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Federal authorities arrested the founder of cryptocurrency exchange Bitzlato on Wednesday. They say Bitzlato has been a financial haven for Russian criminals involved in selling ransomware and illegal drugs on the dark web.
Anatoly Legkodimov, a 40-year-old Russian national living in Shenzhen, China, was arrested in Miami on Wednesday, US prosecutors said. Prosecutors said that under Legkodimov’s watch, Bitzrat processed about $4.58 billion worth of cryptocurrency transactions, and that “a significant portion of these transactions are criminal proceeds and funds used in criminal transactions.” I claimed. Bitzlato is known as a Virtual Asset Service Provider (VASP).
Ransomware and Cyber Crime Bazaar – No Questions Asked
The U.S. Department of Justice has taken action in partnership with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). FinCEN enforces laws against domestic and international money laundering, terrorist financing, and other financial crimes. Central to FinCEN’s agenda is the implementation of sanctions against Russian entities, including Russian-affiliated ransomware groups.
Ransomware groups that Bitzlato has allegedly worked with include (1) Russian-speaking DarkSide, which was involved in the 2021 Colonial Pipeline cyberattack that caused gas shortages in the southeastern United States; (2) his Phobos where ransomware attacked hospitals; (3) Conti, who swore allegiance to Russia after the invasion of Ukraine;
“Bitzlato plays a key role in facilitating transactions for the Conti ransomware group and other global ransomware actors, including actors operating outside Russia,” said Himamauri, Acting Director of FinCEN. Das writes. “As a result, FinCEN assesses that Bitzlato ultimately serves as a VASP that enables the profitability of ransomware attacks and, in Conti’s case at least, furthers the Russian government’s political and economic destabilization interests. I have.”
In addition to these groups, Bitzlato also worked with licensed cryptocurrency exchanges Chatex and Hydra. Hydra is a massive cybercrime marketplace where he facilitated over $5 billion worth of illicit goods and services to approximately 17 million customers before shutting down last year.
“Most of the cryptocurrency received by Hydra came directly from Bitzrat wallets,” FBI Special Agent Ryan Rogers wrote in an affidavit. “Hydra was Bitzlato’s largest trading counterparty for cryptocurrency trading, and Bitzlato was Hydra’s second largest trading counterparty. Funding purchases, sellers of illegal goods and services on the Hydra site routinely transferred illegal proceeds to Bitzlato accounts.”
The affidavit alleged that Legkodimov had personal knowledge that his exchange was processing funds from illegal activities. Using the abbreviation for the requirement to “know your customer,” he quoted Bitzlato’s website touting “easy registration without KYC.”
Other evidence included parts of a 2019 chat discussion that were seized. Trading in “drops” and the like. All of them (I think 90%) are [identity] card. Colleagues are said to have answered yes.
Prosecutors also alleged that Bitzlato had substantial transactions with U.S.-based customers, and that service personnel repeatedly advised users that they could transfer funds from U.S.-based financial institutions. Legkodimov, who allegedly managed the business from Miami last year and this year, had personally received reports that his website received numerous visits from his US-based IP address. . For example, last August, the founder was said to have received an email from his IP address reporting that he had received 264 million visits.
Coinciding with the measures taken in the United States on Wednesday, French authorities worked with Europol and partners in Spain, Portugal and Cyprus to dismantle Biturat’s domain name and digital infrastructure and seize Biturat’s cryptocurrency.
Legkodymov has been charged with running an unlicensed money transfer business. If convicted, he faces up to five years in prison. The Russian citizen was scheduled to appear in his first court hearing on Wednesday.
