Bitzlato Exchange CEO Pleads Guilty to $700,000,000 Money Laundering
The founder of Hong Kong cryptocurrency exchange Bitzlato pleaded guilty this week to operating an unlicensed money-transmitting business that enabled over $700 million in illicit funds.
According to a press release by the United States Department of Justice, Anatoly Legkodymov, a Russian national known by aliases including “Tolik” and “Gandalf,” admitted the exchange served as a channel for dark web criminals and a haven for ransomware proceeds.
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As part of his plea deal, Legkodymov consented to shuttering Bitzlato and releasing claims for about $23 million in seized assets.
Key Takeaways:
- Prosecutors said Bitzlato knowingly allowed anonymous users to open accounts.
- This made it a prime destination for the dark web’s Hydra narcotics bazaar to launder $700+ million before its takedown.
- Millions more in ransomware funds also flowed through Bitzlato, despite warnings.
“Legkodymov’s guilty plea today confirms that he was well aware that Bitzlato, his cryptocurrency exchange, was being used like an open turnstile by criminals eager to take advantage of his lax controls over illicit money transactions,” stated United States Attorney Peace.
Bitzlato marketed itself as requiring minimal identification
Bitzlato marketed itself as requiring minimal identification from users, with no requirement for selfies or passports. This has made it a hub for criminal proceeds and funds intended for illicit activities.
Additionally, when identification information was requested, Bitzlato allowed users to submit data belonging to “straw man” registrants, contributing to deficient know-your-customer (KYC) procedures.
On Wednesday, the final pillar fell as CEO Legkodymov admitted deficiencies in Bitzlato’s know-your-customer identity checks. In addition, the charges demonstrate the DOJ’s persistent campaign to crack down on crypto’s role in enabling crime.
