On Wednesday, the United States Department of Justice (DOJ) shut down Hong Kong-based crypto exchange, Bitzlato. The DOJ released a press release stating that the exchange was a den for criminal activities—from money laundering to ransomware. There were also claims that Bitzlato had received more than $15 million in ransomware payments. As well as processing more than $700 million in illicit transactions.
The seizure of the crypto exchange was a coordinated operation by law enforcement authorities in Europe and the U.S. Authorities involved in the operation included the Cyprus Police, the Civil Guard of Spain, Europol, Eurojust, Politie Police, the Belgian Federal Police, FIOD Tax and Customs Administration, among others. Furthermore, the Financial Crimes Enforcement Network of the U.S. Department of Treasury connected Bitzlato with illegal financing in Russia.
Notably, a press release by the Network stated that the exchange aided the laundering of Convertible Virtual Currency (CVC) for ransomware perpetrators in Russia. The exchange was also linked to Conti, a ransomware-as-a-service group mooted to be connected to the Russian government.
U.S. Deputy Attorney General Lisa Monaco described the exchange’s shutdown as the “most significant enforcement effort” against an exchange by the National Cryptocurrency Enforcement Team since its launch in 2021.
Bitzlato’s Founder Arrested By Authorities
Following the recent developments with Bitzlato, its founder, Anatoly Legkodymo has been arrested. Legkodymo will face charges relating to money laundering and illicit money transmission. Indeed, an internal chat system revealed that the founder knew that the exchange moved money illegally.
According to the DOJ’s press release, Hydra Market—the biggest marketplace on the dark web—was Bitzlato’s largest partner. The DOJ described the marketplace as “an anonymous, illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents, and money laundering services.”
It stated that Bitzlato had processed transactions worth almost $700 million from Hydra Market’s users. Legkodymov will be arraigned before the U.S. District Court for the Southern District of Florida.