Business Technology

Crypto founder accused of $700 million financial fraud

After accusing the cryptocurrency exchange Bitzlato of providing funding for a high-tech nexus of crypto crime, authorities seized the business and detained the company's co-founder.

After accusing the cryptocurrency exchange Bitzlato of providing funding for a “high-tech nexus of crypto crime,” authorities seized the business and detained the company’s co-founder.

Russian national Anatoly Legkodymov, living in China then, was charged with running a business catered to “crooks” by the US Department of Justice.

They said that Bitzlato handled almost $700m (£567m) in illegal funds, violating regulations to prevent money laundering.

Mr Legkodymov was apprehended in Florida’s Sunshine State capital of Miami.

At a press conference on Wednesday, US Attorney Breon Peace announced the arrest, saying, “Institutions that trade in Cryptocurrency are not above the law and their owners are not beyond our reach.”

“As alleged, Bitzlato sold itself to criminals as a no-questions-asked cryptocurrency exchange and reaped hundreds of millions of dollars’ worth of deposits as a result. The defendant is now paying the price for the malign role that his company played in the cryptocurrency ecosystem.”

The complaint states that since 2018, the Hong Kong-based exchange has handled bitcoin transactions totalling around $4.5bn.

Prosecutors claimed the company was a “haven for criminal proceeds and funds intended for use in criminal activity” since it required minimal user identification.

In support of their claims, they cited an internal document that identified Bitzlato as handling “dirty money” without regular customer-vetting procedures, suggesting that the company was aware of the problems.

Hydra Market was a dark web marketplace for drugs, money laundering, and stolen financial information that was taken down last year by international authorities.

Prosecutors believe Bitzlato did “substantial” business with Americans, despite the company’s claims that it did not accept customers from the United States.

The US government coordinated with French and international police to carry out the operation.

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