Bitzlato co-founder pleads guilty to laundering $700 million and agrees to shut down the service
Anatoly Legkodymov also dropped his claims to the arrested assets
07.12.2023 - 07:36
What’s new? Anatoly Legkodymov, co-founder and majority owner of the Bitzlato crypto exchange, pleaded guilty to laundering $700 million. As part of the agreement with the US Department of Justice, he also agreed to shut down the service and waived claims to seized assets worth $23 million. Legkodymovwas arrested on January 17 on charges of operating an unlicensed exchanger that was used by ransomware hackers and was also involved in transactions on darknet marketplaces.
What else is known? Bitzlato is registered in Hong Kong and is positioned as a service that does not require a facial photo or passport for identification (KYC). Prosecutors emphasize that even when the service asked to disclose more personal data, its management turned a blind eye to the fact that the data belonged to fake people or was fabricated.
Thus, as a result of non-compliance with KYC procedures, the service became actively used for money laundering. The largest counterparty of Bitzlato was the darknet marketplace Hydra. It exchanged over $700 million worth of cryptocurrencies through the service until its servers were arrested by the US and German authorities last April. About $15 million more was laundered through the service by hackers distributing ransomware.
The day after Legkodymov’s arrest, Bitzlato reported that it had been hacked and lost some of its funds. Then French authorities, in cooperation with Europol and partners in Spain, Portugal, and Cyprus, liquidated Bitzlato’s digital infrastructure and seized the service’s cryptocurrency. Several other employees and partners of the project were detained as part of this operation.
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Later, Bitzlato co-founder Anton Shkurenko said that French authorities confiscated the hot wallet, where 35% of user assets were stored. In March, the service allowed customers to withdraw 50% of funds from their accounts. In September, the share was increased to 60%.
In November, the founder of Binance also pleaded guilty to money laundering and sanctions violations as part of an agreement with the US Department of Justice, he faces 18 months in prison following a sentencing announcement scheduled for February next year. The DOJ is asking that the businessman be barred from leaving the country until the hearing, but the court has yet to issue a final ruling.
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Zhao has also stepped down from his posts as CEO of the global exchange and chairman of the board of the US arm, Binance itself will pay $4,3 billion in fines to several agencies.
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