Anatoly Legkodymov, co-founder and former CEO of the cryptocurrency exchange Bitzlato, has pleaded guilty to operating an unlicensed money services business. His plea was entered on December 6 in the Eastern District Court of New York in Brooklyn, presided over by Judge Eric Vitaliano.
As part of his guilty plea, Legkodymov agreed to dissolve Bitzlato and forfeit $23 million in cryptocurrency. His decision to file a criminal cause for pleading indicated his intention to enter a guilty plea. Breon Peace, the U.S. Attorney for the Eastern District of New York, commented on the plea, stating:
“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.”
Legkodymov’s arrest occurred in Miami on January 17, 2023, as part of a coordinated international operation aimed at dismantling the exchange. On the same day, France blocked Bitzlato’s website. The operation involved multiple countries, including Spain, Portugal, Cyprus, and the European Union Agency for Law Enforcement Cooperation (Europol).
Bitzlato, a Hong Kong-based noncustodial peer-to-peer cryptocurrency exchange, was allegedly lax in its Know Your Customer/Anti-Money Laundering measures. It was identified as a significant financial resource for the Russian darknet marketplace Hydra, which the U.S. Justice Department sanctioned in April 2022.
The enforcement actions against Bitzlato had a temporary impact on the crypto markets. Europol later reported that approximately 46% of the assets processed by Bitzlato, valued at 1 billion euros (equivalent to $1.09 billion at the time), were linked to criminal activities. Europol seized Bitzlato wallets worth 18 million euros and froze 100 accounts on other exchanges totaling 50 million euros.
Binance, a major counterparty of Bitzlato, responded by blocking funds in 20 wallets related to the case in January. By March, Binance managed to unblock some of these funds, allowing users to withdraw up to 50% of their Bitcoin holdings.
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