Crypto Exchange Head Gets No More Jail Time in $700 Million Scam

(Bloomberg) — The Russian founder of the Bitzlato cryptocurrency exchange was sentenced in New York to the 18 months he’d already served behind bars for operating an unlicensed money-transmitting business that masked the proceeds of illegal gambling and drug deals valued at more than $700 million.

Anatoly Legkodymov, who had been in custody since his arrest in January 2023, was sentenced to time served Thursday by US District Judge Eric Vitaliano in Brooklyn, New York. Legkodymov, who pleaded guilty in December, admitted knowing for years that Bitzlato was being used as a conduit for transactions tied to the dark web, including the notorious drug bazaar Hydra Market, which was shut down by authorities in 2022.

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Prosecutors in the office of Brooklyn US Attorney Breon Peace argued Legkodymov, who owned and controlled Bitzlato, deserved at least four years in prison. They said he continued to allow the exchange to operate even after being repeatedly told that it had become “a haven for criminals, drug dealers, ransomware extortionists” and the dark web.

The Russian national had lived in his homeland and in Shenzhen. He was being held in US custody because he was deemed a risk to flee prosecution.

The case was part of a broader effort by the US Justice Department to fight the criminal use of crypto and recover the proceeds of those crimes through the National Cryptocurrency Enforcement Team. Last year, Binance Holdings Ltd. and Chief Executive Officer Changpeng Zhao pleaded guilty to anti-money laundering and US sanctions violations under a sweeping settlement with the US that allows the cryptocurrency exchange to continue operating.

The case is US v. Legkodymov, 23-cr-496, US District Court, Eastern District of New York (Brooklyn).

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