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Similar to what happened a few weeks ago with Binance, Anatoly Legkodymov, co-founder of the Bizlato cryptocurrency exchange, pleaded guilty to operating an unlicensed money transmission business and facilitating money laundering through the platform.
A statement from the United States Department of Justice (DOJ) published on December 5 reports that Legkodymov, a Russian citizen residing in China, admitted to having allowed the mobilization of illicit funds totaling up to $700 million in cryptocurrencies.
US authorities accuse the company, registered in Hong Kong, of operating globally without applying mandatory anti-money laundering and know-your-customer (KYC) rules.
According to DOJ investigations, there is evidence that the lack of KYC made Bitzlato the preferred choice of criminals associated with the dark web market Hydra, closed in 2022. TheFiniko, Russia-based Ponzi scheme, and the LocalBitcoins platform from Finland, would have been other recipients of funds.
Here it is important to note that it was also said that the Binance exchange was another of the receiving parties of illicit bitcoins mobilized between May 2018 and September 2022. Although spokespersons for the platform claimed to have provided assistance to international law enforcement partners, in support of the research on Bizlato.
According to the court document, Legkodymov and other company managers knew that the exchange helped criminals launder ill-gotten gains. "Everyone was aware that Bitzlato accounts were plagued by illicit activities and that many of its users were registered under the identities of others," the authorities say.
The Department of Justice further alleged that Bitzlato provided services to American clients and guided users on the movement of funds from other cryptocurrency companies registered in the United States, without obtaining the relevant authorization. All the evidence collected, authorities say, led to the guilty plea of ??Anatoly Legkodymov, who accepted the criminal charges presented by the Department of Justice after his arrest in Miami at the beginning of this year.
The CEO of Bizlato appeared before Judge Eric Vitaliano in a court in Brooklyn, New York, after having spent 11 months in custody. “The guilty plea confirms that he was well aware that his cryptocurrency exchange was being used as an open turnstile by criminals, eager to take advantage of his lax controls over illicit money transactions,” said prosecutor Breon Peace. He added that, as part of the plea agreement, the defendant agreed to dissolve Bitzlato and renounce claims for approximately $23 million in assets seized from the exchange.
Institutions that trade cryptocurrencies are not above the law and their owners are not beyond our reach,” Peace warned, stating that US authorities will continue to investigate the activities of the exchanges.
The investigation into Bitzlato was one of the first actions carried out this year by the DOJ's National Cryptocurrency Enforcement Network. A team formed at the end of 2021 to address complex investigations and prosecutions related to the use of cryptocurrencies for criminal purposes. The actions of this group generated relevant results last November, when the Department of Justice managed to get the former CEO of Binance, Changpeng Zhao, to plead guilty to allowing money laundering through the largest cryptocurrency exchange on the market.
