The US Department of Justice and French authorities on Thursday shut down an alleged money laundering target for crypto criminals.
On Jan. 19, the Justice Department accused Anatoly Legkodymov, a Russian citizen and an executive of Bitzlato, a Hong Kong-registered global cryptocurrency exchange, of “running a money transfer business that transported and transmitted illegal funds and that failed to meet US regulatory protections, including anti-money laundering requirements.”
The Justice Department says Bitzlato advertised itself as a “no-questions-asked cryptocurrency exchange” to criminals, resulting in hundreds of millions of dollars worth of deposits being harvested.
Although Bitzlato said it does not accept US users, the Justice Department claims that the crypto platform has done a significant amount of business with US-based customers, and the company’s customer service representatives have repeatedly advised users that they should withdraw funds from US financial institutions could transfer.
According to the Justice Department, Bitzlato’s largest trading partner in cryptocurrency transactions was Hydra Market, an anonymous online marketplace for illegal goods such as narcotics, stolen financial information and money laundering services.
Hydra Market users traded 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 agencies in April 2022, the DOJ reports.
In the Justice Department press release, the Federal Bureau of Investigation alleges that Legkodymov knowingly allowed Bitzlato to become a “perceived safe haven for funds” both used for and resulting from a variety of criminal activities. The FBI adds that Bitzlato promoted that users would need minimal identification to use the platform and that “no selfies or passports [are] necessary.”
According to Chainalysis, crypto criminals have relied heavily on Bitzlato for money laundering services. His research shows that the exchange received over $2.3 billion in cryptocurrency between 2019 and 2023.
The shutdown of the platform could deal a decisive blow to the crypto crime industry.
“If cybercriminals cannot reliably convert the cryptocurrency generated by their activities into cash, the incentives to commit these crimes decrease,” reports Chainalysis.
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