The U.S. Department of Justice (DoJ) on Wednesday announced the arrest of Anatoly Legkodimov (aka Gandalf and Trick) is the co-founder of Hong Kong-registered cryptocurrency exchange Bitzlato and is suspected of handling $700 million in illicit funds.
A 40-year-old Russian national arrested in Miami was found in U.S. federal court for “carrying and transmitting illegal funds and conducting a money transfer business that failed to meet U.S. regulatory protections, including anti-money laundering requirements. ” was indicted. ‘ said the Justice Department.
According to court documents, Bitzlato allegedly violated rules requiring customer vetting by advertising itself as a cryptocurrency exchange with minimal user identification requirements.
This lack of Know Your Customer (KYC) practice has turned the service into a “criminal proceeds haven,” according to the complaint, allowing 700 million dollars on the Hydra darknet market before being shut down by law enforcement in April 2022. Facilitated transactions worth more than a dollar.
“Defendant helped operate a cryptocurrency exchange that failed to implement anti-money laundering protections and enabled criminals to profit from fraudulent activities such as ransomware and drug trafficking,” said Assistant Attorney General Polite. said.
Additionally, Legkodimov and other senior executives are aware that users are “known to be fraudsters,” despite registering accounts using stolen identification documents. Instead, it has been accused of turning a blind eye to illegal activities taking place on its platform.
“An internal spreadsheet stored in Bitzlato’s shared administrative folder encapsulated the company’s own views: ‘Positive: No KYC.. Negative: Dirty money..’,” the DoJ said. .
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has identified Bitzlato as a “major money laundering concern” that has allowed ransomware actors such as Conti to launder ill-gotten gains. explained.
Coinciding with the arrest, Bitzrath’s digital infrastructure was seized and dismantled by authorities in France, Spain, Portugal and Cyprus as part of an international exercise led by Europol.
“Allegedly, Bitzlato marketed itself to criminals as a no-questions-asked cryptocurrency exchange, resulting in deposits worth hundreds of millions of dollars,” federal prosecutor Breon Peace said.
In February 2022, blockchain analytics firm Chainalysis revealed that Bitzlato “received $206 million from darknet markets, $224.5 million from fraud, and $9 million from ransomware attackers.” bottom.
After last year’s Russian-Ukrainian war, the high-risk exchange also emerged as a “cash-out destination” for Project Tellikon, a terrorist group soliciting cryptocurrency donations to support militias in the Donbass region. , the company noted.
Overall, Bitzlato received an estimated $2.5 billion in cryptocurrency between 2019 and 2023, 53% of which came from illegal and dangerous sources.
“When cybercriminals cannot reliably convert the cryptocurrency generated by their activities into cash, their motivation to commit crimes plummets,” Chainalysis said, adding that removal is “another disruption of key money laundering services. represents,” he added.
The development also comes a week after Europol dismantled its network of call centers in Bulgaria, Cyprus, Germany and Serbia, luring victims into heavily investing in fraudulent cryptocurrency schemes and earning millions of dollars. suffered the loss of
