A Russian, creator of a cryptocurrency exchange platform suspected of laundering millions of dollars in dirty money, was arrested in the United States on Wednesday and five of his alleged accomplices were arrested in Europe.
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The founder and main owner of the Bitzlato platform, Anatoly Legkodimov, a 40-year-old Russian man living in China, was arrested in Miami, Florida in the middle of the night, US authorities said at a news conference.
He will appear before a federal judge later today on charges of “illicit money transmission activity,” a charge that carries a five-year prison sentence.
Five other men, mainly of Russian and Ukrainian nationality, were arrested in Spain (3), Portugal and Cyprus as part of a major international police operation led by French gendarmes, Paris prosecutors said.
Another suspect was to be arrested quickly and a final one fled, according to a source close to the inquiry opened by French justice in September 2022.
They are suspected of being involved in the creation and development of the Russian-language Bitzlato platform, which “enables the rapid conversion of cryptoassets such as bitcoins, ethereum, litecoins, bitcoins cash, dashes, dogecoins and tether USD into rubles,” Paris prosecutor specified Laure Beccuau in a statement.
“This platform was used by crooks to launder their money,” General Marc Boget, commander of the gendarmerie in cyberspace, told AFP.
The service offered by the Bitzlato company has been taken out of service. The domain name and cryptoassets, valued at almost €16 million, were seized according to the Gendarmerie, who estimate the total transactions recorded on Blitzlato since 2018 at more than two billion dollars.
This global trawl “deals a major blow to the crypto criminal ecosystem” and “responses to the crisis of confidence in the cryptocurrency markets,” commented US Deputy Attorney General Lisa Monaco.
“Whether you’re breaking the law in China or Europe — or operating our financial system from an island in the tropics — you can expect to be held accountable for your actions in a US court,” she added was referring to the arrest in the Bahamas of former FTX cryptocurrency exchange CEO Sam Bankman-Fried.
The US judiciary has criticized Anatoly Legkodimov for pursuing a policy of “minimal identification” of his clients, boasting that he “neither requires a selfie nor a passport”. As a result, Bitzlato has become a “haven for criminal funds,” according to the Justice Department.
The company is accused of carrying out most of its transactions with Hydra Market, the main sales platform for the global dark web, in a joint operation by German and American authorities until its dissolution in April.
Hydra Market has been operating in Russian since 2015, selling drugs and fake documents or malware on this dark side of the internet. According to the US Department of Justice, Hydra users have traded over $700 million worth of cryptocurrencies through Bitzlato.
However, according to the complaint, Anatoly Legkodimov knew that his clients were hiding under false identities to carry out illegal activities. In an internal communication, he had admitted that it was a matter of “scammers”.
Along with the lawsuits, the US Treasury Department has placed Bitzlato on a list of entities with “money laundering risk.” “This makes Bitzlato a de facto international outcast,” commented Deputy Finance Minister Wally Adeyemo.