On July 18, Judge Eric Vitaliano of Brooklyn’s federal court sentenced Anatoly Legkodymov, the founder of the Bitzlato cryptocurrency exchange, to 18 months in prison, equivalent to the time he had already served. Legkodymov’s sentencing followed his guilty plea to operating an unlicensed money-transmitting business that concealed over $700 million in illegal proceeds from activities such as gambling and drug transactions.
Admitting Fault and Conditions at MDC
During the hearing, Judge Vitaliano took note of the challenging conditions at Brooklyn’s Metropolitan Detention Centre (MDC), stating, “It’s a terrible place, and the court does consider that.” This sentiment echoed the experience of FTX founder Sam Bankman-Fried, who also spent time at MDC before his conviction on fraud charges. Legkodymov expressed regret, acknowledging his role in the illicit activities facilitated by Bitzlato. “I realize now, as the founder of the company, I could have done more,” he told the court.
Read the Bitzlato reports here on FinTelegram.
Plea Deal and Asset Forfeiture
Legkodymov consented to relinquish any claim to $23 million in cryptocurrency assets seized by French authorities during the international crackdown on Bitzlato in January 2023 as part of his plea agreement. This operation saw collaboration between the United States, Spain, Portugal, Cyprus, and the European Union Agency for Law Enforcement Cooperation (Europol).
Prosecution’s Allegations and Evidence
Prosecutors presented evidence showing that Bitzlato users frequently engaged in transactions on the Russian dark web black market, Hydra Market, and often traded under false identities. A revealing message from May 2019 showed Legkodymov admitting to a colleague that many Bitzlato users were “known to be crooks.”
Europol’s investigation revealed that approximately 46% of assets processed by Bitzlato, valued at $1.09 billion, were tied to illicit activities. Many transactions involved entities sanctioned by the U.S. Office of Foreign Assets Control (OFAC), while others were connected to cyber scams, money laundering, ransomware, and child exploitation material.
Conclusion
The sentencing of Anatoly Legkodymov marks another step in the ongoing efforts to clamp down on the misuse of cryptocurrency for illegal activities. As the industry continues to face rigorous oversight, the case underscores the importance of compliance and the severe consequences of failing to implement adequate monitoring measures.
