Anatoly Legkodymov, the Russian founder of the now-closed Bitzlato cryptocurrency exchange, has pleaded guilty to operating an unlicensed money-transmitting business, enabling criminals to launder illicit proceeds. Legkodymov, who was arrested in Miami nearly 11 months ago, faces up to five years in prison for his role in running a cryptocurrency exchange that allegedly catered to money launderers and criminals. Bitzlato, which was shut down by law enforcement, is estimated to have received $2.5 billion in cryptocurrency between 2019 and 2023, with more than half of that sum believed to originate from illegal sources.
The U.S. Justice Department accused Legkodymov of profiting from providing a haven for criminals, emphasizing that engaging in cryptocurrency transactions does not exempt individuals from the law. Bitzlato had a reputation for weak know-your-customer (KYC) procedures and was known for requiring minimal identification information from users, potentially allowing some to register with stolen identity documents. German and U.S. authorities dismantled the Hydra darknet marketplace, which was identified as Bitzlato’s largest counterparty in cryptocurrency transactions, exchanging over $700 million worth of digital assets with the exchange.
Legkodymov’s guilty plea affirms his awareness that Bitzlato, his cryptocurrency exchange, was exploited by criminals due to its lax controls over illicit money transactions. The case highlights law enforcement’s continued efforts to combat cryptocurrency-related crimes and emphasizes the accountability of individuals involved in facilitating illegal financial activities through digital assets. The outcome could set a precedent for holding cryptocurrency exchange operators responsible for their role in enabling money laundering and illicit financial transactions.
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