Bitzlato Founder Admits Guilt in Crypto Exchange Case
The U.S. Department of Justice has announced that Russian national Anatoly Legkodymov, founder of the cryptocurrency exchange Bitzlato, has pleaded guilty to operating a platform that authorities say helped ransomware operators and other cybercriminals launder over $700 million.
News of Bitzlato’s shutdown and Legkodymov’s arrest first broke in early 2023. At that time, authorities alleged that Bitzlato facilitated money laundering for cybercriminals, linking the exchange to well-known hacking groups such as Conti, DarkSide, Phobos, and the Hydra marketplace.
The U.S. Department of Justice described Bitzlato as a “global threat that enables Russian cybercriminals and fraudsters to launder stolen funds.” Due to the lack of KYC (know-your-customer) procedures, Bitzlato became a haven for criminal proceeds and funds intended for illegal activities.
It was reported that more than $4.5 billion in cryptocurrency allegedly passed through the service. Bitzlato’s largest crypto transaction partner was Hydra, the world’s largest and oldest darknet marketplace, which was shut down by U.S. and German authorities in April 2022.
Chainalysis Report Findings
According to a report by Chainalysis, which analyzed Bitzlato’s illegal activities from 2019 to 2021, the company was linked to cryptocurrency transactions totaling over $2 billion. A significant portion of these funds (about $966 million, nearly 48% of the total volume) was deemed illegal and associated with high-risk crypto transactions.
The report also highlighted that the exchange received $206 million from darknet sources, $224.5 million from scammers, and about $9 million from ransomware operators.
Authorities’ Statements and Legal Consequences
Law enforcement officials claimed that Legkodymov and other managers were aware of the illegal activities widely practiced on Bitzlato, including users registering accounts with stolen personal data and documents (when such documents were requested at all).
“Legkodymov operated a cryptocurrency exchange that was open to money laundering and other crimes,” Justice Department representatives stated. “He profited from providing services to criminals, and now he will be held accountable. Cryptocurrency transactions do not make you immune from the law.”
Prosecutors in New York added, “Legkodymov’s guilty plea confirms that he knew Bitzlato was an open gateway for criminals seeking to exploit its weak controls over illegal financial transactions.”
Legkodymov, who has been held in custody in Brooklyn since his arrest in January of this year, faces a maximum sentence of five years in prison.