Anatoly Legkodymov, the founder of the Bitzlato cryptocurrency exchange, was recently sentenced to 18 months by Judge Eric Vitaliano for operating an unlicensed money-transmitting business. This sentence was equivalent to the time he had already served. Legkodymov had previously admitted to running an operation that helped hide over $700 million from illegal gambling and drug transactions.
During the trial, Legkodymov expressed regret and stated that he could have done more as the founder of the company. Judge Vitaliano took note of the harsh conditions at the Metropolitan Detention Centre in Brooklyn, where Legkodymov was detained, emphasizing the challenging environment.
As part of his plea agreement, Legkodymov agreed to forfeit any claim to $23 million in crypto assets that were seized by French authorities during a global operation that led to the closure of Bitzlato on January 23, 2023. Prosecutors accused Legkodymov of facilitating crypto exchanges through the Russian dark web black market Hydra Market and failing to implement proper monitoring measures for users.
The crackdown on Bitzlato was part of an international effort involving the US, Spain, Portugal, Cyprus, and Europol. Approximately 46% of the assets processed by Bitzlato, totaling $1.09 billion, were associated with illicit activities, according to Europol. These activities included transactions linked to entities sanctioned by the Office of Foreign Assets Control, cyber scams, money laundering, ransomware, and child abuse material.
Legkodymov’s case is part of a broader initiative by the US Justice Department to combat the criminal use of cryptocurrency and recover proceeds from such crimes through the National Cryptocurrency Enforcement Team. This crackdown reflects the increasing scrutiny of the crypto industry, as seen in the recent settlement with Binance Holdings Ltd. and CEO Changpeng Zhao for anti-money laundering and sanctions violations.
Overall, the sentencing of Legkodymov and the closure of Bitzlato highlight the growing efforts to address illegal activities in the cryptocurrency space. It serves as a reminder of the importance of regulatory compliance and monitoring within the industry to prevent misuse and criminal behavior. As the crypto industry continues to evolve, it is essential for companies and individuals to uphold ethical standards and adhere to legal requirements to ensure a safe and secure environment for all participants.