In Miami, January 18, 40-year-old Russian Anatoly Legkodymov was detained. The detainee is scheduled to be taken to the District Court of Florida, where he will be charged. In the message of the US Department of Justice, Anatoly Legkodymov is called the majority owner of the Bitzlato crypto exchange. The Financial Crimes Enforcement Network (FinCEN) of the US Treasury, as stated in the Department's message, today, January 18, recognized Bitzlato as the "main money laundering company" for illegal Russian financing. If found guilty, Anatoly Legkodymov faces up to five years in prison.
Bitzlato is based in China. Anatoly Legkodymov lived in China, but temporarily flew to the United States, where he was detained. Deputy U.S. Attorney General Lisa Monaco said the Justice Department worked with "key partners" to apprehend Mr. Legkodymov. According to the US Department of Justice, the crypto exchange allowed criminals to process more than $700 million of funds, and the crypto exchange received more than $15 million due to ransomware programs. The largest counterparty of Bitzlato, according to a press release from the Ministry of Justice, was the Russian darknet market Hydra.
According to the US Department of Justice, Bitzlato does not require customers to provide reliable identification — photos or passports. When users were required to present any documents, Bitzlato allowed the use of information from "front persons". In this regard, funds intended for criminal activities were kept in the company's accounts, the press release of the department notes.
As stated in the message of the US Department of Justice, Anatoly Legkodymov's colleagues repeatedly warned him that users of the crypto exchange are drug users. At the same time, one of the Bitzlato managers said that it is necessary to fight drug trafficking only nominally, so as not to miss out on profits, and Anatoly Legkodymov himself called the exchange's users "known scammers," the report notes.
In April 2022, law enforcement agencies in Germany and the United States seized a network of servers belonging to Hydra and confiscated $25 million worth of darknet bitcoins. At the same time, the United States blocked all the property of persons related to Hydra in the country. The site had about 17 million users and more than 19 thousand sellers. The Hydra servers are used for illegal trade in drugs, forged documents, and stolen data.
In August 2022, Russian Denis Dubnikov, the founder of the EggChange crypto exchange, was extradited from the Netherlands to the United States. The US Department of Justice has charged Denis Dubnikov with laundering about $400 thousand received as a result of cyber attacks in 2019.
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During Operation Cryptostorm, Russians and Ukrainians were detained in Portugal
As a result of the release of information related to Operation Cryptostorm by American and French law enforcement agencies, the Criminal Police confirms that the National Department for Combating Cybercrime and Technological Crime (UNC3T) was involved in the investigation, which ended with the arrests of several suspects who were held in Europe and the United States.
Investigations revealed that suspects with Russian and Ukrainian citizenship developed a commercial crypto asset exchange platform called BITZLATO in order to convert cryptographic assets such as bitcoin, ethereum, litecoin, Bitcoin Cash, dash, dogecoin, and tether into rubles, using it for money laundering, fraud, fraudulent sales on darknet markets,and other purposes. ransomware and other types of crimes.
Operation Cryptostorm, coordinated internationally by French authorities, which ended several months ago, allowed the identification and location of several suspects, two of whom lived in Portugal.
The Department of Investigation and Criminal Response (DIAP)participated in Operation Cryptostorm at the national level Lisbon, in collaboration with Europol, Eurojust, law enforcement agencies in the United States, Spain, Cyprus and the Netherlands, during which searches were conducted at the place of residence with the seizure of a huge amount in cryptocurrencies and related data that will determine the set of facts, evidence and involvement of the authors.
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Federal Magistrate Judge Robert Levy in Brooklyn announced the preliminary indictment in case No. 23M17 "United States v. Anatoly Legkodymov, aka "Gandalf" and aka "Tolik". Why Anatoly is called Tolik is clear, and-Gandalf the evil wizard from Tolkien's novels "The Hobbit" and" The Lord of the Rings", but the 40-year-old Russian Legkodymov was not arrested for witchcraft.
