Russian Anatoly Legkodymov, founder of cryptocurrency exchange Bitzlato, has been arrested by the US Department of Justice on charges of ransomware attacks and money laundering.
Anatoly was arrested in Miami on Tuesday and was arraigned in the Southern District of Florida court yesterday.
French authorities, working with Europol and with the help of partners from Spain, Portugal and Cyprus, dismantled the digital operations of the Bitzlato exchange.
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According to a report by Chainalysis, a blockchain analytics firm, on money laundering, Bitzlato received 2 billion dollars worth of cryptocurrencies in 2019-21, with 966 million of that coming from illegal activities.
According to some estimates, Bitzlato managed to make 206 million dollars from darknet, 224.5 million from scams and 9 million from ransomware attacks.
The US Department of Justice stated that due to insufficient KYC (Know Your Customer), Bitzlato became a so-called haven for illegal funds.
According to Chainalysis' report, the company had several "transactions" with Hydra Market, which was considered one of the largest darknet markets before it was shut down by US and German authorities in 2022.
The Justice Department alleges that Bitzlato founder Anatoly along with other exchange executives were aware of this illegal activity taking place, including the use of stolen identities to register accounts.
Despite claiming that the company did not allow users from the United States to register, reports received by Anatoly Legkodymov showed significant traffic to the platform from US-based IP addresses, with over 250 million visits in July 2022 alone.
Yesterday morning, Bitzlato notified its users that the exchange had been hacked and assured them that all funds were safe.
After the initial warning, they also announced that “funds are completely safe” and that anyone who has suffered any damage will be fully compensated. They disabled the service as a “security measure” and asked not to renew their services until further notice.
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In addition to the legal action taken by the Department of Justice, the U.S. Treasury Department’s Financial Crimes Enforcement Network ( FinCEN) has also identified Bitzlato as a “primary money laundering concern” linked to Russia. FinCEN also commented that “ Bitzlato plays a critical role in the laundering of convertible virtual currency ( CVC ) by facilitating illicit transactions for ransomware attacks operating in Russia – including Conti, a Ransomware-as-a-Service with ties to the Russian government .” FinCEN Director Himamauli Das added that “Bitzlato poses a global threat, enabling Russian cybercriminals and ransomware organizations to launder their proceeds.” Source: bleepingcomputer.com
