Department of Justice says Anatoly Legkodymov operated the Hong Kong-registered Bitzlato exchange as a money laundering haven.
United States authorities have arrested a Russian national accused of running a Hong Kong-registered cryptocurrency exchange as a money laundering outfit.
The US Department of Justice said Anatoly Legkodymov, 40, a Russian living in Shenzhen, China, is scheduled to be arraigned on Wednesday for his role in transmitting a total of $700m in illicit funds through the virtual currency exchange Bitzlato, which marketed itself as requiring minimal identification from users.
The arrest was conducted in conjunction with the US Department of the Treasury’s Financial Crimes Enforcement Network and foreign authorities, officials said.
“Overnight, the Department worked with key partners here and abroad to disrupt Bitzlato, the China-based money laundering engine that fueled a high-tech axis of cryptocrime, and to arrest its founder, Russian national Anatoly Legkodymov,” US Deputy Attorney General Lisa Monaco told reporters in Washington, DC.
“Today’s actions send the clear message: whether you break our laws from China or Europe — or abuse our financial system from a tropical island — you can expect to answer for your crimes inside a United States courtroom,” Monaco added.
The arrest comes less than a month after the Department of Justice announced the extradition of another cryptocurrency leader, Sam Bankman-Fried, the former CEO of failed cryptocurrency firm FTX. He had been staying in the Bahamas and faces charges of fraud and money laundering.
The US Department of Justice hailed Legkodymov’s arrest in Miami, Florida, on Tuesday night as a “blow to the cryptocrime ecosystem”.
Officials said the exchange catered to “known crooks”, including criminals seeking a haven for money attained from narcotics trading and from selling stolen financial information.
Reporting from Washington, DC, Al Jazeera’s Alan Fischer noted Treasury officials said on Wednesday “that a lot of the people using this site are Russians and Russian criminals, and they have been laundering money”.
“This suggests that the Russian criminals wouldn’t be able to do business if the authorities in Russia, the government in Russia, didn’t allow them to do that. So they [US officials] believe that some of the money that is going through this exchange is also being used to help fund Russia’s war in Ukraine,” he said.
Asked at the news conference if Bizlato had assisted Russia in evading sanctions tied to its invasion of Ukraine, Deputy Secretary of the US Treasury Wally Adeyemo said, “What we do know is Russia has set up an ecosystem that is permissive for cybercriminals.”
Bitzlato’s largest partner for transactions was Hydra, an anonymous online marketplace on the “darknet” that was shut down by US and German authorities last year.
Hydra sold illegal drugs, stolen credit card data, counterfeit currency and fake identity documents, masking the identities of those involved using encryption.
When it was closed in April 2022, the Hydra marketplace had approximately 17 million customer accounts and more than 19,000 vendor accounts, according to German federal police.
The so-called “darknet” includes websites that can be accessed only with specific software or authorisations, ensuring anonymity for users.
Prosecutors said Bitzlato had processed $4.58bn worth of cryptocurrency transactions since May 3, 2018, though not all the transactions involved criminal activities.
Legkodymov is charged with “conducting an unlicensed money-transmitting business”. He faces a maximum penalty of five years in prison if convicted.
Source: Thanks AlJazeera.com