U.S. Justice Dept. charges Russian founder of cryptocurrency firm

WASHINGTON –

A Russian nationwide who based a cryptocurrency change that evaded U.S. rules and have become a haven for the proceeds of prison exercise has been arrested, federal officers mentioned Wednesday.

Anatoly Legkodymov, who lives in China, was arrested Tuesday evening in Miami and was due in court docket on a cost of conducting an unlicensed cash transmitting business.

Prosecutors allege that Legkodymov’s China-based cryptocurrency change, Bizlato Ltd., of which he served as majority proprietor, didn’t implement required anti-money-laundering safeguards and required solely minimal identification from its customers, even letting them provide data belonging to “straw man registrants,” folks serving as cowl for the customers.

The Justice Department mentioned Bizlato, both instantly or by its intermediaries, performed greater than $700 million in cryptocurrency exchanges with customers of Hydra Market, a darknet market for medication, pretend identifications and different unlawful merchandise.

“Operating offshore or moving your servers out of the continental U.S. will not shield you,” Deputy Attorney General Lisa Monaco mentioned at a Wednesday news convention. “And whether you break our laws from China or Europe, or abuse our financial system from a tropical island, you can expect to answer for your crimes inside a United States courtroom.”

Monaco’s point out of a tropical island appeared to be an obvious reference to the arrest final month within the Bahamas of Sam Bankman-Fried, the previous CEO of failed cryptocurrency agency FTX.

The cost Legkodymov faces carries a most penalty of 5 years in jail upon conviction. Legkodymov, 40, was in custody Wednesday, and it was unclear if he had a lawyer who may touch upon his behalf.

Asked on the news convention if Bizlato had assisted Russia in evading sanctions tied to its invasion of Ukraine, Deputy Treasury Secretary Wally Adeyemo mentioned, “What we do know is Russia has set up an ecosystem that is permissive for cyber criminals.”

The Treasury Department’s Financial Crimes Enforcement Network and French authorities labored collectively to determine the alleged prison actions by Bizlato, which U.S. officers mentioned was an indication of the worldwide cooperation to purge dangerous actors from cryptocurrency markets.