The FBI arrests a Russian man accused of his crypto exchange


New York
CNN

US authorities arrested a Russian cryptocurrency executive who allegedly oversaw the exchange of hundreds of millions of dollars with drug traffickers and cybercriminals.

Anatoly Legkodymov, 40, was arrested in Miami, the Justice Department said Wednesday.

The US Treasury Department has labeled its cryptocurrency exchange, Bitzlato Limited, as a “primary money laundering concern”, a move designed to cripple the exchange and cut off its funding.

His arrest marks the latest attempt by President Joe Biden’s administration to crack down on digital currencies that US officials say have been a safe haven for fraudsters and drug dealers for too long. The illegal activity has caused a “crisis of confidence” in cryptocurrency markets, Deputy Attorney General Lisa Monaco told reporters on Wednesday, while vowing to continue holding the industry accountable.

Bitzlato reportedly exchanged more than $700 million in cryptocurrency with Hydra, a notorious dark web marketplace for selling drugs and hacking tools that US and German authorities shut down in April.

French and European authorities seized Bitzlato’s cryptocurrency and computer servers, prosecutors said.

Legkodymov will be arraigned in U.S. District Court for the Southern District of Florida on Wednesday, the Justice Department said. Legkodymov could not be reached for comment.

Legkodymov lived in China, which has no extradition treaty with the United States. It was not immediately clear why he had traveled to Miami.

Bitzlato’s website was offline on Wednesday. A Twitter account using the exchange’s name did not immediately respond to a message asking for comment on the allegations.

Monaco has been overseeing an aggressive attempt by the Justice Department to seize some of the billions of dollars in illicit cryptocurrency proceeds allegedly made by scammers, hackers and drug dealers in recent years. To get a handle on the problem, last year the FBI formed a team of cryptocurrency experts to focus on blockchain analysis and the seizure of digital money.

In June 2021, justice officials seized about half of the estimated $4.4 million ransom paid to Russian-speaking hackers by Colonial Pipeline, which supplies about 45% of the fuel consumed on the East Coast. That ransomware attack shut down the pipeline for days and created long lines at gas stations in several states.

But the cybercrime economy is still buzzing.

Cybercriminals received more than $1.2 billion in ransoms in 2020 and 2021 combined, according to cryptocurrency tracking company Chainalysis.

Bitzlato’s disruption is part of a “highly strategic” effort by U.S. authorities to “tackle the illicit underbelly of the crypto economy,” said Ari Redbord, chief of legal and government affairs at TRM Labs, a financial crime firm. investigates.

“These kinds of regulatory actions send a message to the whole [cryptocurrency] industry: We’re still chasing non-compliant exchanges no matter where they are or how big they are,” Redbord, a former senior Treasury and Justice official, told CNN.

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