crypto strategy

Deputy Attorney General Lisa O. Monaco Delivers Remarks on the Founder and Majority Owner of a Cryptocurrency Exchange Responsible for Processing Illicit Funds

Notes as prepared for delivery

Good afternoon. Thank you all for being here.

Today, the Department of Justice has delivered a heavy blow to the cryptocurrency ecosystem.

Justice Department agents and prosecutors, working in partnership with the Treasury Department and French law enforcement, disrupted Bitzlato, a China-based cryptocurrency exchange known for laundering criminal proceeds from the darknet. And last night, FBI agents arrested Bitzlato founder Anatoly Legkodymov.

With me today are Assistant Attorney General for the Criminal Division, Kenneth Polite, United States Attorney for the Eastern District of New York, Breon Peace, FBI Associate Assistant Director Brian Turner, and Assistant Secretary to the Treasure, Wally Adeyemo.

Today’s enforcement actions are a warning to all who seek to exploit the cryptocurrency ecosystem.

First, the Department of Justice and our partners will use every tool at our disposal to attack the use of the darknet and cryptocurrencies to promote criminal activity.

And second, we are taking action to address a crisis of confidence in the cryptocurrency markets, where criminals and fraudsters seek to operate outside the laws and rules that protect our financial system.

Malicious actors working from perceived sanctuaries overseas exploit crypto markets and flout laws and regulations that protect the integrity of our financial system and, with it, the incomes and investments of hard-working Americans.

It’s no secret that cybercriminals rely on these bad actors to launder their criminal proceeds from cryptocurrency into fiat currency.

Today, through a coordinated international effort, Justice Department prosecutors and agents have disrupted a bustling corner of this criminal ecosystem.

Last night in Miami, FBI agents arrested Legkodymov, a Russian national and founder and majority owner of Bitzlato, a Hong Kong-registered cryptocurrency exchange.

The charges allege that Legkodymov operated Bitzlato as a high-tech financial hub that, in his own words, catered to “known crooks”.

Bitzlato has not implemented the safeguards required by US law – safeguards that allow authorities to detect and investigate financial crimes.

Instead, Bitzlato facilitated the transmission of hundreds of millions of dollars in illicit funds fueling darknet markets and laundering the proceeds of ransomware attacks.

For example, as is claimed, Bitzlato was a crucial financial resource for the notorious Hydra darknet market, the disruption of which I announced from this rostrum last April – this time with our German partners.

Hydra was the oldest and largest darknet market in the world, responsible for 80% of global darknet transactions.

Hydra and Bitzlato formed a high-tech cryptocurrency axis: Hydra buyers financed illicit purchases – of illegal drugs, stolen financial information and hacking services – from crypto accounts hosted in Bitzlato, and the sellers of these illegal goods and services to Hydra sent criminal proceeds to accounts at Bitzlato – all to the tune of more than $700 million in direct and indirect transfers between 2018 and 2022.

I’ve said before that we would tackle the entire ecosystem that allows cybercriminals and illicit actors to thrive.

Today’s action against Bitzlato – like the Hydra disruption – reflects another critical step in the execution of this strategy.

From the time of Legkodymov’s arrest and continuing until today, the Department’s international and domestic partners have engaged in a coordinated campaign of disruption, which includes enforcement actions in several European countries, the seizure of servers and Bitzlato cryptocurrency, and regulatory enforcement actions here in the United States. States.

Today’s actions show not only the broad international reach of the accused’s alleged crimes, but also the international network law enforcement used to arrest him and his business partners..

Today marks the elimination of the Hydra-Bitzlato cryptocurrency axis.

We also destroyed the cybercriminal business model that Bitzlato supported.

Coordinated operations like this against Bitzlato – using all tools and designed for maximum impact – are the pillars of international success against cybercrime.

Our actions in this case also mark the most significant enforcement effort by the National Cryptocurrency Enforcement Team against a cryptocurrency platform.

To everyone who exploits the cryptocurrency ecosystem to enable cryptocurrency, we have a clear message: we will not just target hackers, fraudsters and criminals who hide their profits in cryptocurrency; we also unleash the full force of the Ministry of Justice against illicit actors and entities that support cybercriminals – like Legkodymov and Bitzlato.

Operating overseas or moving your servers outside of the continental United States will not protect you.

Whether you’re breaking our laws from China or Europe or abusing our financial system from a tropical island, you can expect to be held accountable for your crimes in US court.

I would like to thank the agents, analysts and prosecutors who worked diligently to investigate this matter.

And finally, a huge thank you to our overseas partners and the Department of the Treasury for their cooperation in this and many other cryptocurrency and cybercrime cases.

I will now turn the floor over to the polite assistant attorney general of the criminal division.

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