As Brion Peace, the federal prosecutor for the Eastern District of New York, said in a press release, Legkodymov, a Russian citizen permanently residing in China, works as a senior manager of the Bitzlato Ltd cryptocurrency exchange, which is registered in Hong Kong, near the city of Shenzhen, where he lives. His company, apparently named after a merger of the words "bitcoin" and" gold, " was engaged in transfers of illegally obtained funds, violating our requirements for registering such transfers as part of the fight against money laundering. "Institutions that trade cryptocurrencies are not above the law, and their owners are not beyond our capabilities," Pis said in a press release. "Bitzlato allegedly offered itself to criminals as a no-questions-asked cryptocurrency exchange, and as a result received hundreds of millions of dollars. Now the defendant is paying for the detrimental role that his company has played in the cryptocurrency ecosystem."
Oh, this "cryptocurrency ecosystem", which timidly appeared three decades ago and during this time has grown stronger with varying success, crushing many of the usual rules. As the Russian-language New Vienna Magazine published in Austria explained about five years ago, cryptocurrency is "not money in its full sense, but' quasi-money ' – a set of numbers protected by encryption. It contains all the necessary data-the nominal value, the" address " of the owner, the date of crediting. In terms of their use, cryptocurrencies are closer to securities, but such "crypto-actions" are not backed by any property, only by an idea. Cryptocurrency can be issued by anyone – it is just a set of zeros and ones that are awarded as a reward to people who are members of the system and provide their computers for calculating transactions. It turns into a means of payment only after the start of quotations on a special exchange. Now they trade about two thousand cryptocurrencies – the most expensive and popular is bitcoin, whose capitalization exceeds tens of billions of dollars. The state or banks are not able to control how much cryptocurrency a citizen has in his account, what goods he buys, and it is impossible to seize such an account."
Perhaps this explains Legkodymov's witchy nickname to some extent, but he is accused of quite mundane cases that threaten up to 5 years in prison, which is nonsense for our cryptocurrency users. From case No. 23M17, it follows that Anatoly Legkodymov was arrested on January 17 at his home at an unspecified address in Miami, where he was on vacation and, according to the investigation, lived for the last two years. The next day, he was taken to the Federal court for the Southern District of Florida, where Magistrate Judge Edwin Torres, with lawyer Joel De Fabio, introduced him to the charges and explained his rights. The defendant refused to provide a Russian interpreter, because he is fluent in English, and agreed to move the bail hearing to New York, where he should be taken in the next few days. In the meantime, Anatoly Legkodymov is being held in Miami Federal Prison under the number 40111-510 with an unknown release date.
In a press release from the Brooklyn prosecutor's office, it is noted that the investigation was carried out by our FBI and the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN), as well as law enforcement officers from Europol, Cyprus, Portugal, Spain and France, and the French blocked the digital infrastructure of Bitzlato, froze cryptocurrency they also carried out other investigative actions on the same day, January 17. "Today, the Ministry of Justice dealt a major blow to the crypto - crime ecosystem," said Deputy Minister Lisa Monaco. – Overnight, [our] ministry, with key partners here and abroad, eliminated Bitzlato, the Chinese-based money laundering engine that spun the high-tech axis of crypto crime, and arrested its Russian founder. Today's actions make it clear that if you violate our laws in China, Europe, or harm our financial system from a tropical island, you can face your crimes in a United States courtroom."
After receiving an arrest warrant for Legkodymov from Brooklyn Federal Magistrate Judge Robert Levy on January 14, FBI investigator Ryan Rogers outlined the essence of what he allegedly did in an 18-page affidavit. Special Agent Rogers reported that he has been serving in the bureau since January 2021 and deals with individuals and groups that engage in cyber and financial crime, and in the course of investigations, he was engaged in external surveillance, interrogated witnesses, conducted authorized searches and used special equipment to obtain the necessary information, that is, do not put a finger in his mouth. According to his affidavit, from January 2016 to December 2022, Legkodymov "conducted, controlled, directed, supervised, directed or owned part of the money transfer business in the Eastern District of New York and elsewhere," while violating the law.
