “largest and longest running darknet market in the world.” Hydra was shut down by a cooperative effort between U.S. and German law enforcement agencies last April. Bitzlato users exchanged an estimated $700 million in cryptocurrency for illegal activities with Hydra until it was closed. The Justice Department alleges Legkodymov knew of the criminal activities carried out by Bitzlato’s users, disregarding warnings from other executives about the dangers of allowing these activities to continue because he did not want to sacrifice profits. Bitzlato’s website has been shut down with agencies throughout the world taking aim at its infrastructure.

U.S. Attorney Breon Peace for the Eastern District of New York said: “Institutions that trade in cryptocurrency are not above the law and their owners are not beyond our reach. As alleged, Bitzlato sold itself to criminals as a no-questions-asked cryptocurrency exchange, and reaped hundreds of millions of dollars’ worth of deposits as a result. The defendant is now paying the price for the malign role that his company played in the cryptocurrency ecosystem.”

Editorial credit: Bob Korn / Shutterstock.com