US Arrests Russian Chief of China-based Crypto Exchange Bizlato

By Keith Griffith | DAILYMAIL.COM

US authorities have arrested the Russian founder of a Hong Kong-based darkweb crypto exchange known as Bitzlato, saying it was used as a haven for online criminals.

Anatoly Legkodymov, a Russian national who lives in China, was arrested Tuesday night in Miami on a charge of conducting an unlicensed money transmitting business.

US Deputy Attorney General Lisa O. Monaco told reporters on Wednesday that the charges allege Legkodymov ‘operated Bitzlato as a high-tech financial hub that, in his own words, catered to ‘known crooks.”

She said that Bitzlato operated in tandem with the ‘notorious Hydra darknet market’, a darknet marketplace for drugs, fake identifications and other illegal products.

‘Hydra and Bitzlato formed a high-tech axis of cryptocrime: Hydra buyers funded illicit purchases — of illegal drugs, stolen financial information, and hacking services — from crypto accounts hosted at Bitzlato, and sellers of these illegal goods and services at Hydra sent criminal proceeds to accounts at Bitzlato,’ said Monaco.

The Justice Department said Bitzlato, either directly or through its intermediaries, conducted more than $700 million in cryptocurrency exchanges with users of Hydra Market.

Prosecutors allege that Legkodymov’s China-based cryptocurrency exchange, of which he served as majority owner, did not implement required anti-money laundering safeguards.

They further allege the exchange required only minimal identification from its users, even permitting users to supply information belonging to ‘straw man registrants,’ people serving as cover for the users.

‘Whether you break our laws from China or Europe or abuse our financial system from a tropical island—you can expect to answer for your crimes inside a United States courtroom,’ Monaco said in a statement, an apparent reference to the arrest last month in the Bahamas of Sam Bankman-Fried, the former CEO of failed cryptocurrency exchange FTX.

The charge Legkodymov faces carries a maximum penalty of five years in prison if he is convicted.

Legkodymov, 40, was in custody Wednesday. It was unclear if he had a lawyer who could speak on his behalf.