The crypto company Bitzlato was the target of a “significant worldwide cryptocurrency enforcement operation” that was announced by the United States Department of Justice. The action also resulted in the arrest of the company’s creator, Anatoly Legkodymov.
Lisa Monaco, the Deputy Attorney General for the United States, made an announcement on January 18 stating that enforcement actions had been taken against Bizlato in coordination with France. These actions included the seizure of Bizlato’s website and the labelling of the company as a “primary money laundering concern” connected to Russian illicit finance.
According to Monaco, the United States Department of Justice, the United States Department of the Treasury, and French law enforcement collaborated to bring legal action against Bitzlato for allegedly “conducting a money transmitting business that transported and transmitted illicit funds and that failed to meet U.S. regulatory safeguards.” In other words, Bitzlato allegedly moved and transmitted illegal funds.
Legkodymov, a Russian citizen residing in China, was taken into custody by FBI agents on January 17 in Miami as part of the investigation into Bitzlato’s activities.
The United States District Court for the Southern District of Florida is where his arraignment is set to take place.
The United States authorities stated that the criminal complaint against Bitzlato was based on the company being a money laundering operation “crucial financial resource” for the Hydra darknet marketplace, which allowed users to launder funds, including those obtained from ransomware attacks: “Hydra Market users exchanged more than $700 million in cryptocurrency with Bitzlato, either directly or through intermediaries, until Hydra Market was shut down by U.S. and German law enforcement in April 2022.
Additionally, Bitzlato was given more than $15 million from the revenues of the malware.”
The enforcement action consisted of a concerted effort throughout Europe and the United States to confiscate a significant portion of Bitzlato’s resources, including as the company’s servers, as well as to take the company’s creator into custody.
The “most substantial enforcement endeavour” against an exchange since the National Cryptocurrency Enforcement Team was established in October 2021, according to Monaco, who referred to the case as “the most significant enforcement effort.”
It was stated by Assistant Attorney General Kenneth Polite of the criminal division of the Department of Justice that United States authorities were “just getting started” in their crackdown on similar businesses engaged in the facilitation of money laundering.
Monaco issued a warning to individuals who perpetrate crimes against the United States financial system “from a tropical island,” despite the fact that no official has explicitly commented on the current prosecution against cryptocurrency exchange FTX and its former CEO Sam Bankman-Fried.
