Founder of Bitzlato exchange has pleaded for unlicensed money transmitting

Pierluigi Paganini December 08, 2023

Anatoly Legkodymov, the founder of the Bitzlato cryptocurrency exchange has pleaded in a money-laundering scheme.

Anatoly Legkodymov (41) (aka Anatolii Legkodymov, Gandalf, and Tolik), the Russian founder of the unlicensed Bitzlato cryptocurrency exchange, has pleaded guilty in a money-laundering scheme.

The police arrested Legkodymov in Miami in January, he was charged in a U.S. federal court with conducting a money-transmitting business that transported and transmitted illicit funds and that failed to meet U.S. regulatory safeguards, including anti-money laundering requirements.

The Bitzlato cryptocurrency was used cybercriminals for illicit transactions, including transactions associated with ransom payments.

Bitzlato’s largest counterparty in cryptocurrency transactions was Hydra Market, a dark web marketplace that was considered the largest and longest-running darknet market in the world. The U.S. and German law enforcement seized Hydra Market in April 2022. According to DoJ, Hydra Market users exchanged more than $700 million worth of cryptocurrency with Bitzlato.

“The founder and majority owner of Bitzlato Ltd. (Bitzlato), a cryptocurrency exchange that served as a primary conduit for dark market purchasers and sellers, as well as a safe haven for illicit transactions by ransomware criminals, pleaded guilty today to operating a money transmitting business that transmitted illicit funds.” states the press release published by DoJ. “In connection with his plea agreement, Anatoly Legkodymov, aka Anatolii Legkodymov, Gandalf, and Tolik, 41, who is a Russian national and resided in Shenzen, People’s Republic of China, agreed to dissolve Bitzlato and to release any claim over approximately $23 million in seized assets of Bitzlato.”

Bitzlato’s lax KYC procedures reportedly attracted criminal proceeds and funds earmarked for illicit activities.

“As alleged, Bitzlato advertised a safe haven for fraudsters, thieves, and other criminals to launder illicit proceeds — but their business model didn’t account for federal law enforcement,” said Deputy Attorney General Lisa O. Monaco. “We are dismantling and disrupting the cryptocrime ecosystem using all tools available — including criminal prosecution. In January, the Department and our partners took down Bitzlato’s infrastructure and seized its cryptocurrency. Today’s conviction of Bitzlato’s founder is the latest product of our efforts.”

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Pierluigi Paganini

(SecurityAffairs – hacking, APT28)

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