US Charges Crypto Exchange Bitzlato With Money Laundering, Arrests Founder

The U.S. Justice Department and Treasury Department have targeted Bitzlato Limited with accusations of money laundering and arrested its founder in Miami, officials said in a Wednesday press conference.

The Hong Kong-based platform Bitzlato has been effectively shut down by authorities and founder Anatoly Legkodymov was taken into U.S. custody, ending its catering to known criminal activity tied to Russia, said Deputy Attorney General Lisa Monaco. She outlined the coordinated enforcement actions, which also included the Federal Bureau of Investigation, French authorities and the U.S. Treasury Department, saying they disrupted "a busy corner of this criminal ecosystem."

The Treasury's Financial Crimes Enforcement Network (FinCEN) formally labeled the company a “primary money laundering concern,” which is among the most serious sanctions in the government’s financial arsenal, usually cutting a business off from the global financial system.

That label effectively declares the exchange "an international pariah," said Treasury Deputy Secretary Wally Adeyemo.

U.S. authorities arrested Legkodymov, a Russian national and majority owner of Bitzlato who was living in China. After his arrest in Miami, he was scheduled to be arraigned today in the U.S. District Court for the Southern District of Florida.

The little-known cryptocurrency exchange offered peer-to-peer services and hosted wallets of criminals buying and selling illegal goods, according to Justice Department officials, involving $700 million in direct and indirect transfers in the last several years. FinCEN said the company played a key role in handling illicit transactions for ransomware actors in Russia, including those connected to the Russian government.

The coordinated actions were the most significant U.S. action against a crypto criminal network to date, Monaco said.

The company, whose servers have now been seized, was also tied to routine transactions with the Russian-based Hydra Market, a darknet market targeted by U.S. authorities last year. Monaco said the "Hydra-Bitzlato cryptocrime axis" is now shut down.

Reference : https://www.coindesk.com/