Crypto Exchange Bitzlato in Hot Water as Co-founder Pleads Guilty
Anatoly Legkodymov, also known as “Gandalf” and “Tolik,” a Russian national and co-founder of the Hong Kong-based crypto exchange Bitzlato, has pleaded guilty in a US federal court in New York to charges related to operating an unlicensed money transmitting business.
Legkodymov admitted to overseeing Bitzlato Ltd., a crypto exchange that served as a conduit for dark market transactions and a haven for ransomware criminals, the US Attorney’s Office for the Eastern District of New York said in a press release from Wednesday.
“The defendant may have thought he was operating from a safe haven overseas for his ‘No Questions Asked’ clearinghouse, but this prosecution and conviction demonstrate otherwise.” – U.S. Attorney Peace
— US Attorney EDNY (@EDNYnews) December 6, 2023
According to the prosecutor, Bitzlato’s lax controls over illicit money transactions attracted criminal elements seeking to exploit its lenient procedures.
Legkodymov agreed to dissolve Bitzlato as part of his plea agreement, releasing any claim to approximately $23 million in seized assets.
The guilty plea was made before US District Judge Eric N. Vitaliano.
The charges highlight Bitzlato’s role in facilitating illegal activities, with the exchange marketing itself as a haven requiring minimal user identification.
Bitzlato allegedly became a hub for criminal proceeds, particularly in dealings with Hydra Market, the largest and longest-running darknet market for narcotics and illicit services.
The US Attorney’s Office further said that Legkodymov’s deficient know-your-customer (KYC) procedures allowed users to submit information belonging to “straw man” registrants openly.
According to Wednesday’s announcement, users of Hydra Market, a Russian online marketplace
