(CTN NEWS) – WASHINGTON – The creator of the cryptocurrency exchange Bitzlato, which has its headquarters in Hong Kong, was detained early on Wednesday in Miami in connection with a massive money laundering scheme.
He is accused of sending more than $700 million in illegitimate payments over the previous four years.
Anatoly Legkodymov, a 40-year-old Russian national, ran a significant “high-tech financial hub that catered to known thieves,” including cybercriminals and drug dealers looking to process dirty money, according to deputy attorney general Lisa Monaco.
According to Monaco, “Today the Department of Justice struck a severe blow to the cryptocrime ecosystem.”
According to Monaco, “Bitzlato facilitated the transit of hundreds of millions of dollars in criminal funds, igniting darknet markets and laundering the proceeds of ransomware operations.”
On November 2, 2021, Deputy Attorney General Lisa Monaco talks with The Associated Press during a press conference at the Department of Justice in Washington.
According to a statement made on Monday by Europol, two alleged hackers have been detained on suspicion of running ransomware assaults that resulted in 5,000 infections.
The only information provided by federal officials on Legkodymov’s whereabouts and arrest is that he operated the company out of Miami early last year and early this year.
Monaco said that Bitzlato had been a financial partner for the Hydra darknet market, which was shut down by American and German authorities the previous year.
According to Monaco, “Hydra and Bitzlato established a high-tech axis of cryptocrime,” and he added that the darknet directed funds associated with drug sales, bank data breaches, and hacking operations to Bitzlato accounts.
Legkodymov was detained, and according to the deputy attorney general, relevant enforcement operations, including the seizure of Bitzlato’s servers, were being carried out by federal authorities and foreign partners at the time.
Legkodymov and other Bitzlato managers “were aware that many of its users were registered under other people’s names and that the exchange’s accounts were plagued with unlawful activities,” according to federal officials.
In a correspondence to a coworker on May 29, 2019, Legkodymov allegedly claimed that Bitzlato users were “known to be fraudsters,” according to court documents.
Federal investigators believe that despite Bitzlato’s claims to the contrary, the exchange advised U.S.-based clients that they may move funds from U.S. banking institutions.
Sam Bankman-Fried, the creator of FTX, adjourns from Manhattan Federal Court on December 22 following his arraignment and bail hearings.
Legkodymov is accused of operating an illegal money transfer company. He might receive a maximum sentence of five years in prison if found guilty.
The Bitzlato case is unrelated to Sam Bankman-arrest Fried’s last month for allegedly stealing billions of dollars in customer monies in one of the biggest fraud schemes in American history. Bankman-Fried was the founder of the defunct cryptocurrency exchange FTX.
Monaco did not specifically address the FTX fraud case on Wednesday, but she did imply that suspects like Bankman-Fried, who was deported last month after being detained in the Bahamas, would be subject to the same level of law enforcement scrutiny.
The deputy attorney general stated, “Whether you violate our laws from China or Europe or misuse our financial system from a tropical island – you may expect to face for your crimes inside a United States courtroom.”
Bank-Fried made his first appearance in federal court last month and was released on a $250 million bail.
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