Bitzlato Co-Founder Pleads Guilty, Forfeits $23M in Cryptocurrency Amidst Laundering Allegations
Summary:
Anatoly Legkodymov, co-founder and ex-CEO of the cryptocurrency exchange Bitzlato, pleaded guilty to operating an unlicensed money services business. As a result, he agreed to dissolve Bitzlato and forfeit $23 million in cryptocurrency. His arrest was part of an international effort to close the exchange, with allegations that Bitzlato had inadequate anti-money laundering measures, serving as a significant financial source for the black market. Roughly 46% of Bitzlato's managed assets were reportedly linked to illegal activities. Binance, a major associate of Bitzlato, was also implicated in this case, freezing funds in 20 wallets related to the case.
On December 6, Anatoly Legkodymov, who co-founded the cryptocurrency exchange Bitzlato and served as its previous CEO, confessed in court to running an unauthorized money services business. The proceedings took place in Brooklyn's New York Eastern District Court, under the jurisdiction of Judge Eric Vitaliano. Legkodymov agreed in court to the disbandment of Bitzlato and the relinquishment of $23 million in cryptocurrency. He had lodged a criminal plea, representing a plan to admit guilt. U.S. Eastern District of New York Attorney, Breon Peace, noted that Legkodymov's confession affirms his awareness that criminals exploited Bitzlato for illicit financial transactions due to his weak oversight.
Legkodymov experienced an arrest in Miami on January 17, during a global effort to shut down the exchange. France followed with a website blockade the same day. The Department of Justice reported that Spain, Portugal, and Cyprus, accompanied by Europol - the European Union Agency for Law Enforcement Cooperation - participated in the action against it.
Bitzlato, the Hong Kong noncustodial peer-to-peer cryptocurrency exchange, allegedly displayed "insufficient" Know Your Customer/Anti-Money Laundering measures, serving as a significant financial conduit for Hydra, a Russian darknet marketplace. The Justice Department sanctioned Hydra in April 2022.
Crypto markets experienced a brief disruption as a result of the enforcement activities. Europol further alleged that 46% of Bitzlato's managed assets, worth 1 billion euro (or $1.09 billion at the time), were tied to unlawful activities. The law enforcement agency seized Bitzlato wallets amounting to 18 million euro and froze 100 accounts in other exchanges equating to 50 million euro.
The incident also involved Binance, a significant Bitzlato associate. In relation to the case, Binance froze funds across 20 wallets later in January. By March, the exchange had partially released some funds, enabling users to withdraw up to 50% of their Bitcoin (BTC) holdings.
This Legkodymov event underscores the equal importance of Binance in relation to Bitzlato. It's a case that merits close monitoring.
Published At
12/7/2023 12:37:28 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.