The U.S. Department of Justice has seized cryptocurrency exchange Bitzlato and arrested its co-founder in what they allege is a money laundering scheme.
Anatoly Legkodymov, a Russian national, was arrested in Miami, Florida and charged with running a business that catered to criminals and international crime syndicates.
The U.S. Justice Department said that Bitzlato processed more than $700 million U.S. in illicit funds, breaking rules designed to prevent money laundering.
Since 2018, Hong Kong-registered crypto exchange Bitzlato processed about $4.5 billion U.S. worth of cryptocurrency transactions, according to the Justice Department.
The firm required minimal identification from its users, allowing it to become a “haven for criminal proceeds and funds intended for use in criminal activity,” say federal prosecutors.
They alleged that the firm was aware of the issues, citing an internal document that described Bitzlato as handling “dirty money” without standard customer-vetting processes.
U.S. authorities claim the firm was closely connected to Hydra Market, a dark web marketplace for drugs, money laundering, and stolen financial information that was shutdown last year. Bitzlato claimed it did not accept U.S. customers, but prosecutors said that it did do business with many American investors and criminals.
