Founder of Bitzlato Cryptocurrency Exchange Pleads Guilty in Money-Laundering Scheme

Dec 08, 2023The Hacker NewsCryptocurrency / Cyber Crime

The Russian founder of the now-defunct Bitzlato cryptocurrency exchange has pleaded guilty, nearly 11 months after he was arrested in Miami earlier this year.

Anatoly Legkodymov (aka Anatolii Legkodymov, Gandalf, and Tolik), according to the U.S. Justice Department, admitted to operating an unlicensed money-transmitting business that enabled other criminal actors to launder their illicit proceeds. He faces up to five years in prison.

"Legkodymov operated a cryptocurrency exchange that was open for business to money launderers and other criminals," said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department's Criminal Division.

"He profited from catering to criminals, and now he must pay the price. Transacting in cryptocurrency does not put you beyond the reach of the law."

Bitzlato, which served as a safe haven for fraudsters and ransomware crews such as Conti, is estimated to have received $2.5 billion in cryptocurrency between 2019 and 2023, more than half of which originated from illegal and risky sources.

Prior to its takedown by law enforcement, the Hong Kong-registered exchange also drew attention for its lax know-your-customer (KYC) procedures and marketed itself as a platform that required only minimal identifying information from its users. Some of its users are believed to have registered accounts using stolen identity documents.

The Justice Department also singled out the Hydra darknet marketplace as Bizlato's largest counterparty in cryptocurrency transactions, with the former's users exchanging no less than $700 million worth of digital assets with the exchange.

Hydra was the world's largest and longest-running dark web marketplace for narcotics, stolen financial information, fraudulent identification documents, and money laundering services. It was dismantled by German and U.S. authorities in April 2022.

"Legkodymov's guilty plea today confirms that he was well aware that Bitzlato, his cryptocurrency exchange, was being used like an open turnstile by criminals eager to take advantage of his lax controls over illicit money transactions," said U.S. Attorney Breon Peace for the Eastern District of New York.

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