According to the Department of Justice, Anatoly Legkodymov, a Russian national was arrested in Miami, Fla. on Tuesday for operating a China-based cryptocurrency exchange Bitzlato Ltd., that flouted regulatory safeguards and enabled criminals to profit from wrongdoing like ransomware and drug trafficking.
The criminal complaint filed against him, one of several actions alongside those brought by French authorities and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, alleges that 40-year-old Legkodymov neglected his duty to check who was using his crypto exchange and for what purposes.
The government says Legkodymov is the founder and majority owner of the 2016-founded cryptocurrency exchange, a business whose largest partner was Hydra Market, one of the world’s largest and longest running darknet markets. Hydra users transacted in narcotics, stolen financial information, fraudulent identity documents, and money laundering services and exchanged more than $700 million in cryptocurrency with Bitzlato.
This was the case until U.S. and German law enforcement shuttered its operations in April 2022, the DOJ noted in its accompanying press release.
Specific to the anti-money laundering claims against Legkodymov, the government says one of Bitzlato’s key selling points was its loose or non-existent “know-your-customer” or KYC requirements. As recently as March 2022, and for years prior, the website offered registration without passport or photographic proof of identity, just with email.
The government also highlighted that Bitzlato also received more than $15 million in ransomware proceeds.
For his role running Bitzlao and fuelling cybercrime, the United States has charged the defendant with conducting an unlicensed money transmitting business, which carries a maximum penalty of five years in prison.
The suit is proceeding in the Southern District of Florida.
