The Department of Justice announced unlicensed money transmitting charges Wednesday against Anatoly Legkodymov, a Russian national and senior executive of Hong Kong-registered cryptocurrency exchange Bitzlato.
The Justice Department pledged a whole of government approach and increased scrutiny of cyber and financial crimes committed by foreign actors.
"Today's actions send the clear message: Whether you break our laws from China or Europe — or abuse our financial system from a tropical island — you can expect to answer for your crimes inside a United States courtroom," Deputy Attorney General Lisa O. Monaco said at a news conference announcing the charges.
Mr. Legkodymov was arrested Tuesday and arraigned Wednesday in U.S. District Court in Miami. Ms. Monaco declined to expand on why Mr. Legkodymov was in Miami. He faces charges that carry a sentence of no more than five years, though Ms. Monaco said the investigation is ongoing and additional charges might be filed.
Bitzlato is accused of processing more than $700 million worth of funds to finance illegal drugs, ransomware attacks and other illicit activities from 2019 to 2021. The exchange failed to meet U.S. regulatory standards meant to prevent money laundering activity and attempted to mask the identities of its users by providing minimal indicators of who they were.
The DOJ said in a news release that in 2019 Mr. Legkodymov wrote on Bitzlato's internal chat system to tell a colleague that Bitzlato's users were "known to be crooks." He also received warnings from colleagues that its customers were drug addicts and traffickers.
Ms. Monaco said Bitzlato was a resource for the darknet Hydra Marketplace, which the department, with German authorities, shut down in April. The department said that in 2021 Hydra accounted for roughly 80% of all darknet market-related cryptocurrency transactions.
"Bitzlato sold itself to criminals as a no-questions-asked cryptocurrency exchange, and reaped hundreds of millions of dollars' worth of deposits as a result. The defendant is now paying the price for the malign role that his company played in the cryptocurrency ecosystem," said Breon Peace, U.S. attorney in New York, at the news conference.
The DOJ also warned would-be cyber and financial criminals that Wednesday's actions will send a message that it will be stepping up prosecution of those with illicit crypto operations outside of the U.S., most notably in Russia.
Wally Adeyemo, U.S. deputy secretary of the treasury, said Russia has set up an ecosystem that is permissive for cyber criminals and that a goal of the DOJ will be disrupting that network.
