Anatoly Legkodymov, a co-founder of Hong Kong-based crypto exchange Bitzlato, pleaded guilty to operating an unlicensed money transmitter tied to allegations that the exchange processed funds from ransomware attacks, illicit drug deals and other crimes, U.S. officials announced Wednesday.
Legkodymov, a majority owner in the exchange, "agreed to dissolve Bitzlato" and release claims over some $23 million in seized assets, a U.S. Department of Justice (DOJ) press release said. Bitzlato was sanctioned by the U.S government in January, when the Treasury Department and DOJ alleged it laundered some $700 million worth of funds, and Treasury's Financial Crimes Enforcement Network designated the exchange as a "primary money-laundering concern," which functionally blocked it off from the global financial system.
Police had arrested Legkodymov in Florida, though his case has since been moved to the U.S. District Court for the Eastern District of New York.
European Union police entity Europol later alleged that Bitzlato laundered over $1 billion worth of funds. The little-known exchange's largest counterparty was darknet marketplace Hydra, the DOJ said, which allowed transactions for fake ID information, stolen financial information and money laundering.
In a statement, Deputy Attorney General Lisa Monaco called Bitzlato a "safe haven for fraudsters, thieves and other criminals."
"We are dismantling and disrupting the cryptocrime ecosystem using all tools available – including criminal prosecution," she said. "In January, the department and our partners took down Bitzlato’s infrastructure and seized its cryptocurrency. Today’s conviction of Bitzlato’s founder is the latest product of our efforts."
Another co-founder of Bitzlato, Anton Shkurenko, said at the end of January that the exchange would reopen, though its main website still displayed a notice that it was seized by French prosecutors as of Dec. 6.
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