US DoJ charges crypto exchange founder over alleged illicit fund transfers
The US Department of Justice (DoJ) has arrested and charged the founder and majority owner of crypto exchange Bitzlato, Anatoly Legkodymov, over his alleged operation of a “money transmitting business that transported and transmitted illicit funds and that failed to meet US regulatory safeguards, including anti-money laundering requirements”.
The DoJ alleges that Bitzlato processed more than $700 million in illicit funds, enabling criminals to profit from ransomware and drug trafficking.
Crucially, the DoJ alleges the exchange “did substantial business with US-based customers, and its customer service representatives repeatedly advised users that they could transfer funds from US financial institutions”.
The Hong Kong-registered firm allegedly billed itself as a “no-questions-asked” crypto exchange, specifying that “neither selfies nor passports [are] required”.
As a result of these “deficient” know your customer (KYC) protocols, the DoJ alleges Bitzlato became a “haven” for criminal proceeds and funds intended for use in criminal activity.
Deputy attorney general Lisa Monaco says the arrest of Russian national Legkodymov has “dealt a significant blow to the cryptocrime ecosystem”.
He has been charged with running an unlicensed money transmitting business and faces up to five years in prison.
Assistant attorney Kenneth Polite of the Justice Department’s criminal division, says: “The National Cryptocurrency Enforcement Team’s tremendous efforts to disrupt Bitzlato and arrest the defendant demonstrate that we will continue to work with our partners – both foreign and domestic – to combat cryptocurrency-fueled crimes, even if they transcend international borders.”