According to the investigation, Legkodymov was the co-founder, head and "majority shareholder", that is, the owner of the majority of shares in Bitzlato Ltd, which required a minimum of information about itself from its clients, specifying that " no passports or selfies are required." In some cases, they were allowed to give details of fake or, as they say in English, "straw" persons. As a result of this vicious system, which investigators called "Know-your-customer" (Know-your-customer or KYC), the Legkodymov cryptocurrency exchange became "a haven for criminal proceeds and funds intended for crime." One of the largest partners of his Bitzlato was the illegal online platform Hydra Market, which the investigation considers to be the largest and oldest in the world, where, among other things, offers for the sale of drugs and forged documents, illegally obtained financial information and money laundering were published. Thanks to the minimum requirements for providing personal data for registration on the crypto exchange, users of Hydra Market, which was closed by our and German law enforcement officers in April 2022, managed to exchange approximately $ 700 million in cryptocurrency.
The investigation believes that Legkodymov managed his "Cryptozl" all last year, living in Miami, and at the same time was aware that a significant part of Bitzlato users received funds illegally, and his company earned more than $ 15 million on this. In his affidavit, FBI investigator Ryan Rogers gave an example of how on May 29, 2019, Legkodymov, through Bitzlato's internal negotiation system, wrote to a colleague that their users were "known crooks", and other colleagues warned him that Bitzlato's customers were mostly " drug addicts who buy drugs from Hydra, and drug dealers."
Summarizing the report on the arrest of Anatoly Legkodymov, the Voice of America's Russian service wrote that " Russia is a haven for cybercriminals, where the government often recruits them for its own malicious purposes. Most of the ransomware incidents reported by FinCEN (the Financial Crimes Division of the Ministry of Finance) in the second half of 2021 were related to various variants of Russian-related ransomware."
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The world's largest cryptocurrency exchange has already blocked several accounts without warning.
The accounts mostly belonged to Russian-speaking users — some owners complained about the inability to withdraw funds from the site in the telegram chat.
The victims chat consists of about 1,000 users-they link the blocking to the case of the Bitzlato crypto exchange, which the crypto exchange is currently investigating. Many chat participants write that they used Bitzlato for both depositing and withdrawing funds. Many of them are outraged by the sanctions applied to the crypto exchange.
A Binance representative said that the blockages are indeed related to Bitzlato — the crypto exchange suspended the operation of user accounts from Eastern Europe and the CIS countries. However, most of the accounts have already been resumed, the employee says.
"Currently, 90% of frozen accounts are unblocked. We have notified users about this — their funds are safe. Those users who were not unblocked for some reason were provided with relevant information and contacts to contact law enforcement agencies, "the representative of the crypto exchange said.
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Pavel Lerner, a former top manager of the EXMO crypto exchange and one of the most influential people in the crypto industry, has been detained in Spain. He is suspected of aiding and abetting illegal operations for the Bitzlato cryptocurrency exchange.
Spanish media reported the other day that the Civil Guard detained three citizens of Russia and Ukraine in Barcelona and Valencia, who are related to this crypto platform. "During the operation launched in France and covering five countries, six people were arrested, half of them in Spain. They are P. L., 45, and O. G., 25, both residents of Barcelona, and M. L., 26, who was in Valencia. The detainee in Valencia lived in a rented apartment, and planned to leave Spain in the near future, " wrote Europa Press. Bitzlato co-founder Anton Shkurenko confirmed Lerner's arrest on YouTube.
The arrested Pavel Lerner is a legend in the world of the crypto industry. He is known for being the co-founder and director of the EXMO cryptocurrency exchange. In 2018, Lerner left EXMO for another exchange, Utorg. Another significant project that Lerner was engaged in is Monolith OS DAO, the first decentralized cryptoruble-MCR coin with a soft peg to the Russian ruble in the ratio of 1:1.According to the Cryptolab research portal, Pavel Lerner is one of the world's best developers of analytical systems and a specialist in quantum computing. In December 2017, Lerner was abducted in Ukraine by unknown persons, and demanded a ransom of one million dollars in bitcoins. After receiving the ransom, the kidnappers released the programmer.
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At the request of Interpol, Anton Shkurenko, one of the founders of the Bitzlato cryptocurrency exchange, was detained in Moscow.
According to the "Database", Shkurenko was wanted at the request of French investigators, who suspect him of extortion committed by a group of individuals, "data theft and gaining access to the automated data processing system", as well as legalization (laundering) of funds obtained by criminal means. An extradition check will be conducted against Shkurenko, after which a decision will be made whether to extradite him to France or not.
