Cryptocurrency Founder Nabbed After Allegedly Enabling $700 Million In ‘Ransomware And Drug Trafficking’ Schemes

Ben ZeisloftJanuary 18, 2023

Anatoly Legkodymov was the founder of cryptocurrency Bitzlato platform, was arrested After his company allegedly processed illicit funds in excess of $700 million, his company was arrested Tuesday evening in Florida funds.

Legkodymov is a Russian national and resides in China. “transported and transmitted” According to a, illegal funds are being used to launder money in violation of the American safeguards against laundering. press release Source: Justice Department According to Bitzlato, Hydra users were allowed to use his name. “anonymous, illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents, and money laundering services,” To exchange more than $700,000,000 in cryptocurrency.

“Institutions that trade in cryptocurrency are not above the law and their owners are not beyond our reach,” In a statement, U.S. Attorney Breon peace of the Eastern District of New York stated that. “As alleged, Bitzlato sold itself to criminals as a no-questions-asked cryptocurrency exchange, and reaped hundreds of millions of dollars’ worth of deposits as a result. The defendant is now paying the price for the malign role that his company played in the cryptocurrency ecosystem.”

Bitzlato needed minimal authentication to make the platform work. “haven for criminal proceeds and funds intended for use in criminal activity,” According to the press release. Bitzlato was paid $15 million ransomware proceeds in addition to the $700,000,000 in assets that Hydra users transferred. Hydra was shut down by American and German authorities in 2013. Hydra users allegedly admitted to Bitzlato personnel that they were using the cryptocurrency platform under false identities, and Legkodymov allegedly told a colleague on the company’s internal chat system many users were “known to be crooks.”

The Treasury Department requires financial institutions that they implement strict due diligence procedures for their users. This includes a requirement that they include a “requirement to identify and verify the identity of beneficial owners,” According to a rule from the agency’s Financial Crimes Enforcement Network.

“As alleged, the defendant helped operate a cryptocurrency exchange that failed to implement required anti-money laundering safeguards and enabled criminals to profit from their wrongdoing, including ransomware and drug trafficking,” In a statement, Assistant Attorney General Kenneth Polite stated.

After the incident, Legkodymov was arrested. indictment Sam Bankman-Fried, former CEO of FTX, was charged with conspiracy, wire fraud, securities fraud, money laundering, and conspiracy. After users discovered that he had commingled funds between FTX, Alameda Research and FTX, the entrepreneur was a target of worldwide ridicule. This led to untold millions in customer assets being lost.

The collapse of FTX also spurred lawmakers to demand more scrutiny of the cryptocurrency industry. Senators considered Various proposals to increase regulation of digital asset markets were made by Rostin Behnam (Commodity Futures Trading Commission Chairman), while House of Representatives members are also involved. discussed The bankruptcy proceedings of FTX, with John Ray III.

Patrick McHenry, Chairman of the House Financial Services Committee (Republican-from-NC), stated that regulation was necessary to ensure the continued existence of a legitimate cryptocurrency industry. “It appears to be the same old-school fraud, just using new technology,” He said. “We have to separate out the bad actions of an individual from the good created by an industry.”