The National Cryptocurrency Enforcement Team, a newly established division within the US Department of Justice (DoJ), made headlines with its first major enforcement operation resulting in the arrest of Anatoly Legkodymov in Miami, Florida, on January 18, 2022.
Legkodymov, a Russian national believed to be residing in Shenzhen, China, stands accused of operating Bitzlato, an illicit cryptocurrency exchange that operated on the dark web and was based in China with registration in Hong Kong.
In collaboration with law enforcement agencies from France, Europol, and partners in Germany, Spain, Portugal, and Cyprus, the National Cryptocurrency Enforcement Team successfully seized Bitzlato’s servers and dismantled its digital infrastructure. Legkodymov has been charged with the offense of unlicensed money transmitting.
Deputy Attorney General Lisa Monaco emphasized the significant role played by Bitzlato in transmitting hundreds of millions of dollars in illicit funds, which were used to fuel darknet marketplaces and launder the proceeds of ransomware attacks.
The DoJ revealed that Bitzlato facilitated transactions amounting to $700 million between 2018 and 2022 on Hydra, a dark web marketplace that was shut down in April 2022. Monaco described the collaboration between Hydra and Bitzlato as a sophisticated network of cryptocurrency-related criminal activities.
Furthermore, Bitzlato was reported to have received over $15 million in ransomware payments, playing a crucial role in laundering convertible virtual currency (CVC) by enabling illicit transactions for ransomware groups, including Conti, a notorious ransomware-as-a-service organization with ties to the Russian government, as stated by the US Treasury’s Financial Crimes Enforcement Network (FinCEN).
US Attorney for the Eastern District of New York, Breon Peace, issued a stark warning to individuals who believe they can evade the law by utilizing cryptocurrency, emphasizing that this prosecution should dispel any illusions of immunity.
The successful operation conducted by the National Cryptocurrency Enforcement Team highlights the government’s commitment to combating illegal activities within the cryptocurrency space and sending a clear message to those engaging in such criminal behavior.