Anatoly Legkodymoc had already served 18 months in Brooklyn’s “awful” MDC, according to the magistrate, which was sufficient to serve as appropriate punishment.
The proprietor of the defunct crypto exchange Bitzlato has reportedly been spared additional prison time after his exchange processed more than $700 million in illicit proceeds from the Russian dark web.
Judge Eric Vitaliano handed down a time served sentence to Anatoly Legkodymoc on July 18 in a New York District Court after his guilty plea to one charge of running an unauthorized money-transmitting company.
According to Judge Vitaliano, Legkodymov’s 18 months of confinement at Brooklyn’s Metropolitan Detention Centre (MDC) were sufficient punishment for his offenses.
Vitaliano stated, “It is an awful location, and the court does take that into account.” Sam Bankman-Fried, the founder of FTX, also served time in the MDC prior to his own fraud prosecution. He was convicted of all seven fraud offenses and sentenced to 25 years in prison.
Legkodymov also consented to waive any claim to the $23 million in crypto assets that were confiscated by French law enforcement during the global undercover operation that resulted in the exchange’s closure on January 23, 2023.
The prosecution alleges that Legkodymov failed to implement sufficient measures to monitor the users of the Russian dark web black market Hydra Market, which facilitated the exchange of over $700 million in cryptocurrency.
The prosecution also claimed that Bitzlato users frequently accessed the exchange’s customer service portal to request assistance with transactions on Hydra Market and frequently acknowledged that they were trading under fraudulent identities.
Additionally, they identified a message from May 2019 in which Legkodymov informed a Bitzlato colleague that a significant number of the exchange’s users were “known to be criminals.”
Legkodymov stated in a court statement that he had contemplated his actions in relation to Bitzlato for the past 18 months.
“I have come to the realization that, as the company’s originator, I could have done more,” he stated. A coordinated international endeavor to halt the exchange resulted in Legkodymov’s arrest in Miami on January 17, 2023.
Spain, Portugal, Cyprus, the European Union Agency for Law Enforcement Cooperation (Europol), and the United States were all involved in the undercover operation that resulted in Legkodymov’s arrest and the subsequent shutdown of the exchange.
Europol reported that approximately 46% of the assets processed by Bitzlato, which were equivalent to $1.09 billion at the time, were associated with illicit activities.
“The Office of Foreign Assets Control (OFAC) sanctions the majority of suspicious transactions, while others are associated with cyber frauds, money laundering, ransomware, and child abuse material,” stated Europol.
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