For the first time in history, the United States authorities have classified a cryptocurrency trading platform as a “primary money laundering concern”, following a joint action against Bitzlatoan exchange registered in Hong Kong and which is accused of processing more than 700 million dollars of illicit funds.
This Wednesday, January 18, different authorities from the United States reported on this international action, for which the Russian was arrested in Miami. Anatoly Legkodymovthe main shareholder of Bitzlato, who will be prosecuted in US territory for different crimes.
“This is a unique step that has only been taken a few times in Treasury history for some of the most egregious money laundering cases and is the first of its kind, specifically under new authorities to combat illicit Russian finance.” said the Undersecretary of the Treasury Department, Wally Adeyemo.
According to the United States Department of Justice, Bitzlato is accused of conducting a money transmission business that operated illicit fundsat the same time that it did not comply with the regulatory measures required by the US authorities.
The operation was coordinated by French authorities and the United States’ Financial Crimes Enforcement Network (FinCEN), while the Treasury Department is already taking action with simultaneous executions.
Among the key accusations to both Legkodymov and Bitzlato, it is mentioned that the platform has been promoted as an exchange with lax controls, where neither selfies nor passports are required to carry out operations.
Likewise, this platform is related to Hydra Market, which was an anonymous and illicit online marketplace where narcotics, stolen financial information, fraudulent identification documents and money laundering services were offered.
“Hydra Market users traded over $700 million worth of cryptocurrency with Bitzlato, either directly or through intermediaries, until Hydra Market was shut down by US and German law enforcement in April 2022. Bitzlato also received over 15 million in ransomware proceeds,” the Justice Department indictment reads.
According to FinCEN, once Hydra Market was closed, Bitzlato continued related operations in the growing darknet markets connected to Russia, including BlackSprut and OMG!.
Regarding Legkodymov, the Russian executive is accused of knowing that Bitzlato’s accounts were riddled with illegal activities and that many of its users were registered with the identities of others.
“On May 29, 2019, Legkodymov used Bitzlato’s internal chat system to write to a colleague that Bitzlato users were ‘known criminals’ and used others’ identity documents to register their accounts,” it reads. in the accusation.
According to the Justice Department, in addition to Legkodymov’s arrest, French authorities, in collaboration with Europol and allies in Spain, Portugal and Cyprus, dismantled Bitzlato’s digital infrastructure.
Actions against Russian finance
For FinCEN, this action is the first order issued pursuant to section 9714(a) of the Russian Anti-Money Laundering Law, which highlights the serious threat posed to business operations, which facilitate and support the Russian illicit finances, represent for the national security of the United States and its financial sector.
In this context, FinCEN He noted that Bitzlato is a financial institution that operates outside of the United States but plays a critical role in laundering money from the cryptocurrency world by facilitating illicit transactions for ransomware actors operating in Russia.
“Bitzlato represents a global threat by allowing Russian cybercriminals and ransomware actors to launder the proceeds of their theft… We will continue to leverage the full range of our authorities to prohibit these institutions from gaining access to the United States financial system and used to support Russian illicit finance,” said FinCEN Acting Director Himamauli Das.
For FinCEN, Russia is a paradise for cybercriminals, as your government often recruits these types of actors for its malicious purposes. According to this authority, most of the ransomware incidents detected in the second half of 2021 were carried out by groups related to Russia, indicating that “Bitzlato is part of a larger ecosystem of Russian cybercriminals that can operate with impunity” in that country.
