According to the Law360 blog, Anatoly Legkodymov, one of the founders and the primary owner of the Bitzlato cryptocurrency exchange, which has ties to Russia, made his initial appearance in the New York federal court on Tuesday.
He has been ordered ‘jailed without bond’ because of charges that he used the site to launder millions in illegal proceeds, which he has denied.
The FBI seized the Russian citizen, a resident of China, in Miami on January 17 and charged him with unauthorized money transmission. The defendant was also charged with running a Hong Kong-registered exchange that processed more than $700 million in illegal cash while failing to install anti-money laundering procedures.
The money is said to be connected to a variety of criminal enterprises and individuals, including ransomware organizations and drug traffickers. Among them were Russia’s largest cryptocurrency pyramid scam, Finiko, and Hydra, formerly the biggest darknet market with Russian roots. Hydra was shut down in April after its servers were seized in Germany.
Four more Bitzlato employees, including three executives, were detained in Europe at the end of January. Another Bitzlato co-founder, Anton Shkurenko, was temporarily held, interrogated, and freed by Russian authorities in February.
Prior to that, Shkurenko disclosed that Bitzlato intended to relocate to Russia and restart operations there. He also pledged to partly resume withdrawals despite French law authorities taking the platform’s hot wallet.
In a statement published on its Telegram channel at the beginning of March, the exchange declared it had begun to handle client fund withdrawals. As French authorities removed its website, Bitzlato remained unavailable for more than a month. Europol claims it has swapped over $1 billion in ill-gotten gains.