The Department of Justice (DoJ) has announced that Russian cryptocurrency exchange Bitzlato founder Anatoly Legkodymo has been arrested in Miami for running an illegal operation.
The report alleges that Bitzlato catered heavily to crypto criminal activity. U.S. Attorney Breon Peace commented on the capture of Legkodymo. Stating “Institutions that trade in cryptocurrency are not above the law and their owners are not beyond our reach.”
Through the work of an overseas investigative team, coupled with local resources in the United States, the Chinese-based money laundering operation which catered to an array of criminal activity was not out of reach for the Department of Justice. Deputy Attorney General Monaco added: “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.”
Bitzlato is a key exchange for crypto crime
Legkodymo reportedly operated Bitzlato as one of the largest crypto crime exchanges. The exchange was utilized mostly in assisting criminals to launder crypto from ransomware attacks and move funds from drug trafficking. The Honk-Kong registered exchange required minimal identification from users. With no important know-your-customer (KYC) information needed in order to trade on the exchange.
The lack of KYC from the exchange allowed criminals free reign to use the exchange without having to identify themselves. Legkodymo has also previously admitted on the exchange’s chat service that users often made use of assumed identities. The founder also commented stating that Bitzlato catered to “known crooks.”
Darknet Marketplace Capitalizes on Bitzlato
One of the largest users of Bitzlato was the darknet marketplace, Hydra Market. The anonymous marketplace offers criminals the ability to purchase narcotics. Other services included fraudulent identification documents, and stolen financial information, as well as assistance in money laundering services.
The DoJ reports that $700 million in cryptocurrency is said to have made its way through Bitzlato either directly or indirectly. An additional $15 million in ransomware proceeds also made its way through the shady exchange. Hydra Market was shut down by U.S. and German law enforcement in April 2022.
The brazen criminal enterprise also cited in a company spreadsheet that it boasted one of its positives as offering no KYC, while one of the negatives was dirty money.
Furthermore, a global team including Europol and several countries had taken down Bitzlato’s infrastructure along with additional enforcement action.
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