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Agents of the Central Operations Unit (UCO) of the Spanish Gendarmerie (Guardia Civil) have arrested in Spain three of the six members of the governing board of Bitzlato, a Hong Kong — registered cryptocurrency exchange platform that Europol and major international law enforcement agencies consider to be one of the main tools used by global organized crime to launder money, the agency said. on Thursday, the Spanish Ministry of the Interior.
Among those arrested are 45-year-old Mikhail Lunov, a Ukrainian citizen who served as CEO; 26-year-old Paul Lerner, commercial director of the company; and 25-year-old Alexander Goncharenko, who is responsible for marketing. During the operation, which was conducted in five countries, 18 million euros were involved and more than 100 accounts worth 50 million euros were blocked.
The operation, dubbed "Operation Bizlato" (Operación Bizlato), began two weeks ago in France, when the local gendarmerie hacked the entire technological infrastructure of the company. According to sources close to the investigation, this attack on Bitzlato provoked the company's executives to attempt secret access to the company's servers, allegedly to extract compromising information stored on computers. This maneuver led to the fact that the rest of the operation, which involved law enforcement agencies in Spain, France, Portugal, Cyprus and the United States, had to be carried out at an accelerated pace.
According to Europol, 46% of money transactions on the platform are classified as illegal activities, including child abuse, circumvention of sanctions, cyber fraud, and cyber extortion. According to the investigation, the amount is estimated at about 1 billion euros.
Bitzlato co-founder Anton Shkurenko confirmed Lerner's arrest on YouTube.
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Crypto exchange Bitzlato, which is accused of money laundering by foreign law enforcement agencies, announced in a telegram channel that depositors can start withdrawing funds.
Anonymous representatives of the platform on Wednesday, March 1, published detailed instructions for withdrawing funds, since all coins are "marked as high-risk" by AML services (services that track cases of money laundering).
"We were gone for 42 long days, but we came back. A lot of work has been done to ensure that your data is safe and that the coins end up in your wallets — " the Bitzlato team announced.
In mid-February, Bitzlato presented a roadmap for disbursing funds to users. Part of the funds that were on the Bitzlato hot wallet still remains with European law enforcement officers. Bitzlato does not abandon its attempts to appeal the seizure of servers in France.
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Crypto exchange Bitzlato published instructions for withdrawing 50% of funds in BTC
Dear users, Today (20.03.2023) at 14:00, users who used the WEB version and the application will be able to access the withdrawal of 50%.
To do this, you need to check access to your email addresses that were specified during registration. Next, you need to go to the @bz_phoenix_bot. bot and click start. The "Web/Mobile" button will appear in the bot, you need to start the dialog and specify your email address. After specifying the email address and verifying it, a code is created for transferring funds. This code is sent as a link to the specified email address.
Important:
- Funds can only be transferred from accounts that have a known email address and are not linked to the telegram id.
- The account from which the funds were transferred is deleted (in fact, marked as deleted).
- If you made a mistake and entered an email address that you can't access, you can try again in 24 hours.
- Funds can only be transferred to the account where the transfer operation was requested.
The email will also offer an alternative option. Run the /start code command in the bot. You can open this link or run this command under the telegram account under
which you created the transfer request.
It is important for us not only to return your funds, but also to warn you. All coins are marked as high-risk by AML services, so we have prepared recommendations for withdrawing funds.
Option 1:
You need to find a service without AML checks (try withdrawing the balance with the lowest amount for the test)
Option 2:
You need to send funds to a cold wallet (for example, electrum), then you can try to send the smallest amount to centralized / decentralized services.
Option 3:
Send to any service (with the lowest amount to make sure everything is in order)
Option 4:
Leave the coins on our service and wait for p2p operation and withdraw funds to the card.
Minimum withdrawal amount-0.001 BTC-commission - 0.0003 BTC
We cannot guarantee that a third-party service will not stop you using AML protocols. Therefore, we recommend testing the withdrawal with a small amount.
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The former co-founder of the Bitzlato crypto exchange asks the crypto community to help find US citizens who will agree to act as guarantors for him in court.
The Russian citizen was detained in the United States two months ago and sent to custody until the end of the money laundering trial. On Thursday, March 23, Legkodymov appealed through the media to the community for help.
