Breaking News
Investing Pro 0
Free Webinar - Master Indicators: Maximized Trading Potential! | Thursday, June 8 | 12:30PM EDT Enroll Now

U.S. arrests Bitzlato cofounder, alleges $700 million of illicit funds processed

Published Jan 18, 2023 12:21PM ET Updated Jan 18, 2023 06:56PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. The Treasury Department is pictured in Washington, U.S., April 25, 2021. REUTERS/Al Drago

By Daphne Psaledakis, Raphael Satter and Chris Prentice

WASHINGTON (Reuters) - U.S. authorities said on Wednesday they have arrested the majority shareholder and cofounder of Hong Kong-registered virtual currency exchange Bitzlato Ltd for allegedly processing $700 million in illicit funds.

Anatoly Legkodymov, a Russian national living in China, was arrested in Miami on Tuesday on charges that he operated the exchange as an unlicensed money exchange business that "in his own words, catered to 'known crooks,'" a top Justice Department official said.

Prosecutors said Bitzlato exchanged more than $700 million in cryptocurrency with Hydra Market, which they described as an illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents and money laundering services that U.S. and German law enforcement shut down in April 2022.

"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," Deputy Attorney General Lisa Monaco told reporters at a news conference at the Justice Department.

Bitzlato also received more than $15 million in ransomware proceeds, prosecutors said. It was not immediately possible to contact Hydra Market for comment.

“Despite it being a small name, it carries a lot of weight," said Chen Arad, the chief operating officer at Solidus Labs, a crypto market surveillance company.

"Small actors are not safe and they carry just as much risk as any big-name exchange (or) platform," he said.

Authorities described Legkodymov as the cryptocurrency exchange's cofounder, saying the 40-year-old Russian helped run the company from the Chinese city of Shenzhen. Legkodymov did not immediately respond to an email with questions, and messages left on Bitzlato's automated Telegram support chat service were answered with the phrase, "Oops, sorry."

Bitzlato has processed $4.58 billion worth of cryptocurrency transactions since May 3, 2018, prosecutors said, adding a substantial portion constitutes "the proceeds of crime."

It also broke rules requiring significant vetting of customers and failed to meet requirements aimed at preventing money laundering, authorities said. Archived versions of Bitzlato's website noted that the site's clients could register using "only your email."

Prosecutors said Bitzlato knowingly serviced U.S. customers and conducted transactions with U.S.-based exchanges using U.S. online infrastructure. For at least some period of time, it was being managed by the defendant while he was in the United States, they said.

The charges were filed in conjunction with the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN), which said it has prohibited certain transmittals of funds involving Bitzlato by any covered financial institution after labeling Bitzlato Ltd a "primary money laundering concern" related to Russian illicit finance.

"Identifying Bitzlato as a primary money laundering concern effectively renders the exchange an international pariah," Deputy Treasury Secretary Wally Adeyemo said at the news conference.

Adeyemo said Bitzlato has repeatedly facilitated transactions for Russian-affiliated ransomware groups, including the gang behind Conti, which he said has links to the Russian government and Russia-connected darknet markets.

Cari Stinebower, a former Treasury Department official now a partner at law firm Winston & Strawn, said the penalties imposed are akin to those under Section 311 of the U.S. Patriot Act and will make Bitzlato untouchable by U.S. and foreign banks.

"None of the mainstream financial institutions will deal with an entity identified as a primary money laundering concern," she said.

"While U.S. financial institutions will refuse to engage in business with Bitzlato, (one would expect that) other financial institutions will follow suit," she added. "The impact will be to freeze Bitzlato out of the global financial sector almost immediately."

By midday Wednesday, Bitzlato's website was replaced by a notice saying that the service had been seized by French authorities "as part of a coordinated international law enforcement action."

U.S. arrests Bitzlato cofounder, alleges $700 million of illicit funds processed

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
taylor jason
taylor jason Jan 18, 2023 8:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
idiot, all he had to do was stay in China and he would have been fine.
Jayne Doe
Jayne Doe Jan 18, 2023 7:35PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why are you arresting these people? I don't want them to go to jail. This was an agreement they all benefited from but me. Today it's 16 billion. I just want 3 billion and access. I will put 1 billion back in and go from there. This is not okay. I don't want to hurt anyone then didn't know the truth so they shouldn't be blamed. I most certainly don't want it done. Not him not anyone. After the rules are changed will be a different story. Every one is going to lose if we don't agree on something that works for everyone. The only reason the are involved is because of your actions. Don't make the pay for something he didn't see as a problem. We have to be better. We all need money right now. I can't manage something that I can't see. The exchange law's need to be fixed to stop people from taking it. I need access to cryptocurrency in order to manage the coins. I don't need complete control and want to allow everyone to gain from this. They were just taking advantage. No access to funds.
Johnny Crash
Johnny Crash Jan 18, 2023 3:58PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Oh no, another crypto scam? Surprise!
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email