Crypto Feb 11, 2023

The cryptocurrency exchange that helped to “launder” dirty money from the Hydra marketplace has been closed

U.S. law enforcement agencies, with the help of international colleagues,…

U.S. law enforcement agencies, with the help of international colleagues, have shut down the Chinese exchange Bitzlato Limited and arrested its entire top management.

Bitzlato Limited was established in 2016, and its founder is Anatoly Legkodymov, who is a citizen of the Russian Federation. From the first day of its operation, the exchange attracted a large number of people who were not entirely legitimate business, and this was facilitated by the company’s policy and lack of control over “dirty” money. First of all, the exchange attracted the attention of various criminals, and most of all it attracted the attention of users of “dark” Internet markets.

The investigation showed that most of the Bitzlato exchange users were also active users of Hydra Market. Customers and sellers from the Hydra resource immediately fell in love with the Chinese exchange because they did not have any questions about the legality of their finances when making illegal transactions through it. The blockchain analysis showed that in the period from May 2018 to April 2022, about $300 million was credited to Bitzlato accounts from Hydra users. Also, more than $200 million was sent to Hydra accounts from the exchange. Also, thanks to the analysis, it became known that almost $20 million was transferred to the exchange’s accounts from accounts that were used for ransomware crimes.

If you think that Bitzlato employees somehow fought against illegal transactions, you are mistaken. Exchange employees sometimes blocked users who were suspected of illegal activity, but in most cases they themselves deliberately helped to transfer money to Hydra accounts. The analysis of exchange users’ correspondence with the support service showed that the employees directly answered that funds from the exchange could be transferred to any address, regardless of the purpose of the transactions. The employees of the exchange were well aware that most of their customers used accounts registered under other names to make purchases on Hydra Market, and even knowing all the schemes of transferring funds, they did not react in any way.

The marketing director of the exchange prepared a report titled “Competitor Analysis” in which he pointed out that the rejection of illegal money transfers would hit the company’s finances, and he also highlighted the disadvantages of the exchange, which he attributed to “a large number of fraudsters among the users of the resource” and “a large amount of dirty money on the company’s accounts”.

Despite the fact that the exchange was not officially registered in the United States, it advertised its services among clients of the American market. As it later became known, about 1.5 thousand US clients transferred more than USD 2 million to Bitzlato’s account.

The founder of the exchange did not even worry about being held accountable for his activities. As of October 2022, he was living in Miami, from where he had unimpeded access to the exchange’s servers. It all ended on January 17, 2023, when US law enforcement agencies in partnership with several European countries arrested Legkodymov and confiscated all of his company’s cryptocurrency assets.


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