Bitzlato CEO Avoids More Jail Time Despite $700 Million Dark Web Operation

Anatoly Legkodymov, the founder of Bitzlato, will not get more jail time for his role in a $700 million dark web operation.The judge decided that the 18 months he already spent in Brooklyn's terrible" MDC was enough punishment.

This decision came despite Bitzlato's involvement in large-scale illegal activities.As a result, the development raised questions about how severe financial crimes are punished today.

Bitzlato Founder Avoids Further Jail Time

Anatoly Legkodymov, the founder of Bitzlato, has escaped additional prison time following Judge Eric Vitaliano's ruling at a New York District Court on July 18.

Legkodymov had already pleaded guilty to running an unlicensed money-transmitting business. His crypto exchange, Bitzlato, processed over $700 million in illegal funds from the Russian dark web.

According to the latest ruling, the judge considered Legkodymov's 18 months in Brooklyn's Metropolitan Detention Centre (MDC) sufficient punishment.

He acknowledged that the MDC is a terrible place" for someone to be imprisoned. Interestingly, FTX founder Sam Bankman-Fried also served time in the same facility.

However, his outcome differed, resulting in a 25-year sentence for fraud charges. As part of the agreement, Legkodymov gave up any claim to $23 million in seized crypto assets. French law enforcement took these funds during a global operation.

Legkodymov Accused of Facilitating $700M in Crypto for Russian Dark Web Market

Meanwhile, Legkodymov was accused of helping to move over $700 million in cryptocurrency through Hydra Market, a Russian dark web marketplace known for illegal activities.

The prosecutors argued that Bitzlato, Legkodymov's company, didn't properly monitor its users and did not implement effective KYC programs.

Consequently, many customers openly asked for help with Hydra Market transactions. Some even admitted to trading using fake identities.

In one instance, Legkodymov reportedly told a colleague that many Bitzlato users were known to be crooks". This admission, made in May 2019, pointed out that the exchange allowed suspicious practices.

Reflecting on his actions, Legkodymov told the court he could have done more to prevent such activity as the company's founder.

He said, I realize now, as the founder of the company, I could have done more."

Furthermore, he was arrested in Miami on January 17, 2023, as part of a planned operation involving several agencies. The operation involved several countries, including the United States, Spain, Portugal, and Cyprus.

According to the report, the authorities apprehended 5 suspects during this operation: one in Cyprus, one in the US, and three in Spain. Notably, the European Union Agency for Law Enforcement Cooperation (Europol) also played a key role.

Europol's investigation revealed that about 46% of assets processed by Bitzlato were linked to illegal activities. At the time of the investigation, this amount was equivalent to $1.09 billion.

The agency also seized a crypto wallet holding about EUR 18 million. In addition, they froze over 100 accounts at other crypto exchanges, involving a total of EUR 50 million.

The Aftermath and Implications

The Bitzlato case shows how some platforms can become hubs for illegal activities if left unchecked.

Again, Legkodymov's sentencing raises questions about the appropriate punishment for crypto-related crimes. Some may argue that the time served in a harsh prison is enough punishment.

Others might argue that Bitzlato's offense deserves a stricter sentence.For crypto users, the Bitzlato case serves as a reminder to remain cautious.

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