Anatoly Legkodymov, the Russian founder of the Bitzlato cryptocurrency exchange, pleaded guilty on Wednesday to operating a money transfer business that accepted illicit funds. The plea, entered in the U.S. District Court for the Eastern District of New York, sheds light on alleged criminal activities within Bitzlato, a platform that had garnered attention for its association with illicit finance.

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Bitzlato's Illicit Activities Unveiled

Bitzlato, based in Hong Kong, had positioned itself as a cryptocurrency exchange, but according to U.S. authorities, it operated as a "safe haven for fraudsters, thieves, and other criminals to launder illicit proceeds." The exchange reportedly required minimal user identification, making it an attractive option for those seeking to transfer funds derived from criminal activities.

Legkodymov, also known as "Gandalf," admitted as part of the plea agreement to being aware that some Bitzlato clients were transferring cryptocurrency derived from illicit activities, including proceeds from ransomware on the Hydra Market. 

The guilty plea comes with a potential maximum penalty of five years in prison. Furthermore, Legkodymov agreed to dissolve Bitzlato and forfeit any claim to $23 million in seized assets.

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Bitzlato's Checkered Past

Bitzlato came under scrutiny earlier when, in January, the U.S. government sanctioned the exchange, alleging that it had laundered around $700 million. 

The Treasury Department and the Department of Justice designated Bitzlato as a "primary money-laundering concern," effectively cutting it off from the global financial system. European Union police entity Europol later accused Bitzlato of laundering over $1 billion in funds.

Bitzlato's website, once active as a cryptocurrency exchange, no longer functions, having been seized by French authorities as part of an international law enforcement operation. Legkodymov's arrest initially took place in Florida, and the case has since been transferred to the U.S. District Court for the Eastern District of New York.