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Russian citizen accused of running a cryptocurrency exchange used by criminals

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WASHINGTON — A Russian citizen who ran a cryptocurrency exchange that federal prosecutors say moved at least $700 million in illicit funds has been arrested in Miami and charged with evading U.S. money laundering safeguards. money, according to an unsealed indictment Wednesday.

Russian citizen, Anatoly Legkodymov, 40, oversaw the Hong Kong-based exchange, Bitzlato, which knowingly allowed criminals “to profit from their wrongdoings, including ransomware and drug trafficking,” Kenneth A. Polite Jr., the assistant attorney general for the Justice Department’s criminal division, said at a news conference Wednesday.

The move was part of an intensified effort by federal law enforcement, in conjunction with European partners, to combat international cryptocurrency schemes and illegal transactions. In particular, they have sought to suppress the activities of companies and individuals based in China and Russia operating in the unregulated corners of cyberspace known as the “darknet”.

If convicted, Mr Legkodymov, who lives in Shenzhen, China, could face up to five years in prison. A senior law enforcement official, speaking on condition of anonymity, said he was likely to face further charges, possibly related to money laundering. It was not immediately clear who represented Mr. Legkodymov, the majority shareholder of the company.

The company’s encrypted internal communications showed Mr Legkodymov and other executives acknowledging that the exchange trafficked in “dirty money”, including deposits made by drug dealers, Breon Peace said, the United States Attorney for the Eastern District of New York.

In conversations, colleagues warned Mr. Legkodymov that the exchange’s clientele consists of “drug addicts who buy drugs” and “drug dealers”, a practice that could negatively affect long-term viability. of the company. In a May 29, 2019 message, according to court documents, Legkodymov told a fellow executive that many Bitzlato users were “known to be scammers” and admitted that many used fake IDs to register. their accounts.

Investigators were also able to track approximately $15 million obtained from ransomware attacks that were laundered through Bitzlato.

Mr. Legkodymov has been under surveillance since arriving at Kennedy International Airport in Queens last October and continued to play a pivotal role in supervising the exchange until his arrest in Florida on Tuesday, officials said. He was scheduled to appear in U.S. District Court for the Southern District of Florida later Wednesday.

Lisa O. Monaco, deputy attorney general, said Bitzlato’s operations were linked to operations of the $5.2 billion Hydra market, which accounted for about 80% of all cryptocurrency transactions on the darknet before the department does not close it in April.

Prosecutors described Hydra as “an online criminal market” that allowed users from predominantly Russian-speaking countries to anonymously buy and sell drugs, stolen financial information and fraudulent identifications, as well as money laundering services .

nytimes Gt

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