While the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has issued an order identifying the virtual currency exchange Bitzlato Limited d/b/a Bitzlato (www.bitzlato.com) as a primary money laundering problem related to illegal Russian financing, U.S. law enforcement authorities have charged and arrested the Russian founder and owner, Anatoly Legkodymov. The Bitzlato website was seized and shut down by French police and is no longer accessible.
Indictment, Arrest, And Shutdown
The U.S. Attorney’s Office has issued an indictment against Bitzlato and its owner, Russian national Anatoly Legkodymov, alleging that Bitzlato facilitated the laundering of $700 million in tainted cryptocurrencies related to the now-shuttered dark web market Hydra and millions more in ransomware proceeds. Legkodymov was arrested in Miami and is scheduled to be arraigned this afternoon in the U.S. District Court for the Southern District of Florida. French authorities seized and shut down the Bitzlato website.
According to FinCEN, Bitzlato plays a critical role in laundering Convertible Virtual Currency (CVC) by facilitating illicit transactions for ransomware actors operating in Russia, including Conti, a Ransomware-as-a-Service group that has links to the Government of Russia.
The Binance Involvement
Binance, the world’s largest crypto exchange by trading volume, was named as one of the receiving and sending counterparties associated with Bitzlato, according to the order from the Treasury Department’s FinCEN. Data from Arkham Intelligence shows that tens of millions of dollars flowed from Bitzlato through intermediate wallets to Binance, the world’s largest crypto exchange.