Crypto-Exchange Used to Launder Ransomware Transactions Dismantled

The newly founded National Cryptocurrency Enforcement Team, part of the US Department of Justice (DoJ), announced its first enforcement operation with the arrest of Anatoly Legkodymov in Miami, Florida, on January 18, 2022.

Legkodymov, a Russian national, allegedly residing in Shenzhen, China, has been accused of running Bitzlato, an illegal crypto-exchange operating on the dark web, based in China and registered in Hong Kong.

Together with French authorities, Europol and partners in Germany, Spain, Portugal, and Cyprus, the DoJ’s National Cryptocurrency Enforcement Team seized Btzlato’s servers, “dismantled [its] digital infrastructure,” and Anatoly Legkodymov was charged with “unlicensed money transmitting.”

Deputy Attorney General Lisa Monaco said that Bitzlato “facilitated the transmission of hundreds of millions of dollars in illicit funds, fuelling darknet marketplaces and laundering the proceeds of ransomware attacks.”

According to the DoJ, the crypto-exchange has been used to facilitate transactions of up to $700m between 2018 and 2022 on Hydra, a dark web marketplace that was taken down in April 2022.

“Together, Hydra and Bitzlato formed a high-tech axis of crypto crime,” Monaco said.

Bitzlato also received more than $15 million in ransomware proceeds, claimed the DoJ. It played “a critical role in laundering convertible virtual currency (CVC) by facilitating illicit transactions for ransomware actors operating in Russia, including Conti, a ransomware-as-a-service group that has links to the Government of Russia,” the US Treasury’s Financial Crimes Enforcement Network (FinCEN) added.

“To anyone who still believes that they can hide from the law by using cryptocurrency, this prosecution should put that illusion to rest,” Breon Peace, US Attorney for the Eastern District of New York, warned.