The founder of the Bitzlato cryptocurrency has been arrested, charged with transferring illegal funds worth hundreds of millions

Justice Department officials announced Wednesday the arrest of a Russian executive accused of running a cryptocurrency exchange that facilitated illegal drug and money laundering transactions.

Deputy Attorney General Lisa Monaco held a press conference with federal prosecutors and FBI officials to announce the arrest of Bitzlato Ltd founder and majority owner Anatoly Legkodimov in Miami on Tuesday. Legkodimov is a Russian citizen living in China. Its cryptocurrency exchange Bitzlato is registered in Hong Kong and advertises itself as requiring minimal identification from users.

Bitzlato is accused of moving and transferring illegal funds and facilitating other crimes in cryptocurrency transactions with Hydra Market, which DOJ officials described as “an anonymous and illegal online marketplace for drugs, stolen financial information, fraudulent identity documents, and money laundering services that has served as the largest and longest-running marketplace.” to the dark webs of the world.”

“Today the Ministry of Justice has dealt a huge blow to the crypto ecosystem,” Monaco stated. Overnight, the department worked with key partners here and abroad to disrupt Bitzlato, the China-based money laundering engine that fueled the crypto-hi-tech hub, and to apprehend its founder, Russian national Anatoly Legkodimov.

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Lisa Monaco, Deputy US Attorney, listens during a press conference at the Department of Justice in Washington, D.C., United States, on Wednesday, November 30, 2022.

Deputy Attorney General Lisa Monaco listens during a press conference at the Department of Justice in Washington, D.C., on November 30, 2022. (Amanda Andrade-Rhodes/Bloomberg via Getty Images/Getty Images)

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An American flag flies outside the Department of Justice in Washington, DC (AP Photo/Andrew Harnik/AP Newsroom)

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In a criminal complaint unsealed Wednesday, DOJ officials alleged that users of Hydra Market exchanged more than $700 million in cryptocurrency with Bizlato before Hydra Market was shut down by US and German law enforcement in April 2022. Bizlato also received more than 15 million dollars in ransomware revenue, the complaint claims.

Legkodimov and other Bitzlato directors are accused of knowing criminal activity including drug trafficking conducted on the stock exchange, while admitting that the company dealt with “dirty money”. Although the company denied serving US clients, court documents allege that Bitzlato did significant business with clients in the US and advised users that they could transfer funds from US financial institutions.

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Illustration of different cryptocurrencies

Representations of cryptocurrencies are shown in this illustration. (Reuters/Dado Rovic/Illustration/Reuters Photo)

If convicted, Legkodimov faces a maximum penalty of five years in prison. Officials said an investigation is underway and additional charges may be filed “in the future.”

“Today’s actions send a clear message: whether you broke our laws from China or Europe – or abused our financial system from a tropical island – you can expect to answer for your crimes in a US courtroom,” Monaco said.

Asked at the press conference whether Pizzlato helped Russia evade sanctions related to the invasion of Ukraine, Deputy Treasury Secretary Wali Adimo said, “What we do know is that Russia has created an ecosystem that allows cybercriminals.”

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The US Treasury Department’s Financial Crimes Enforcement Network and French authorities worked together to identify alleged criminal activities by Bizlato, which US officials said is a sign of global cooperation to purge bad actors from the cryptocurrency markets.

The Associated Press contributed to this report.

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