Photograph: Jonathan Raa/NurPhoto/Rex/ShutterstockPhotograph: Jonathan Raa/NurPhoto/Rex/ShutterstockA Russian national who founded a cryptocurrency exchange that the justice department says became a haven for the proceeds of criminal activity has been arrested, federal officials said on Wednesday.and was due in court on a charge of conducting an unlicensed money-transmitting business.
Prosecutors allege that Legkodymov’s cryptocurrency exchange, Bitzlato Ltd, of which he served as majority owner, did not implement required anti-money laundering safeguards and required only minimal identification from its users, even permitting them to supply information belonging to “straw man registrants”, people serving as cover for the users.
“The result was that Bitzlato became a safe haven for criminals, like drug dealers and ransomware groups,” said Breon Peace, the US attorney in Brooklyn, where the case was filed. “They knew that when the police traced their funds to Bitzlato, Bitzlato would not be able to turn over its users’ true identities.
“Operating offshore or moving your servers out of the continental US will not shield you,” deputy attorney general Lisa Monaco said at a Wednesday news conference. “And 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.
The treasury department worked with French authorities to identify the alleged criminal activities by Bitzlato, which US officials said was a sign of the global cooperation to purge bad actors from cryptocurrency markets.