Bitzlato, Owner and Founder Arrested and Charged for $700M Money Laundering and Transmitting

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Anatoly Legkodymov, owner and founder of Bitzlato, a Hong Kong-registered cryptocurrency exchange, has been arrested and charged with money laundering and illicit money transfers. The Russian national was arrested in Miami on Wednesday, 18th January 2023. 

The Bitzlazo senior executive is accused of being in a fraud operation that has transmitted more than $700 in the past four years. The illicit funds still need to meet U.S. regulatory guidelines, including anti-money laundering laws, stealing people’s identities and money, and allowing drug lords to traffic drugs on the company platforms. 

The Authorities In Charge of Bitzlato’s owner

U.S. law enforcement officers arrested Legkodymov. However, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and the French authorities are in charge of the concurrent enforcement actions.

Officers from the Eastern District of New York attorney, the Federal Bureau of Investigation (FBI), and the Department of Justice made the arrest and charging announcement.

U.S. Attorney Breon Peace clearly stated that no cryptocurrency trading firms and their owners are above American law. 

Deputy Attorney General Monaco stated that the arrest was a big blow to the American crypto crime ecosystem. The Department of Justice worked with intel overseas to disrupt the activities of the China-based money laundering engine, a massive sponsor of the high-tech axis of crypto crime.

Assistant Attorney General Polite noted that arresting Anatoly Legkodymov was a move that solidified the American National Cryptocurrency Enforcement Team to combat cryptocurrency-fueled crimes even across international borders in partnership with federal and international intel.

FBI Assistant Deputy Director Turner announced that the FBI would continue to hunt down criminals who operate behind their keyboards and use cryptocurrency to evade the law. In any case, the arrest of Legkodymov should remind the criminals that the FBI will impose heavy consequences on them when discovered.

 FBI Assistant Director-in-Charge Driscoll also noted that the FBI and their partners would tighten their guidelines on keeping cryptocurrency and other financial markets safe from illicit transactions. 

The Crime

Bitzlato marketed itself to criminals as a free-to-trade platform, where no questions were asked to qualify for cryptocurrency transfer and reaped millions of dollars in deposits. The platform asked for minimal user identification as it didn’t require one to upload personal data, such as photos and passports. Occasionally, Bitzlato would ask for identification information for “straw man” registrants.

The lack of deficient know-your-customer (KYC) procedures developed into a good breeding ground for crime. Bitzlato partnered with Hydra Market, an anonymous, unlawful online marketplace for opioids, money laundering services, stolen financial information, and fraudulent identification documents. Hydra Market transacted over $700 million in cryptocurrency directly and indirectly. However, 

Legkodymov and Bitzlato’s other managers knew of the illegal cryptocurrency transactions on the platform and that many of its users were registered under false identities.

In defense, Legkodymov stated that the platform didn’t approve f users from the USA. The French Hydra Market was brought down by German and U.S. law enforcement in April 2022. law enforcers and the USA Justice Department are investigating more as the suspect prepares to be arraigned in court.

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