Anatoly Legkodymov, the founder of Bitzlato, a crypto exchange that operated on the web3 platform, pleaded guilty to charges of running a money transmitting business that helped criminals move illicit funds.
According to the Department of Justice (DoJ), Legkodymov confessed to running Bitzlato, which offered minimal identification requirements and no know-your-customer (KYC) procedures, making it a “safe haven for criminals” who wanted to exchange cryptocurrency for fiat currency or other cryptocurrencies.
The incident has been tagged as Cybercrime and Financial Fraud by the US Department of Justice on its press release five days ago.
Bitzlato’s main partner in cryptocurrency transactions was Hydra Market, a notorious darknet market that sold drugs, stolen data, fake IDs, and money laundering services.
Previously, Bizlato facilitated over $700 million worth of cryptocurrency transactions with Hydra Market, until the latter was shut down by law enforcement in April 2022.
Deputy Attorney General Lisa O. Monaco said that the government was determined to disrupt cryptocrime and that the takedown of Bitzlato’s infrastructure and seizure of its cryptocurrency earlier this year was part of the ongoing efforts.
The DoJ said that Bitzlato had a “no questions asked” clearinghouse approach, which allowed criminals to exploit the exchange’s lax controls, leading to its downfall.
Later, the case was jointly prosecuted by the United States Attorney’s Office for the Eastern District of New York and the National Cryptocurrency Enforcement Team (NCET), with claims made to combating illicit cryptocurrency use.
Legkodymov faces up to five years in prison and a fine of up to $250,000 if found guilty of all charges pressed against him.
As part of his plea agreement, Legkodymov agreed to dissolve Bitzlato and to release any claim over approximately $23 million in seized assets of Bitzlato. The proceeding was held before United States District Judge Eric N. Vitaliano.
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.
