Crypto Exchange Founder Pleads Guilty To $700M Illicit Funds

Anatoly Legkodymov, the founder of crypto exchange Bitzlato pleaded guilty to charges related to operating a money transmitting business that facilitated the movement of illicit funds.

The charges highlighted Bitzlato’s role as a primary facilitator for dark market transactions. Furthermore, his lax controls over illicit money transactions.

Crypto Exchange Founder Oversees Millions In Illicit Funds

Legkodymov admitted to the operation of Bitzlato, which attracted criminals seeking a refuge for their activities.

Meanwhile, the crypto exchange, marketed as having minimal identification requirements, allegedly became a “safe haven for criminals” due to a lack of know-your-customer (KYC) procedures.

However, Bitzlato’s largest counterparty in cryptocurrency transactions was Hydra Market. This is a notorious online marketplace dealing in narcotics, stolen financial information, fraudulent identification documents, and money laundering services.

Users exchanged over $700 million worth of cryptocurrency with Bitzlato. This makes it a key player in the illicit darknet market until Hydra Market’s shutdown in April 2022.

Authorities Claim Legkodymov Turned a Blind Eye

However, deputy Attorney General Lisa O. Monaco emphasized the government’s commitment to disrupting cryptocrime. She cited the takedown of Bitzlato’s infrastructure and seizure of its cryptocurrency earlier this year as part of ongoing efforts.

Learn more: How To Identify a Scam Crypto Project

According to the DoJ, Bitzlato had a “no questions asked” clearinghouse approach.

This allegedly enabled criminals to exploit the exchange’s lax controls, is the primary cause of its downfall.

The case was jointly prosecuted by the United States Attorney’s Office for the Eastern District of New York and the National Cryptocurrency Enforcement Team (NCET). This is a unit dedicated to combating illicit cryptocurrency use.

Learn more: 15 Most Common Crypto Scams To Look Out For