In a highly anticipated speech on January 18, 2023, the Department of Justice announced that Anatoly Legkodymov, the founder of Bitzalo, has been arrested for crimes totaling $700 million.
“We have disrupted Bitzlato, a China-based cryptocurrency exchange notorious for laundering criminal proceeds from the darknet,” Deputy Attorney General, Lisa O. Monaco said.
Bitzlato is a Hong Kong-registered cryptocurrency exchange founded by Anatoly, a Russian national. In the quest to offer services in the crypto industry, the company “facilitated the transmission of hundreds of millions of dollars in illicit funds fueling darknet marketplaces and laundering the proceeds of ransomware attacks”.
The company also operated in ways that deterred US authorities from detecting and investigating financial activities initiated by the firm.
According to the DOJ, further allegations against Bitzlato included that it was used to finance the Hydra darknet market, a multibillion-dollar Russian marketplace for trafficking about 80% of illegal drugs and currencies around the world.
It added that between 2018 and 2022, financial transactions carried out in terms of sales and transfer of monies from the criminals that used Hydra were over $700 million.
The creation of NCET
Narrating the process it took to curb the criminality by Bitzlato, Assistant Attorney General, Kenneth A. Polite, Jr, appreciated the effort deployed by domestic and international organizations toward addressing such crimes.
This includes the NCET, the U.S. Attorney’s Office in Brooklyn, the FBI agents, law enforcement agencies in France, and the FinCEN.
It can be recalled that while the DOJ launched the NCET in October 2021, it announced the first team of the organization in February 2022. The NCET was created to manage complex investigations and prosecutions of criminalities related to cryptocurrency, and virtual currency exchanges.
Deputy Attorney General, Lisa O. Monaco advised that those who are involved in cryptocrimes should desist as the DOJ “will not only target hackers, fraudsters, and criminals that mask their profits in cryptocurrency”.
She added that the Department of Justice will unleash all arsenals to bring defaulters to the book. This she said includes those who are in the US or offshore as long as their operations break the laws of the United States.
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