Bitzlato founder pleads guilty, agrees to dissolve dark web exchange

The DOJ announced charges against the founder of the Hong Kong-based exchange in January

December 6, 2023 05:36 pm

Artwork by Crystal Le

Anatoly Legkodymov, founder of the dark web-tied crypto exchange Bitzlato, has pleaded guilty to operating an unlicensed money transmitting business in a New York court.

The Department of Justice originally filed charges against the Hong Kong-based exchange’s majority owner last January.

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,” US attorney Breon Peace said in a statement at the time.

According to the DOJ, Legkodymov will dissolve Bitzlato and “release any claim over approximately $23 million in seized assets of Bitzlato” as part of the plea agreement. A sentencing date has not been set yet.

“We are dismantling and disrupting the cryptocrime ecosystem using all tools available — including criminal prosecution. In January, the Department and our partners took down Bitzlato’s infrastructure and seized its cryptocurrency. Today’s conviction of Bitzlato’s founder is the latest product of our efforts,” Deputy Attorney General Lisa Monaco said in a press release.

The DOJ and German authorities shut down Hydra Market — which allegedly specialized in being a marketplace for drugs and stolen financial information — back in 2022. The online marketplace exchanged roughly $700 million worth of crypto with Bitzlato, the authorities said.

Legkodymov was denied bail at a hearing back in March due to his status as a Russian national in the US on a visa and his “access” to crypto, cited as reasons to keep him detained.

The initial DOJ announcement surprised some in crypto, with some taking to X to post that they had never heard of the exchange before.

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