Chinese Crypto Exchange Founder Arrested in Connection to $700M Money Laundering

The founder of the Hong Kong-based cryptocurrency exchange Bitzlato was arrested early Wednesday in Miami. Deputy Attorney General Lisa Monaco said Anatoly Legkodymov, 40, a Russian national, oversaw a major “high-tech financial hub that catered to known crooks,” including cybercriminals and drug dealers seeking to process dirty money.

“The Department of Justice today dealt a significant blow to the cryptocrime ecosystem,” Monaco said. “Bitzlato facilitated the transmission of hundreds of millions of dollars in illicit funds, fueling darknet marketplaces and laundering the proceeds of ransomware attacks,” Monaco said. “This is a major victory in the fight against cybercrime and I applaud the hard work and dedication of the Department of Justice in bringing this case to fruition.”

$700M Money Laundering Scheme Uncovered by Chinese Exchange Founder Arrest

The Department of Justice has announced the arrest of 150 suspects and the seizure of $32 million in cash and 4 million lethal doses of fentanyl as part of a global darknet drug operation.

This latest crackdown on cybercrime demonstrates the Justice Department’s commitment to thwarting hackers and keeping the public safe online.

Federal officials declined to say why Legkodymov, a Russian national who has been living in Shenzhen, China, was in Florida and how he was taken into custody, except to indicate he was running the business from Miami last year and early this year.

A Friday detention hearing has been set for Russian businessman and Putin critic, Evgeny Legkodymov. Legkodymov remains in federal custody and faces transfer to the Eastern District of New York in Brooklyn where the case was brought. Legkodymov’s attorneys are fighting the transfer, arguing that their client would not receive a fair trial in Brooklyn.

Monaco said that Bitzlato had served as a financial partner for the darknet marketplace known as Hydra, which was shuttered by U.S. and German authorities last year. This marketplace was known for its discreet and secure transactions, which is why Bitzlato decided to partner with them. Unfortunately, the authorities were able to shut them down, but Bitzlato is still in business and looking for new partnerships.

“Hydra and Bitzlato have teamed up to create a powerful axis of cryptocrime,” Monaco said. “The darknet has pushed money linked to drug transactions, stolen financial information, and hacking operations into accounts at Bitzlato.”

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