Crypto Opinions & News Authorities dismantle Crypto Exchange Bitzlato, allege it was Cybercrime “Haven”

upnorth · Jan 19, 2023

Federal authorities on Wednesday arrested the founder of Bitzlato, a cryptocurrency exchange they said has been a financial haven for Russia-aligned criminals engaged in ransomware and illicit drug sales on the dark web.

Anatoly Legkodymov, a 40-year-old Russian national residing in Shenzhen, China, was arrested on Wednesday in Miami, US prosecutors said. The prosecutors alleged that on Legkodymov’s watch, Bitzlato processed roughly $4.58 billion worth of cryptocurrency transactions and that a “substantial portion of those transactions constitute the proceeds of crime, as well as funds intended for use in criminal transactions.” Bitzlato is known as a virtual asset service provider (VASP).

Ransomware groups that Bitzlato allegedly worked with include (1) the Russian-speaking DarkSide, which was responsible for the Colonial Pipeline cyberattack in 2021 that caused gas shortages in the southeastern US; (2) Phobos, whose ransomware has attacked hospitals; and (3) Conti, which has pledged its allegiance to Russia following its invasion of Ukraine.

“Bitzlato plays a critical role in facilitating transactions for the Conti ransomware group and other global ransomware actors, including actors that operate out of Russia,” FinCEN acting director Himamauli Das wrote. “As a result, FinCEN assesses that Bitzlato serves as a VASP that ultimately enables the profitability of ransomware attacks and, at least in the case of Conti, advances the political and economic destabilization interests of the Government of Russia.” Besides those groups, Das said, Bitzlato also worked with sanctioned cryptocurrency exchange Chatex and Hydra, a massive cybercrime marketplace that facilitated sales of more than $5 billion of illicit goods and services for some 17 million customers before it was shut down last year.