The founder of Bitzlato pleaded guilty to unlicensed money transmission in a U.S. court
The co-founder of a major cryptocurrency exchange has pleaded guilty to charges related to processing illegal funds, marking a significant development in the ongoing crackdown on illicit activity within the digital asset space.
Anatoly Legkodymov, the founder and majority owner of Bitzlato, a Hong Kong-registered virtual currency exchange, admitted to operating a money-transmitting business that facilitated the transfer of approximately $700 million in illicit funds.
Legkodymov, a 41-year-old Russian national, pleaded guilty to one count of operating an unlicensed money-transmitting business violating the U.S. Bank Secrecy Act (BSA). He also agreed to forfeit $23 million in assets allegedly acquired through illegal activities as part of a plea bargain.
According to U.S. authorities, Bitzlato knowingly facilitated the exchange of cryptocurrency derived from ransomware attacks and other illegal activities. The platform, which has been in operation since 2016, became a popular haven for cybercriminals due to its lax regulatory compliance and limited KYC/AML procedures, making it difficult to trace the source of funds.
“From its inception, Bitzlato prioritized anonymity and ease of use over compliance with anti-money laundering laws,” said Acting U.S. Attorney Tessa M. Gorman for the Western District of Washington. “This allowed Bitzlato to become a haven for ransomware actors and other criminals, who exploited the platform to launder illegal proceeds.”
Legkodymov’s guilty plea represents a major victory for U.S. law enforcement in its efforts to combat financial crime within the cryptocurrency industry. It sends a clear message that regulators are actively pursuing individuals and entities who facilitate the transfer of illegal funds through digital assets.
The case against Bitzlato follows similar actions taken against other cryptocurrency exchanges in recent months. In August, Binance, the world’s largest cryptocurrency exchange, agreed to pay a $4.3 billion settlement to resolve investigations into violations of the BSA and other regulations.
These developments highlight the growing scrutiny of the cryptocurrency industry and its potential role in facilitating financial crime. As the industry continues to evolve, regulators and law enforcement agencies are expected to increase their focus on combating illicit activity within the digital asset space.
Legkodymov’s sentencing hearing is scheduled for March 2024. He faces a maximum penalty of five years in prison and a fine of $250,000.