United States authorities designated cryptocurrency exchange Bitzlato Limited. as a primary money laundering concern and charged its founder for allegedly facilitating money laundering for criminals.
The Treasury Department designated Bitzlato under a section of the USA Patriot Act, a law used to combat money laundering and terrorist financing, for allegedly laundering illicit funds for ransomware actors based in Russia. This type of action, a rarely used so-called death-knell sanction that cuts off the entity from the United States financial system, has been used mainly in the past against banks and other financial institutions and in most cases has forced the institution to close.
Bitzlato, which is based in Hong Kong but operates globally, allegedly exchanged more than $700+ millions in cryptocurrency with Hydra Market, a darknet marketplace that was the largest in the world before it was shut down in April 2022, the United States Justice Department said. Bitzlato also received more than $15 million of ransomware proceeds, the Justice Department said.
Anatoly Legkodymov, the founder and majority owner of Bitzlato, was arrested Tuesday night in Miami. Mr. Legkodymov, a 40yr old Russian who lives in Shenzhen, China, is scheduled for his first court appearance Wednesday afternoon at a federal court in Florida.
Concurrent with the United States action, French authorities have taken their own enforcement steps, including closing Bitzlato’s digital infrastructure and seizing its cryptocurrency.
United States prosecutors said Bitzlato lacked effective KYC procedures to check users identity as required by United States anti money laundering laws and did substantial business with United States based customers despite claiming not to accept users from the United States.
Representatives for Bitzlato and for Legkodymov couldnt be immediately reached for comment.
“Today the Department of Justice dealt a significant blow to the cryptocrime ecosystem” Deputy Attorney General Lisa Monaco said Wednesday. “Today’s actions send the clear message- Whether you break our laws from China or Europe or abuse our financial system from a tropical island, you can expect to answer for your crimes inside a United States courtroom”
Deputy Treasury Secretary Wally Adeyemo said authorities continue to investigate whether Bitzlato was used to help circumvent sanctions that were imposed on Russia over its invasion of Ukraine. The enforcement action should serve as a warning against the use of crypto to launder illicit funds and as a reminder that United States authorities are ready to act if they see it occur, he said, adding that there could be other charges against Bitzlato or its founder.
Deputy Attorney General Lisa Monaco announced an enforcement action against cryptocurrency exchange Bitzlato Ltd on Wednesday.
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Keywords: bitzlato, cryptocurrency, deputy attorney general, enforcement action, exchange, lisa monaco, united states,