US authorities have coordinated with French counterparts to arrest Bitzlato founder Anatoly Legkodymov in a “major international cryptocurrency enforcement action.”
The United States Department of Justice (US DoJ) announced the news in an 18 January statement. US Deputy Attorney General Lisa Monaco revealed US and French police had seized Bitzlato’s website.
The statement continued that the cryptocurrency platform was a “primary money laundering concern” allegedly linked to illegal Russian financing.
Monaco claimed the US DoJ, US Treasury Department, and French authorities launched the crackdown, accusing Bitzlato of “conducting a money transmitting business that transported and transmitted illicit funds and that failed to meet U.S. regulatory safeguards.”
Police arrested Legkodymov, who currently lives in China, in Miami on 17 January. He will face charges at the US District Court for the Southern District of Florida.
Monaco added in her statement,
“Today the Department of Justice dealt a significant blow to the cryptocrime ecosystem. Overnight, the Department worked with key partners here and abroad to disrupt Bitzlato, the China-based money laundering engine that fueled a high-tech axis of cryptocrime, and to arrest its founder, Russian national Anatoly Legkodymov. 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.”
Ransomware and Darkwebs
The US DoJ press release continued, explaining Bitzlato allegedly provided funding for the Hydra darknet marketplace, where people could send money from sources such as ransomware attacks.
“[Bitzlato] allegedly became a haven for criminal proceeds and funds intended for use in criminal activity. Bitzlato’s largest counterparty in cryptocurrency transactions was Hydra Market, an anonymous, illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents, and money laundering services that was the largest and longest running darknet market in the world.
The statement added that Bitzlato and Hydra Market also traded over $700 million USD “either directly or through intermediaries.” US and German law enforcement later “shuttered” the latter in April last year.
The statement also claims Bitzlato also received over $15 million USD in ransomware funds.
The news comes after the Singaporean Monetary Authority (MAS) cracked down on Russian cryptocurrency exchanges in early November.
Reports found the central bank aimed to comply with US and European Union-led Russian sanctions allegedly linked to money laundering for pro-Russian groups in the ongoing war in Ukraine.
Crypto Crisis Continues
The story is the latest significant blow to the cryptocurrency industry, namely amid the ongoing FTX collapse and arrest of disgraced chief executive Sam Bankman-Fried. Released on $250 million USD bail, he faces eight counts totalling 115 year in court for fraud, misappropriation of funds, and other offences.
New York authorities also detained Aurelien Michel at John F Kennedy Airport for creating a fake Mutant Ape Yacht Club non-fungible token (NFT) and later launching a rug pull. Investors in the decentralised autonomous organisation (DAO) lost up to $2.9 million USD.
