The Department of Justice (DOJ) announced Wednesday it arrested a Russian national who founded a cryptocurrency exchange that had evaded U.S. regulations and became a haven for proceeds of criminal activity.
Anatoly Legkodymov, who lives in China, was arrested Tuesday night in Miami. He was due in court on a charge of conducting an unlicensed money transmitting business.
Prosecutors allege that Legkodymov’s China-based cryptocurrency exchange, Bizlato Ltd., did not implement required anti-money laundering safeguards and required only minimal identification from its users. The DOJ said it even permitted users to supply information belonging to “straw man registrants”—in other words, people serving as cover for the users.
According to the DOJ, the company, either directly or through intermediaries, conducted more than $700 million in cryptocurrency exchanges with users of Hydra Market, a darknet marketplace for drugs, fake IDs and other illegal products.
In announcing the arrest, Deputy Attorney General Lisa Monaco said, “There is no place that is beyond the reach of U.S. law enforcement and our partners.”
“We will work in a coordinated and collaborative fashion with partners here in the United States and more broadly all around the globe to route out those who seek to exploit the cryptocurrency markets, those who seek to find safe haven in countries, whether they’re Russia, whether they’re China, whether they’re places in Europe,” said Monaco.
If convicted, 40-year-old Legkodymov faces a maximum penalty of five years in prison.
Legkodymov was in custody Wednesday; it was unclear whether he had a lawyer who could comment on his behalf.