Crypto exec arrested in Miami, accused of ‘vast’ $700M money laundering operation

MIAMI – Federal agents in Miami arrested the founder of a cryptocurrency exchange Tuesday night, accusing him of running a “vast” money laundering operation, the U.S. Department of Justice announced Wednesday.

Anatoly Legkodymov, 40, a Russian national who resides in Shenzhen, China, was set to be arraigned in federal court in Miami Wednesday afternoon.

Legkodymov is a senior executive and majority shareholder of the Hong Kong-based crypto exchange Bitzlato, which marketed itself as requiring little to no personal identification from users.

Prosecutors said Bizlato “became a haven for criminal proceeds and funds intended for use in criminal activity.”

They said Legkodymov ran Bitzlato from Miami in 2022 and 2023.

Prosecutors allege that Bizlator’s largest counterparty in crypto transactions was Hydra Market, which prosecutors described as “an anonymous, illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents and money laundering services that was the largest and longest running darknet market in the world.”

Hydra users, according to prosecutors, exchanged more than $700 million in cryptocurrency with Bizlato, either directly or through intermediaries, until U.S. and German authorities shuttered Hydra last April.

Prosecutors also said Bizlato received more than $15 million in ransomware proceeds and said its customers “routinely used the company’s customer service portal to request support for transactions with Hydra, which Bitzlato often provided and admitted in chats with Bitzlato personnel that they were trading under assumed identities.”

“Legkodymov and Bitzlato’s other managers were aware that Bitzlato’s accounts were rife with illicit activity and that many of its users were registered under others’ identities,” federal prosecutors said in a news release. “For instance, on May 29, 2019, Legkodymov used Bitzlato’s internal chat system to write to a colleague that Bitzlato’s users were ‘known to be crooks,’ using others’ identity documents to register their accounts. Legkodymov was repeatedly warned by colleagues that Bitzlato’s customer base consisted of ‘addicts who buy drugs at Hydra’ and ‘drug traffickers.’”

One senior executive stressed that Bizlato should only “nominally” combat drug dealers, in order to avoid “hurting the company’s bottom line,” officials said.

Prosecutors said while Bizlato claimed to accept users from the U.S., it did “substantial business” with American customers.

Legkodymov was charged with conducting an unlicensed money transmitting business. He could face up to five years in prison.

Authorities in France are also taking their own enforcement actions, according to the DOJ.