The law of the United States allows you to get out of prison before a decision is made on the case, if the defendant has sureties, Legkodymov's lawyers explain. The Russian's team of associates encourages those who want to help to write to Telegram: https://t.me/helplegkodymov
"The crypto community knows Anatoly as a decent, law-abiding person and wants to help him get out of prison on bail until the end of the trial."
User activity Anatoly Legkonymov on the forum Bitcointalk.org it can be traced back to 2011, on the Bits.media forum - from 2016. Anatoly Legkodymov and his partners created the future Bitzlato in the mid-1990s as a telegram cryptocurrency exchange called ChangeBot. Within a few years, the project has expanded to "a single crypto platform that includes an exchange, a p2p exchange, a mining pool, and secure wallets."
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Bitzlato: Anatoly Legkodymov pleaded not guilty to money laundering.
The management of the Bitzlato cryptocurrency exchange refuted the information spread in the media that the co-founder of the service Anatoly Legkodymov pleaded guilty to large-scale money laundering.
A few days ago, rumors began to spread online that Anatoly Legkodymov, who was arrested in mid-January at the request of the Federal Bureau of Investigation (FBI), is negotiating to plead guilty to the charges against him. Channels publishing this information referred to a document that appeared on the Internet.
The Bitzlato team commented on the situation, calling this information unreliable. Negotiations between Legkodymov's lawyers and the US Attorney may take place between April 14 and June 13. But this does not mean an admission of guilt, and the detainee still denies all charges. This document suggests that the US authorities are only trying to simplify their work instead of preparing evidence, Bitzlato representatives explained.
Legkodymov is being defended by Venable LLP, a law firm that applied for his release on bail, but this request was rejected. Bitzlato has reached out to Venable LLP partner Mark Schamel for comment. He confirmed that Anatoly Legkodymov does not negotiate a guilty plea, and also does not cooperate with the US Department of Justice and other law enforcement officers. Therefore, Shamel demanded to make appropriate corrections to the document.
The former co-owner of Bitzlato, Anton Shkurenko, provided an exclusive comment to the editorial board of Bits.media. Recall that earlier rumors also spread about him that he was detained in Russia for extradition to France. However, in reality, Shkurenko remained at large.
"It is very difficult to stay in prison, but this does not mean that Anatoly intends to admit guilt. The release of such documents by the US authorities once again proves that they are not able to perform their work efficiently, but only try to put an innocent person in prison," Shkurenko said.
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Co-founder and main shareholder of the Bitzlato Ltd cryptocurrency exchange. Anatoly Legkodymov pleaded guilty in the United States to one of the charges against him in the case of transferring illegally obtained funds.
The Russian also agreed to confiscate $ 23 million as part of a deal concluded with the investigation.
Legkodymov said in federal court for the Eastern District of New York that he became aware that some clients used the crypto exchange to transfer funds whose source of origin was illegal activity. He admitted that the proceeds from ransomware from the Hydra Market platform ended up on Bitzlato.
Recall that a Russian citizen was detained in Miami in January on charges of carrying out activities to transfer illegally obtained funds. In March, the federal court for the Eastern District of New York ordered the detention of a Russian citizen. He may face up to five years in prison.
According to the US Department of Justice, operations on the exchange registered in Hong Kong were conducted in violation of regulatory norms and requirements of the law on preventing money laundering. In particular, according to the American authorities, Bitzlato, offering its services on the international market, including in the United States, allegedly imposed minimal requirements for customer identification, stating that they would not need identity documents to register on the platform. In the event that documents were requested, the exchange allegedly looked at them through its fingers, not caring about their verification.
Bitzlato denies providing services in the United States, but according to the US Department of Justice, in July 2022 alone, more than 250 million visits to the site of the crypto exchange by American users were registered.
As a result of this policy, Bitzlato, as it is believed in the United States, has become one of the "harbors" for hiding criminal proceeds and funds intended for carrying out criminal activities. At the same time, the largest partner of the crypto exchange was allegedly the largest illegal darknet platform Hydra Market, which was liquidated by law enforcement agencies.
In total, Hydra users transferred more than $ 700 million in cryptocurrency through Bitzlato, and the exchange received about $ 15 million in revenue from the use of ransomware (ransomware), according to the US.
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