Russian Founder of Bitzlato Exchange Sentenced to Time Served for Operating Unlicensed Money-Transmitting Business

Russian Cryptocurrency Exchange Founder Sentenced to Time Served for Illegal Money-Transmitting Business

Anatoly Legkodymov, the Russian founder of the Bitzlato cryptocurrency exchange, has been sentenced in New York to the 18 months he had already served behind bars for operating an unlicensed money-transmitting business. The business was found to have masked the proceeds of illegal gambling and drug deals valued at more than $700 million.

Legkodymov, who had been in custody since his arrest in January 2023, pleaded guilty in December to knowing that Bitzlato was being used as a conduit for transactions tied to the dark web, including the notorious drug bazaar Hydra Market, which was shut down by authorities in 2022.

Prosecutors argued that Legkodymov deserved at least four years in prison for his role in allowing Bitzlato to operate as a haven for criminals, drug dealers, ransomware extortionists, and the dark web. Despite being repeatedly warned about the illicit activities on the platform, Legkodymov continued to allow it to operate.

The case against Legkodymov is part of a broader effort by the US Justice Department to combat the criminal use of cryptocurrency and recover the proceeds of those crimes through the National Cryptocurrency Enforcement Team. Last year, Binance Holdings Ltd. and its CEO Changpeng Zhao pleaded guilty to anti-money laundering and US sanctions violations in a settlement with the US government.

Legkodymov, a Russian national who had lived in his homeland and in Shenzhen, was held in US custody due to concerns that he would flee prosecution. The case is US v. Legkodymov, 23-cr-496, in the US District Court, Eastern District of New York (Brooklyn).

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