Bitzlato and its Founder Charged With Laundering $700M
- The U.S. Department of Justice worked together with the Federal Bureau of Investigations, Treasury Department, and French authorities to take down the laundering operation.
- Crypto Twitter, however, was not impressed with the “major international cryptocurrency enforcement action” against the little known platform.
U.S. Department of Justice building in Washington, D.C, 10 January, 2012. Diego M. Radzinschi/The National Law Journal
The U.S. Department of Justice (DoJ) has charged little known crypto exchange Bitzlato with money laundering and arrested its founder Anatoly Legkodymov, the DoJ said in a press release on 18 January.
According to the announcement, the DoJ considered Bitzlato to be a “money laundering engine” that fueled a “high-tech axis of cryptocrime”, and claimed that the crypto exchange had processed more than $700 million in illicit funds in the last several years. As part of the case against Bitzlato, the Federal Bureau of Investigations (FBI) arrested its founder Anatoly Legkodymov in Miami on Tuesday. The DoJ’s assistant attorney general, Kenneth Polite, said in a statement:
“As alleged, the defendant helped operate a cryptocurrency exchange that failed to implement anti-money laundering safeguards and enabled criminals to profit from their wrongdoing, including ransomware and drug trafficking. 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.”
The DoJ considered the move against Bitzlato a “major international cryptocurrency enforcement action”, noting that it worked together with the FBI, Treasury Department, and French law enforcement to take down the money laundering operation. According to the agency, the crypto exchange offered peer-to-peer services and hosted wallets of criminals that bought and sold illegal goods, and played a key role in handling illicit transactions for ransomware actors in Russia. Bitzlato was also used as a “crucial financial resource” for the Hydra darknet marketplace, which was targeted by U.S. authorities last year.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has now labeled the exchange a “primary money-laundering concern”, a tag which usually cuts off a business from the global financial system. The agency also noted that the top three counterparties that received BTC from the exchange were Binance, the Hydra darknet market, and alleged Ponzi scheme “TheFiniko”.
Crypto Twitter, however, was not impressed by the DoJ’s “major international cryptocurrency enforcement action” that targeted an exchange hardly anyone had ever heard of:
- The popular crypto exchange has decided to sell its business in Russia to CommEX, a crypto exchange business that was officially launched on Tuesday.
- Binance noted that it will fully exit the Russian market, and have no ongoing revenue split or any option to buy back shares in the business.
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- Karl Greenwood, co-founder of the OneCoin crypto pyramid scheme, was sentenced to 20 years in prison, and ordered to pay back the $300 million he made in commissions.
- Greenwood was the “global master distributor and the leader of the MLM (multi-level marketing) network” during his time in OneCoin, earning him 5% of all monthly sales.
- The U.S. SEC, CFTC, and FTC have all filed separate lawsuits against bankrupt crypto lender Celsius and its former CEO Alex Mashinsky, charging them with multiple counts of fraud.
- Mashinsky was also arrested in New York on Thursday, and later charged by the Department of Justice with securities fraud, commodities fraud, and wire fraud.