<p>Anatoly Legkodymov, the co-founder and majority owner of Hong Kong-registered virtual currency exchange Bitzlato, entered a guilty plea in a U.S. court on Wednesday in relation to illicit funds transfer activity.</p><h2 id="header-0">New York court appearance</h2><p>According to a Department of Justice <a href="https://www.justice.gov/usao-edny/pr/founder-and-majority-owner-cryptocurrency-exchange-pleads-guilty-unlicensed-money" rel="noopener noreferrer nofollow">press release</a>, Legkodymov, a Russian national, appeared before U.S. District Judge Eric Vitaliano for a “criminal cause for pleading,” signaling a guilty plea.</p><p>Legkodymov, 41, was arrested in Miami on Jan. 17 and has been held at the Metropolitan Detention Center (MDC) in Brooklyn since then. U.S. authorities accused him of processing approximately $700 million in illicit funds through Bitzlato, a platform headquartered in Hong Kong.</p><p>The charges related to operating the platform as an unlicensed money exchange business. Allegedly, he engaged in significant cryptocurrency swaps with Hydra Market, described as a marketplace involved in drugs, stolen financial information and money laundering services.</p><p>United States Attorney for the Eastern District of New York, Breon Peace stated:</p><p>“Legkodymov’s guilty plea today confirms that he was well aware that Bitzlato, his cryptocurrency exchange, was being used like an open turnstile by criminals eager to take advantage of his lax controls over illicit money transactions.”</p><p>The Department of Justice maintained that Bitzlato becoming “a haven for criminal proceeds and funds intended for use in criminal activity” was as a result of its “deficient know-your-customer (KYC) procedures.”</p><h2 id="header-1">Website taken down</h2><p>Bitzlato’s website has been replaced by a notice stating that the service was seized by French authorities as part of an international law enforcement action coordinated with U.S. and German law enforcement shutting down Hydra Market in April 2022.</p><p>This guilty plea is the latest development in U.S. law enforcement’s broader efforts to crack down on fraud and illicit financial activities within the cryptocurrency markets. In recent cases, FTX founder Sam Bankman-Fried was convicted for stealing billions from customers, while Binance agreed to a $4.3 billion settlement, with CEO Changpeng Zhao (CZ) pleading guilty to violating U.S. anti-money laundering laws. Binance was identified as one of Bitzlato’s top counterparties by U.S. authorities.</p><h2 id="header-2">Russia calls for Legkodymov’s release</h2><p>Despite calls from Russia’s embassy in Washington for Legkodymov’s release and an embassy visit to him in jail, the U.S. State Department <a href="https://www.reuters.com/technology/co-founder-seized-crypto-exchange-bitzlato-plead-guilty-us-2023-12-06/" rel="noopener noreferrer nofollow">confirmed</a> that Russia rejected a proposal for the release of two Americans, including Wall Street Journal reporter Evan Gershkovich. This follows Russia’s denial of a U.S. embassy request to visit Gershkovich. The diplomatic exchanges underscore the international dimension of the case and the geopolitical tensions surrounding the detention of individuals in both countries.</p><p>As U.S. law enforcement continues its efforts to combat cryptocurrency-related crimes, the anticipated guilty plea of Bitzlato’s co-founder highlights the regulatory scrutiny and consequences faced by those involved in illicit financial activities within the crypto industry.</p>

Bitzlato co-founder to pleads guilty in US to illicit funds processing

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