Bitzlato Founder Sentenced to Prison for Assisting Money Laundering

The CoinDesk reports:
On July 18th, Judge Eric Vitaliano sentenced the founder of the Bitzlato cryptocurrency exchange to 18 months in prison, which is time served, for operating an unlicensed money transmitting business.
Anatoly Legkodymov admitted to a scheme last year that facilitated the concealment of over $700 million in proceeds from illegal gambling and drug trafficking.
Bitzlato founder admits he could have done more
Judge Vitaliano acknowledged the deplorable conditions at the Metropolitan Detention Center (MDC) in Brooklyn, where Legkodymov was held, stating, “It’s a terrible place, and the court does take that into account.”
It is worth noting that FTX founder Sam Bankman Fried also served at the MDC and was later convicted of all seven fraud charges, receiving a 25-year prison sentence.
As part of a plea agreement, Legkodymov agreed to relinquish any claim to $23 million in seized cryptocurrency assets in a global operation by French authorities to shut down Bitzlato on January 23, 2023.
Prosecutors alleged that Legkodymov facilitated the exchange of cryptocurrencies through the Russian dark web market Hydra and failed to implement measures to monitor users.
Evidence included Bitzlato users frequently seeking transaction assistance on the Hydra Market and openly admitting to using false identities for transactions. In a message from May 2019, Legkodymov confessed to a colleague that many Bitzlato users “are known to be scammers.”
Reflecting on his actions, he told the court, “I now realize that as the founder of the company, I could have done more.”
Crackdown on cryptocurrency intensifies
Legkodymov was arrested in Miami on January 17, 2023, as part of a coordinated international effort to shut down the Bitzlato exchange. This operation involved cooperation among U.S., Spain, Portugal, Cyprus, and the European Union Agency for Law Enforcement Cooperation (Europol).
The Europol report stated that approximately 46% of the assets handled by Bitzlato were linked to illicit activities, valued at $1.09 billion at the time. They added that most of the suspicious transactions were related to entities sanctioned by the Office of Foreign Assets Control (OFAC), with others involving online fraud, money laundering, ransomware, and child abuse materials.
It is worth noting that the case against Legkodymov is part of a broader initiative by the U.S. Department of Justice to combat the illicit use of cryptocurrencies and recover proceeds from such crimes through the National Cryptocurrency Enforcement Team.
The crackdown comes at a time of increased scrutiny in the cryptocurrency industry, exemplified by last year’s settlement with Binance Holdings Limited and CEO Zhao Changpeng. CZ admitted to anti-money laundering and violating U.S. sanctions while allowing the cryptocurrency exchange to continue operating.