Anatoly Legkodymov, the Russian founder of Bitzlato, a cryptocurrency exchange, has pleaded guilty to operating a money-laundering scheme, facing up to five years in prison. This case highlights the challenges and risks in the cryptocurrency industry, particularly concerning illegal financial activities.
Bitzlato’s fall: A guilty plea in money-laundering
Anatoly Legkodymov, the 41-year-old Russian founder of Bitzlato, has pleaded guilty to operating an unlicensed money-transmitting business that facilitated money laundering. This guilty plea comes nearly 11 months after his arrest in Miami earlier this year. Legkodymov, who is also known by aliases such as “Gandalf” and “Tolik,” faces a maximum penalty of five years in prison as part of his plea agreement.
The lax standards of Bitzlato
Bitzlato, now defunct, was infamous for its minimal know-your-customer (KYC) procedures, effectively becoming a haven for illicit funds. The Hong Kong-registered exchange required only minimal identifying information from its users, with some accounts even registered using stolen identity documents. This lack of stringent checks made Bitzlato a preferred platform for fraudsters and criminals to launder their proceeds.
Bitzlato’s connections to darknet marketplaces
The Justice Department highlighted Bitzlato’s significant interactions with Hydra Market, an anonymous, illicit online marketplace on the darknet. Hydra Market was Bitzlato’s largest partner in cryptocurrency transactions, with users exchanging over $700 million worth of digital assets. This partnership underscores the exchange’s role in facilitating illegal activities on a large scale.
The international operation and arrest
Legkodymov’s arrest in Miami was part of an international operation that included the detention of several Russian and Ukrainian nationals in Spain, Portugal, and Cyprus. His guilty plea confirms his awareness of Bitzlato’s role in enabling criminal financial activities.
