Russian national Anatoly Legkodymov – the founder of a China-based cryptocurrency exchange who was believed to have been living in China for the past several years – was recently arrested while residing in Miami, Florida. He has been charged with running an unlicensed money transmitting firm.
Anatoly Legkodymov Arrested in Miami
The business in question is Bizlato Ltd. It is alleged that the company did not implement the necessary anti-money laundering requirements set by the region’s regulators. While bits and pieces of identity information were collected from users of the company, the firm did not go far enough to ensure KYC (know your customer) protocols were in place. The company is also alleged to have serviced users who created fake accounts or that did not operate under their own names.
Legkodymov was a majority owner in the firm. It is said that he – along with other executives of Bizlato – took part in more than $700 million worth of illegal money transfers with the aid of firms like Hydra Market, a darknet arena for illicit products such as phony IDs, drugs, and firearms. Deputy Attorney General Lisa Monaco explained at a conference:
Operating offshore or moving your servers out of the continental U.S. will not shield you, and whether you break our laws from China or Europe, or abuse our financial system from a tropical island, you can expect to answer for your crimes inside a United States courtroom.
The reference to a tropical island could pertain to the Bahamas, which housed the now infamous and defunct FTX exchange. Long considered the golden child of the industry, FTX fell apart in a heaping pile of bankruptcy filings and alleged fraud, with its top executive Sam Bankman-Fried now facing trial. It is believed SBF took user funds and paid off loans for his other company Alameda Research with the money. He is also purported to have purchased Bahamian real estate.
Legkodymov could spend the next five years of his life behind bars for running the company. At the age of 40, Legkodymov was arrested in late January and does not appear to have obtained the services of a lawyer as of this writing. It is also believed Bizlato helped various figures in Russia to avoid sanctions following the invasion of Ukraine in early 2022, though evidence suggesting this is limited. Instead, Deputy Treasury Secretary Wally Adeyemo explained:
What we do know is Russia has set up an ecosystem that is permissive for cyber criminals.
Is Russia a Crypto Crime Haven?
Breon Peace – U.S. attorney for the eastern district of New York – commented:
Institutions that trade in cryptocurrency are not above the law, and their owners are not beyond our reach. As alleged, Bitzlato sold itself to criminals as a no-questions-asked cryptocurrency exchange and reaped hundreds of millions of dollars’ worth of deposits as a result.