US Authorities Charge Bitzlato Exchange of "Unlicensed Money Transmitting"

In a live video conference on January 18, 2023, The Department of Justice (DOJ) announced the arrest of Russian national Anatoly Legkodimov.

The Federal Bureau of Investigation(FBI) arrested the 40 year old from Miami on Tuesday night, although he originally resides in Shenzhen, China. He is accused of doing business by transferring money without a license.

According to a press release from the Department of Justice(DOJ) it noted that Bitzlato “marketed itself as requiring minimal identification from its users,” which made it a hotbed of criminal activity.

The DOJ asserted that the exchange was crucially linked to ransomware payments and Hydra Market. Hydra Market is a Russian-language page on the dark web. Hydra Market was a marketplace for illegal drugs, including money laundering, narcotics sales and stolen financial information and identities.

The DOJ said that “Bitzlato’s largest counterparty in cryptocurrency transactions was Hydra Market,” added, “Hydra users exchanged more than $700 million in cryptocurrency with Bitzlato, either directly or through intermediaries, until Hydra was shuttered by U.S. and German law enforcement in April 2022. Bitzlato also received more than $15 million in ransomware proceeds.”

At the time of Ransomware attacks, hackers prefer to accept ransoms in cryptocurrencies and launder the money through exchanges and “mixers.”

A ‘mixer’ is a service that is used to hide an original transaction and details of the sender and receiver so that the processed transactions can not be tracked.

“Substantial business with U.S.-based customers, and its customer service representatives repeatedly advised users that they could transfer funds from U.S. financial institutions.” The Department of Justice noted Bitzlato’s claims that it did not accept U.S. users though the complaint alleged it did.

As per the DOJ reports, Legkodymov is also accused of conducting Bitzlato transactions from Miami in 2022 and 2023, respectively. Reports were received of “substantial traffic” to its website originating from U.S-based IP addresses – more than 250 million visits in July 2022.

The press release highlights that “Moreover, Legkodymov and Bitzlato’s other managers were aware that Bitzlato’s accounts were rife with illicit activity and that many of its users were registered under others’ identities.”

The US Department of the Treasury Financial Crimes Enforcement Network is collectively working with French authorities on this particular case. If Legkodymov is found guilty, then he will be behind bars for at least five years.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing