Bitzlato Exchange Accused of Money Laundering

US authorities have accused the little-known platform of money laundering with links to illegal Russian financing, and have arrested its founder.

Blitzlato Ltd. has been indicted by the US Justice and Treasury departments on money laundering charges and its founder, Anatoly Legkodymov, has been arrested in Miami, officials said on Wednesday at a news conference in Washington.

The Bitzlato platform, which is based in Hong Kong, has been shut down and its founder, Anatoly Legkodymov, has been arrested in the US. The moves will prevent Blitzlato from funding Russia-linked criminals, Deputy Attorney General Lisa Monaco told a news conference. She also said the coordinated investigative actions, involving the Federal Bureau of Investigation, French authorities and the US Treasury Department, succeeded in disrupting "a busy corner of this criminal ecosystem."

The Treasury Department and their Financial Crimes Enforcement Network (FinCEN) has officially identified the company's primary problem as "money laundering," which is one of the most serious sanctions in the government's crime fighting arsenal as it usually cuts a business off from the global financial system.

According to Deputy Finance Minister Wally Adeyeme, this designation declares the stock exchange an "international pariah."

The founder and majority owner of the exchange, Legkodymov, is a Russian citizen who has lived in China. Shortly after his arrest on Wednesday, he was indicted in the US District Court for the Southern District of Florida.

Cryptocurrency exchange Blitzlato is among the lesser-known exchange platforms. It offered peer-to-peer services and hosted wallets of criminals who bought and sold illegal goods. According to Justice Department investigators, $700 million has been transferred over the past few years. FinCEN also said that Blitzlato played a key role in arranging illegal transactions for ransomware actors in Russia, including those with direct ties to the Russian government.

Lisa Monaco said the crackdown is the most significant US action to date against a crypto-criminal network.

The company's servers were seized and, in addition, the exchange was found to be connected to routine transactions with the Russian Hydra Market. The darknet market was targeted by US authorities last year. Monaco added that the "Hydra-Bitzlato axis of crypto-crime" is now closed.