U.S. authorities charged the co-founder of Hong Kong-based virtual currency exchange, Bitzlato, with a criminal offense in the United States on Monday. Anatoly Legkodymov was accused of handling about $700 million in illicit funds and agreed to forfeit $23 million in a deal with federal prosecutors.
During a hearing before U.S. District Judge Eric Vitaliano, Legkodymov admitted that after he learned that some customers had used the platform to transfer cryptocurrency from illegal activity, he was aware that Bitzlato was being used like an open turnstile by criminals. He also said that the Hydra Market, an online marketplace for drugs, stolen financial data and money laundering services, had made its way onto the Bitzlato platform.
The top federal prosecutor in Brooklyn, Breon Peace, stated in a public statement that Legkodymov’s guilty plea represents the latest success in U.S. law enforcement’s crackdown against fraud and illicit financing in the cryptocurrency market. Bitzlato’s website has now been replaced with a notice stating that the service has been taken over by French authorities as part of an international coordinated law enforcement action.
If the judge sentences him, Legkodymov could face up to five years in prison. No date of sentencing has been set, but Legkodymov was arrested in Miami in January and has been held in the Metropolitan Detention Center since then.
Meanwhile, the FTX founder Sam Bankman-Fried was found guilty of stealing millions of dollars from the customers of that cryptocurrency exchange. Binance CEO Changpeng Zhao also pleaded guilty to violating U.S. laws against money laundering and agreed to pay $4.3 billion in settlement.
Russia’s embassies in Washington have called for Legkodymov’s release in April after Ambassador Anatoly Antonov visited him while he was in prison. However, the U.S. government rejected a plan to release Wall Street Journal reporter Evan Gershkovich and two other Americans whom the U.S. considers were wrongfully held in Russia.
This case is yet another example of the success of U.S. law enforcement in cracking down on fraud and illicit financing in the cryptocurrency market. Bitzlato’s top counterparties have also been targeted, with FTX founder Sam Bankman-Fried found guilty of stealing millions from customers and Binance CEO Changpeng Zhao pleading guilty to violating money laundering laws.