Bitzlato Shutdown Puzzles Cryptoverse: What We Know About Its Alleged Russian Links

Zinger Key Points
  • Anatoly Legkodymov was arrested and charged with running a $700 million money-laundering operation.
  • Bitzlato allowed users to trade cryptos without requiring any form of ID verification.
  • FinCEN concluded that Bitzlato is a financial institution of used primarily for money laundering purposes.

Cryptocurrency followers have been left a bit confused after the Justice Department said it had shut down a little-known China-based cryptocurrency exchange named Bitzlato.

What Happened: Bitzlato founder Anatoly Legkodymov, a Russian national who lives in China, was arrested in Miami on Tuesday night and charged with running a $700 million money-laundering operation. The U.S. Justice Department has described the business as an "axis of cryptocrime" that is "fueling a high-tech network of money laundering". 

See More: Best Crypto Day Trading Strategies

What Is Bitzlato? According to its website, Bitzlato is a "modern company working in the field of blockchain technologies and Convertible Virtual Currency." 

But few were aware of this exchange until it was caught by law enforcement.

Some even questioned why the DoJ went after "a random tiny Russian exchange" instead of Sam Bankman-Fried's FTX, which has been accused of massive fraud.

Founded in 2017 as ChangeBot, Bitzlato is a Russian-affiliated CVC exchange platform offering peer-to-peer services, allowing users to exchange Bitcoin BTC/USDEthereum ETH/USDBitcoin Cash BCH/USDLitecoin LTC/USDDash DASH/USDTether USDT/USDMonolith Ruble MCR/USD and Dogecoin DOGE/USD without intermediaries and hidden commissions. 

Bitzlato said its services involve the collecting and holding of digital assets for registered users and the ability to "freeze" digital wallets.

Lapses: According to the DoJ, Bitzlato allowed users to trade cryptocurrencies without ID or verification, proclaiming that “neither selfies nor passports [are] required," turning it into a market for illicit activity.

Russia Connection: U.S. financial intelligence unit FinCEN said there are reasonable grounds to conclude that Bitzlato was used primarily for "money laundering purposes" linked "with illicit Russian Finances" and as a virtual asset service provider enabling the “continuation of ransomware attacks.” 

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