The U.S. Department of Justice, in cooperation with French law enforcement agencies, has taken action to seize Bitzlato’s assets. Both the company and its owner are facing money laundering charges.
Serious enforcement action on Bitzlato
U.S. Deputy Attorney General Lisa Monaco said in a statement on January 18 that legal action had been taken against the Bitzlato exchange, in consultation with the French side. In addition, its owner Anatoly Legkodymov was arrested and will also face charges.
Bitzlato’s main concern was:
“conducting money transfer activities and transporting and illegally transferring funds, and failing to meet U.S. regulatory safeguards.”
In doing so, the authorities reported that the company was a “key financial resource” for the Hydra darknet market. It enabled the laundering of funds, which, according to investigators, largely came from ransomware attacks carried out earlier.
“Hydra Market users exchanged more than $700 million in cryptocurrencies with Bitzlato, either directly or through intermediaries, until Hydra Market was shut down by U.S. and German law enforcement authorities in April 2022. Bitzlato also received more than $15 million in ransomware proceeds.”
Arrested by the FBI on Tuesday, January 17, Anatoly Legkodymov is scheduled to be brought before the U.S. District Court for the Southern District of Florida.
Joint effort to benefit crypto market
The efforts against Bitzlato, although mainly attributed to US and French authorities, were coordinated across Europe. They were aimed at seizing the exchange’s resources, its servers, as well as capturing its founder. According to Monaco, this action was the “most significant enforcement action” against any entity in the history of the National Cryptocurrency Enforcement Team.
The institution’s history is quite short, dating back to just October 2021. Nevertheless, this body seems to be particularly important in terms of taking care of the cryptocurrency industry’s image. Recall that until recently, ransomware attacks were quite popular. To maintain anonymity, the hackers carrying them out demanded cryptocurrencies as ransom. Their subsequent purification through mixers was a standard part of the process. The above example indicates that the Bitzlato exchange was also involved in the procedure. The agency’s activities thus have the opportunity to cleanse cryptocurrencies of their image as a means of conducting illegal transactions.
Information causes turmoil in bitcoin and crypto market
Less than two hours before the above information saw the light of day, the market was circulated by a heralded rumor. However, its main actor was the Binance exchange. Panic was observed as a result. Bitcoin thus fell from the level of $21,515, to $20,370 (-5.3%). Altcoins recorded a much bigger plunge, sometimes losing several percent each. Moments after the publication of the real news, prices slowly returned to previous levels.