The US Department of Justice (DOJ) has announced the shutdown of cryptocurrency exchange Bitzlato, along with the FBI’s arrest of exchange owner Anatoly Legkodymov. In a live stream broadcast on Jan. 18, law enforcement officials revealed that the Hong Kong-based exchange is part of a vast illicit cryptocurrency network designed to evade sanctions, launder money and covering up crimes.
“Legkodymov operated Bitzlato as a high-tech financial hub that, in his own words, catered to ‘known scammers,'” the DOJ said. statement bed. “Bitzlato has failed to implement safeguards required by US law – safeguards that enable authorities to detect and investigate financial crimes.”
In the live stream, officials warned that criminal actors, regardless of their location or residence, must answer to US law enforcement. “Whether you’re breaking our laws from China or Europe or abusing our financial system from a tropical island, you can expect to answer for your crimes in US court,” the DOJ says, in a potential reference to the FTX under siege Bahamas hub.
Indeed, the Bitzlato announcement comes at a time when law enforcement and regulators are coming under increasing scrutiny. Gemini and Genesis have both been charged by the SEC in just the previous week, alongside the aforementioned FTX and all charges collected against those involved.
The DOJ alleges that Bitzlato facilitated more than $700 million in transactions involving illicit funds from 2018 to 2022, but at the time of the live stream, Bitzlatos’ tagged wallets only had $11,000 on them, down from a high of $6 million. Even at its height, the volume of silver involved in this event is minor compared to the recent collapse of Capital of the Three Arrows and other related entities, many of which have claimed to be scams in their own right. This volume discrepancy could potentially frustrate those who want proper enforcement in the industry.