Bitzlato CEO Pleads Guilty in Global Crypto Crackdown

On January 17, 2023, Legkodymov was apprehended in Miami as part of a globally orchestrated operation aimed at disabling the exchange. France obstructed access to its website the very same day.

As per the United States Department of Justice, the operation targeting the subject in question also involved the European Union Agency for Law Enforcement Cooperation (Europol), Spain, Portugal, and Cyprus.

The noncustodial peer-to-peer cryptocurrency exchange Bitzlato, headquartered in Hong Kong, was a significant “financial resource” for the Russian darknet marketplace Hydra and allegedly had “deficient” Know Your Customer/Anti-Money Laundering safeguards.

In April 2022, the Justice Department imposed sanctions on Hydra. On December 6, former CEO and co-founder of cryptocurrency exchange Bitzlato, Anatoly Legkodymov, entered a guilty plea on one count of operating an unlicensed money services business.

Legkodymov appeared before Judge Eric Vitaliano in the New York Eastern District Court in Brooklyn. Legkodymov entered into a court order to dissolve Bitzlato and relinquish $23 million worth of cryptocurrency.

“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.”

It is understood that his submission of a criminal cause for pleading signifies his intent to submit a guilty plea. The United States Attorney for the Eastern District of New York, Breon Peace, stated that the enforcement actions momentarily jolted the cryptocurrency markets.

Later, Europol asserted that approximately 46% of the 1 billion euros ($1.09 billion) in assets managed by Bitzlato were associated with illegal activities.

Europol suspended one hundred accounts on alternative exchanges, valued at fifty million euros, and seized Bitzlato wallets worth eighteen million euros.

Binance was a significant counterpart to Bitzlato. Later in January, funds were blocked in 20 purses in connection with the case. The exchange unblocked a portion of the funds in its custody in March, permitting users to withdraw a maximum of 50% of their bitcoin.