A Russian was arrested in Miami: he used his crypto exchange for money laundering and drug trafficking

In Miami (Florida), Russian citizen Anatoly Legkodymov was arrested. He is the owner of Bitzlato, a Hong Kong-listed cryptocurrency exchange. She was used for drug trafficking and money laundering. This is mentioned on US Department of Justice website.

Photo: IStock

He is accused of money laundering, as well as the transportation and transfer of illegal funds that did not meet US regulations.

Legkodymov is a top manager and the main shareholder of Bitzlato Ltd. (Bitzlato), a Hong Kong-registered cryptocurrency exchange that operates globally.

The exchange positions itself as requiring minimal identification from its users, meaning “no selfie or passport required.” When Bitzlato prompted users to provide identifying information, it repeatedly allowed them to provide information belonging to "shams" upon registration.

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As a result of such actions, Bitzlato has become a haven for criminal proceeds and funds intended for use in criminal activities.

One of Bitzlato's largest partners in cryptocurrency transactions was Hydra Market. It is the oldest and largest market on the dark web. It sold stolen financial information, forged documents, and provided money laundering services. In addition, Hydra Market was an anonymous illegal online drug market.

Hydra Market users exchanged more than $700 million in cryptocurrency with Bitzlato either directly or through intermediaries until Hydra Market was shut down by US and German law enforcement in April 2022. Bitzlato has received more than $15 million in ransomware revenue.

Bitzlato clients regularly used the company's customer service portal to request support for transactions with Hydra and admitted in chats with Bitzlato staff that they were trading under false names.

Legkodymov and other Bitzlato managers knew that the accounts were rife with illegal activity and that many of its users were registered under other names.

For example, on May 29, 2019, Legkodymov used Bitzlato's internal chat system to write to a colleague that Bitzlato users were "known to be scammers." They use someone else's identity documents to register their accounts.

Colleagues repeatedly warned Legkodymov that Bitzlato's customer base consisted of "addicts who buy drugs on Hydra" and "drug dealers", and one of the top managers even stressed that Bitzlato should only fight drug dealers "nominally" so as not to harm the company.

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While Bitzlato claimed to not accept users from the United States, the exchange did business with US customers, and its customer service representatives repeatedly informed users that they could transfer funds from US financial institutions. What’s more, Legkodymov, who himself operated Bitzlato from Miami in 2022 and 2023, received reports showing significant traffic to the Bitzlato website in the US, including more than 250 million such visits in July 2022 alone.

If Legkodymov is found guilty, he faces up to 5 years in prison.

After his arrest, the French authorities, in cooperation with Europol and partners in Spain, Portugal and Cyprus, took measures to eliminate Bitzlato.

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