US officials have arrested a Russian cryptocurrency executive who allegedly oversaw hundreds of millions of dollars in deals with drug traffickers and cybercriminals.
Anatoly Legkodimov, 40, was arrested in Miami, the Justice Department said Wednesday.
The U.S. Treasury has classified his cryptocurrency exchange, Bitzlato Limited, as a “major money laundering concern.”
His arrest marks a recent effort by President Joe Biden’s administration, with U.S. officials saying digital currencies have been a safe haven for scammers and drug dealers for far too long. Deputy Attorney General Lisa Monaco told reporters on Wednesday that illegal activities are causing a “crisis of confidence” in the cryptocurrency market and vowed to remain accountable to the industry.
Bitzlato allegedly exchanged more than $700 million in cryptocurrency with Hydra, a notorious dark web marketplace selling drugs and hacking tools that US and German authorities shut down in April.
Authorities in France and Europe have seized Bitzrat’s cryptocurrency and its computer servers, judicial sources said.
Legkodymov is scheduled to be indicted Wednesday in the United States District Court for the Southern District of Florida, according to the Justice Department. Legkodymov was not available for comment.
Legkodimov lived in China, which does not have an extradition treaty with the United States. It was not immediately clear why he traveled to Miami.
Bitzlato’s website went down Wednesday. A Twitter account bearing the exchange’s name did not immediately respond to messages seeking comment on the accusations.
Monaco has overseen an aggressive Justice Department effort to seize some of the billions of dollars of illicit cryptocurrency earnings reportedly made by scammers, hackers and drug dealers in recent years. . To address this issue, the FBI last year formed a team of cryptocurrency experts focused on blockchain analysis and seizure of digital money.
In June 2021, law enforcement authorities seized about half of an estimated $4.4 million ransom paid to Russian-speaking hackers by Colonial Pipeline, which provides about 45% of the fuel consumed on the East Coast. This ransomware attack brought down pipelines for days and caused long lines at gas stations in several states.
However, the cybercrime economy remains active.
According to cryptocurrency tracking firm Chainalysis, cybercriminals received more than $1.2 billion in ransoms in 2020 and 2021 combined.
Ari Redbord, head of legal and government affairs at TRM Labs, a firm that investigates financial crimes, said the Bitzlato disruption was “extremely disastrous” by U.S. authorities to “track down the illicit underworld of the cryptocurrency economy.” It is part of a “strategic” effort.
“These kinds of regulatory measures send a message across [cryptocurrency] We continue to track down non-compliant exchanges no matter where they are or how big they are,” Redbord, a former senior Treasury and law enforcement official, told CNN.