Bitzlato ex-CEO Anatoly Legkodymov found himself in hot water when he was compelled to admit guilt for operating an unauthorized money services enterprise. This confession was made on December 6th in the Eastern District Court of New York, where he appeared before Judge Eric Vitaliano.
The Consequences of Legkodymov’s Admission
Upon entering his plea, Legkodymov agreed to the dissolution of Bitzlato, a cryptocurrency exchange he co-founded, and to forfeit $23 million in cryptocurrency. His decision to file a criminal cause for pleading is generally interpreted as an intention to plead guilty. Breon Peace, the United States Attorney for the Eastern District of New York, commented on the matter, stating that Legkodymov’s admission confirmed his awareness of Bitzlato’s misuse as a platform for illicit money transactions.
The International Effort to Dismantle Bitzlato
Legkodymov was apprehended in Miami on January 17th as part of a coordinated international operation to dismantle Bitzlato. The same day, the exchange’s website was blocked by France. Several other nations, including Spain, Portugal, and Cyprus, as well as the European Union Agency for Law Enforcement Cooperation (Europol), participated in the operation. Bitzlato, based in Hong Kong, was criticized for its inadequate Know Your Customer/Anti-Money Laundering safeguards and was identified as a significant financial resource for the Russian darknet marketplace, Hydra.
These enforcement actions temporarily unsettled the crypto markets. Europol later disclosed that approximately 46% of Bitzlato’s handled assets, valued at 1 billion euro, were linked to criminal activities. The agency seized Bitzlato wallets worth 18 million euro and froze 100 accounts on other exchanges worth 50 million euro.
Implications for Binance
Binance, a significant Bitzlato counterpart, was also affected by the case. It froze funds in 20 wallets in connection with the case later in January. However, by March, the exchange had managed to unfreeze some of the funds and allowed users to withdraw up to 50% of their Bitcoin (BTC).
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