Cryptocurrency Exchange Founder Admits to Operating a 'Safe Haven' for Criminals

This article is brief:

• Anatoly Legkodymov’s admission of guilt for illicit financial flows highlights lax controls on illicit transactions.

• Bitzlato is allegedly a refuge for criminals, with dark web transactions reaching $700 million as of April 2022.

• The Deputy Attorney General of Monaco stresses the fight against cryptocurrency crimes, emphasizing the consequences of lax control.

Anatoly Legkodymov, the founder of the cryptocurrency exchange Bitzlato, has pleaded guilty to accusations related to operating a money transfer business that facilitates the flow of illicit funds.

The allegations highlight Bitzlato’s role as a major facilitator of dark market trading. In addition, he has lax control over illegal money transactions.

Crypto Exchange Founder Oversees Millions of Illicit Funds

Legkodmov confessed to involvement in the operation of Bitzlato, an organization that attracted criminals to seek refuge for its activities.

At the same time, the cryptocurrency exchange is allegedly advertised as a “safe haven for criminals” due to the lack of a Know Your Customer (KYC) procedure.

However, Bitzlato’s largest cryptocurrency counterparty is Hydra Market. It is a notorious online marketplace that deals in drugs, stolen financial information, fraudulent identity documents, and money laundering services.

Users exchanged more than $700 million worth of cryptocurrencies with Bitzlato. This made it a key player in the illegal darknet marketplace until the closure of Hydra Market in April 2022.

Authorities claim Lykodemov turned a blind eye

However, Deputy Attorney General Lisa O. Monaco highlighted the government’s commitment to fighting cryptocrime. She cited the demolition of Bitzlato’s infrastructure and the confiscation of its cryptocurrency earlier this year as part of an ongoing effort.

According to the U.S. Department of Justice, Bitzlato uses a “no questions asked” clearinghouse approach.

Allegedly, this allowed criminals to take advantage of the exchange’s lax control, which was the main reason for its downfall.

The case was jointly prosecuted by the U.S. Attorney’s Office for the Eastern District of New York and the National Cryptocurrency Enforcement Task Force (NCET). It is a unit dedicated to combating the use of illegal cryptocurrencies.