Bitzlato Founder pleads guilty and dissolves platform


  • Bitzlato founder pleads guilty to illegal crypto operation, will shut down exchange, and forfeit $23 million.
  • DOJ targets crypto crime, closes Hydra Market linked to Bitzlato, seizing $700 million.
  • Bail denied for Legkodymov, Russian national, amid crypto charges; crypto community surprised by DOJ action.

Anatoly Legkodymov, the founder of the cryptocurrency exchange Bitzlato, which had ties to the dark web, has admitted guilt in operating an unlicensed money-transmitting business in a New York court. 

The Department of Justice (DOJ) initially brought charges against the majority owner of the Hong Kong-based exchange in January. This development marks a significant step in dismantling illicit cryptocurrency operations.

Guilty plea and dissolution of Bitzlato

In a recent courtroom proceeding, Anatoly Legkodymov, the man behind Bitzlato, confessed to his involvement in running an unlicensed money-transmitting business. The DOJ’s charges stemmed from Bitzlato’s alleged facilitation of criminal activities by operating as a cryptocurrency exchange with a lax know-your-customer (KYC) policy. 

US Attorney Breon Peace described Bitzlato as a platform that “sold itself to criminals as a no-questions-asked cryptocurrency exchange, and reaped hundreds of millions of dollars worth of deposits as a result.”

As part of the plea agreement, Legkodymov will take the drastic step of dissolving Bitzlato entirely. Additionally, he will relinquish any claims over approximately $23 million in seized assets associated with the exchange. While this marks a significant blow to the dark web’s crypto infrastructure, a sentencing date for Legkodymov has not yet been set.

Cracking down on crypto crime

The DOJ has been relentless in its efforts to combat cryptocurrency-related criminal activities. Deputy Attorney General Lisa Monaco emphasized the government’s commitment to dismantling the crypto crime ecosystem, stating,

“We are dismantling and disrupting the crypto crime ecosystem using all tools available — including criminal prosecution.”

In January, the authorities, in collaboration with international partners, dismantled Bitzlato’s infrastructure and seized its cryptocurrency holdings. Legkodymov’s conviction is the latest outcome of these joint efforts.

Notably, the DOJ and German authorities had previously shut down Hydra Market in 2022, an online marketplace that specialized in the sale of drugs and stolen financial information. This marketplace had a significant connection to Bitzlato, with approximately $700 million worth of cryptocurrency exchanged between the two platforms, according to authorities.

Denied bail and legal proceedings

Anatoly Legkodymov faced challenges in the legal process, including being denied bail during a hearing in March. The decision to detain him was attributed to his status as a Russian national on a visa in the United States, as well as his access to cryptocurrency assets. These factors raised concerns about the risk of flight and the potential use of crypto to evade authorities.

The initial announcement of charges against Bitzlato’s founder surprised some members of the cryptocurrency community. Some users expressed their lack of familiarity with the exchange, highlighting the elusive nature of dark web-linked platforms.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Benson Mawira

Benson is a blockchain reporter who has delved into industry news, on-chain analysis, non-fungible tokens (NFTs), Artificial Intelligence (AI), etc.His area of expertise is the cryptocurrency markets, fundamental and technical analysis.With his insightful coverage of everything in Financial Technologies, Benson has garnered a global readership.

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