Bitzlato exchange founder gets 18 months in US prison

What’s new? Anatoly Legkodymov, the founder of the crypto exchange Bitzlato, has been sentenced to 18 months in a US prison for running an unlicensed business and laundering $700 million worth of illegal proceeds from gambling platforms and drug dealers. He was arrested in January 2023 and pleaded guilty in December to charges including processing transactions for darknet marketplaces such as Hydra, which was shut down by law enforcement in 2022.

Material by Bloomberg

What else is known? Prosecutor Breon Peace insisted that Legkodymov, as the manager of a money laundering platform, deserved at least four years in prison. Peace noted that the defendant continued to run Bitzlato even after warnings that the exchange was being used by hackers, drug dealers, and other criminals.

Judge Eric Vitaliano ruled that Legkodymov was aware of the illegality of his actions, but also called him “an entrepreneur and visionary” who had “led a life to be admired.” In addition, Vitaliano called the Metropolitan Detention Center, where Legkodymov is being held, a “terrible place”: two inmates have been killed there in the past five weeks.

Given this fact, the judge ruled that Legkodymov had spent enough time in detention. Thus, the businessman has served the sentence imposed by the court since his arrest, and it will not be extended.

In his decision, Vitaliano also cited the sentencing of Changpeng Zhao, founder of the world’s largest crypto exchange Binance. The entrepreneur pleaded guilty to money laundering as part of an agreement with US authorities, resigned as CEO, and received only four months in prison.

As part of the agreement with the US Department of Justice, Legkodymov not only pleaded guilty to laundering $700 million but agreed to shut down Bitzlato and waived claims to $23 million worth of assets seized by French authorities.

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As for service users, by September last year, the team had allowed 60% of the balance at the time of suspension to be withdrawn. According to the Telegram bot Bitzlato, payments of available balances ended on May 30, 2024.

It is noted that the remainder of the funds are blocked by law enforcers in France as part of a criminal investigation. To withdraw the entire amount from the platform, the victims have two options: independently apply to the French court to prove the legal origin of the cryptocurrency, or wait until the end of the judicial process. The term is not regulated by law and, according to the team’s forecasts, may last 2-3 years.