The United States Justice Department and Treasury Department have accused Bitzlato Ltd., a Hong Kong-based cryptocurrency platform, of money laundering and have arrested its founder, Anatoly Legkodymov, in Miami.
Bust Rather than Boom
The charges and arrest come as part of a coordinated effort involving the Federal Bureau of Investigation (FBI), French authorities, and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The enforcement actions have effectively shut down Bitzlato, disrupting what Deputy Attorney General Lisa Monaco referred to as “a busy corner of this criminal ecosystem.”
Bitzlato offered peer-to-peer services and hosted wallets for buying and selling goods. The platform was involved in $700 million in direct and indirect transfers in the last several years, according to Justice Department officials. The company allegedly played a key role in handling illicit transactions for ransomware actors in Russia, including those connected to the Russian government.
Very Dirty Laundry
FinCEN formally labeled Bitzlato a “primary money-laundering concern,” a designation that is among the most serious sanctions in the government’s criminal-fighting arsenal. This classification usually cuts off a business from the global financial system. The label essentially declares the exchange “an international pariah,” according to Treasury Deputy Secretary Wally Adeyemo.
Legkodymov, a Russian citizen and majority owner of Bitzlato, was living in China. He will be arraigned in the U.S. District Court for the Southern District of Florida.
The crackdown against Bitzlato is the most significant U.S. action against a crypto criminal network to date, according to Monaco. The company was also tied to routine transactions with the Russian-based Hydra Market. This organization is a darknet market that was targeted by U.S. authorities last year. Monaco stated that the “Hydra-Bitzlato crypto-crime axis” is now shut down.
The actions taken against Bitzlato and its founder send a clear message that the U.S. government is committed to cracking down on illicit activity involving cryptocurrency. It also serves as a warning to other platforms and individuals engaging in similar activities that they will be held accountable for their actions.
The use of cryptocurrency in illegal activities such as money laundering and the buying and selling of illegal goods is a growing concern. It is also an activity that authorities around the world are working to combat.
It is important to note that the vast majority of cryptocurrency transactions and platforms are legitimate and operate within the law. However, it is crucial that authorities continue to take action against those engaging in illicit activities. This protects the integrity of the financial system and ensure the safety of law-abiding citizens.
The case against Bitzlato and Legkodymov serves as a reminder that the anonymity provided by cryptocurrency does not provide immunity from the law.