Bitzlato Co-Founder Pleads Guilty to a U.S Criminal Charge

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In a dramatic turn of events, Anatoly Legkodymov, the co-founder of Bitzlato, a Hong Kong-registered virtual currency exchange, has pleaded guilty to a U.S. criminal charge. This plea comes in response to allegations by U.S. authorities that Legkodymov played a key role in processing approximately $700 million in illicit funds through the Bitzlato platform.

In his plea agreement, Legkodymov has committed to dissolving Bizlato and relinquishing any claim to approximately $23 million in assets seized from the exchange the plea agreement sheds light on U.S. authorities’ claims that Anatoly was well aware of Bizlato serving as an open avenue for criminals to transport and transmit illicit funds.

Criminals Took Advantage of Bitzlato

The accusation points to lax controls over these transactions, creating an environment akin to an “open turnstile.” Meanwhile, this revelation suggests that criminals took advantage of the exchange’s lack of stringent measures. The strategy is a trend that is becoming rampant amongst hackers and other cybercriminals.

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They recognize vulnerabilities in a network and turn to exploiting such loopholes to obfuscate their loot, leaving users and investors with a loss at the end of the day. In the case of Bizlato, the prosecutors are trying to prove beyond reasonable doubt that the cryptocurrency exchange was intentionally left vulnerable to such illicit operations.

US Authorities Increase Scrutiny on Exchanges

The accusations against Legkodymov and the U.S. authorities’ enforcement action once again showcase the efforts being put into increasing scrutiny in the crypto ecosystem. “The defendant may have thought he was operating from a safe haven overseas for his ‘No Questions Asked’ clearinghouse, but this prosecution and conviction demonstrate otherwise,” United States Attorney Breon Peace added.

Meanwhile, the claims of the court cast a shadow over the cryptocurrency industry, highlighting its challenges regarding regulatory compliance and preventing illegal activities. The Bizlato exchange, which gained prominence in the virtual currency landscape, is now at the center of legal scrutiny, raising concerns among users and industry stakeholders.

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Hong Kong Loses Millions of Dollars to Crypto Scams

Hong Kong has had its fair share of crypto scams as well as other virtual hacks. In the first half of last year, crypto-related crimes accounted for 25% of all of its cyber crimes. The Asian country recorded a loss of over $50 million between January 2022 to June 2022 from 798 cases.

By the end of the year, Hong Kong had recorded 2,336 virtual asset-related cases with a loss of $1.7 billion. In Q1 of this year, the Hong Kong police reported a huge loss of $570 million from virtual assets-related crimes.

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