Authorities arrested Anatoly Legkodymov, the current founder of the crypto exchange Bitzlato. According to them, the startup has been working with dangerous Russian ransomware groups on the dark web.
The CEO who is now living in China, has reportedly laundered over $700 million of funds used in criminal transactions, BBC reports.
The US prosecutors confirmed that the arrest of the 40-year-old Russian took place on Wednesday, Jan. 18.
Bitzlato Linked to Cybercrime Groups
The authorities launched a special investigation to see the suspicious side of the cryptocurrency exchange this week.
According to Ars Technica, the US Justice Department sought help from the Financial Crimes Enforcement Network or FinCEN to check the money laundering scenarios happening behind the scenes.
It was found out that the allegations surrounding Bitzlato were taking place outside the crypto business. More importantly, the authorities alleged that the firm has been working with DarkSide ransomware gang, the dangerous group behind the Colonial Pipeline cyberattack that occurred in 2021.
Another ransomware group that is tied up to Bitzlato is Phobos. The said group of hackers has already launched cyberattacks to medical institutions and hospitals across the country.
Aside from the two above-mentioned ransomware groups, Bitzlato is discovered to have connected with the Conti ransomware squad, which reportedly announced its allegiance to Russia during its invasion of Ukraine.
Bitzlato plays a critical role in facilitating transactions for the Conti ransomware group and other global ransomware actors, including actors that operate out of Russia," Himamauli Das, the acting director of FinCEN said in a statement.
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Bitzlato is All Over the Cybercrime Market
The grueling fact about Bitzlato does not end with its affiliation with the notorious Russian cybercriminals. Actually, the crypto startup is also linked to have negotiation with Hydra and Chatex, two crypto firms which were shut down in 2022 because of the illegal sales of products in the dark web.
In an affidavit, FBI Special Agent Ryan Rogers said that Bitzlato acted as a host for the illegal activities. Hydra used to be "largest counterparty" for illicit undertakings.
Additionally, the affidavit says that Legkodymov knew the plans all along starting from the fund processing to carrying out illegal transactions.
The authorities also seized strong evidence that Legkodymov was really guilty of the crime he committed. The chat discussion in 2019 allegedly contains his message to his colleague. It indicates that "all traders are known to be crooks."
Aside from that, another allegation suggests that Legkodymov has been receiving a lot of IP addresses from several US-based users. The internet traffic was somewhat attributed to Bitzlato's transactions.
If Legkodymov is convicted of the money-laundering crime, he will be imprisoned for five years.
According to Cointelegraph, Bitzlato used to keep a low profile until several complains arose in the crypto community.
