The U.S. Department of Justice and French authorities shut down an alleged money laundering destination for crypto criminals on Thursday.
On Jan. 19, the Justice Department charged Anatoly Legkodymov, a Russian national and senior executive of Bitzlato, a cryptocurrency exchange registered in Hong Kong that operates globally, with "conducting a money transmitting business that transported and transmitted illicit funds and that failed to meet U.S. regulatory safeguards, including anti-money laundering requirements."
The Justice Department says Bitzlato promoted itself to criminals as a "no-questions-asked cryptocurrency exchange," which resulted in reaping hundreds of millions of dollars' worth of deposits.
Although Bitzlato said it didn't accept users from the U.S., the Justice Department alleges the crypto platform did a substantial amount of business with U.S.- based customers and the company's customer service representatives repeatedly advised users that they could transfer funds from U.S. financial institutions.
Bitzlato's largest trading partner in cryptocurrency transactions was Hydra Market, an anonymous, online marketplace for illegal goods such as narcotics, stolen financial information and money laundering services, according to the Justice Department.
Hydra Market users exchanged more than $700 million in cryptocurrency with Bitzlato, either directly or through intermediaries, until Hydra Market was shuttered by U.S. and German law enforcement in April 2022, the DOJ reports.
In the Justice Department's press release, the Federal Bureau of Investigation alleges Legkodymov knowingly allowed Bitzlato to become a "perceived safe haven for funds" that were both used for and resulted from a variety of criminal activities. The FBI adds that Bitzlato promoted how users needed to provide little identification to use the platform and specified that "neither selfies nor passports [are] required."
Crypto criminals relied heavily on Bitzlato for money laundering services, according to Chainalysis. Its research reveals that the exchange received over $2.3 billion in cryptocurrency between 2019 and 2023.
The shutdown of the platform could represent a crucial blow to the crypto crime industry.
"If cybercriminals can't reliably convert the cryptocurrency generated by their activities into cash, the incentives to commit those crimes plummet," Chainalysis reports.
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A crypto exchange allegedly processed over $700 million worth of illicit funds before the Department of Justice shut it down - CNBC
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