The Russian founder of Bitzlato has been sentenced to a fixed term in prison for facilitating more than $700 million in illegal crypto transactions.
Anatoly Legkodimov, a Russian co-founder of Hong Kong-based cryptocurrency exchange Bitzlato that processed more than $700 million in illicit cryptocurrency on the dark web, has been sentenced to 18 months in prison but will not serve any additional time, having already served that time in custody for operating an unlicensed money transfer business.
On July 18, Judge Eric Vitaliano issued a ruling in New York County Court. Convicted Anatoly Legkodimov after pleading guilty in December 2023 to facilitating transactions linked to the dark web, including the infamous Hydra marketplace, which was shut down in 2022.
While prosecutors from Brooklyn U.S. Attorney Brion Pace’s office argued that Legkodimov deserved at least four years in prison for “creating a dirty money exchange,” the judge took into account the harsh conditions of the Urban Detention Center where Legkodimov was being held, calling it a “terrible place,” and citing two recent murders of detainees as reasons against more prison time.
The U.S. Department of Justice alleged that Bitzlato was a major provider of buyers and sellers on the black market, as well as a “safe haven for ransomware criminals.” Under the plea agreement, Bitzlato dissolved and released claims for more than $23 million in forfeited assets to the cryptocurrency exchange.
Pizzolatto is believed to have been associated with Hydra Market, an illicit online drug marketplace that prosecutors say is linked to criminal activities such as money laundering, drug trafficking, the sale of illegally obtained financial information, and fraudulent identities.
The U.S. Treasury’s Financial Crimes Enforcement Network revealed that Bitzlato’s transactions were largely tied to Binance, the cryptocurrency exchange whose founder Changpeng Zhao stepped down in late November 2023 as part of a $4.3 billion settlement with U.S. regulators. Zhao was later sentenced to four months in prison after pleading guilty to violating U.S. laws.