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Deputy Attorney General Lisa Monaco at the Bitzlato lockdown press conference
Photo: JIM LO SCALZO/EPA
The US Department of Justice has announced that the majority shareholder and co-founder of Hong Kong-registered crypto exchange Bitzlato has been arrested.
He is said to have laundered hundreds of millions of dollars in illegal funds.
Bitzlato's website was blocked, and under the address appeared a notice that the service had been confiscated by French authorities "as part of a coordinated international law enforcement effort."
The co-founder was caught in Miami on Wednesday night, according to the US Department of Justice.
The man is said to be a Russian citizen and lives in China.
The ministry did not say why the 40-year-old was in the United States.
According to the statement, he is charged with running an “unauthorized company for sending money”.
Up to five years in prison in the US.
According to the US judiciary, Bitzlato advertised that it only required minimal identification from its users.
The platform has thus become a "haven for criminal profits and funds intended for use in criminal activities".
Bitzlato is also linked to illegal Russian financial transactions, according to the US Treasury Department's Financial Crimes Enforcement Network.
"Bitzlato poses a global threat by allowing Russian cybercriminals and ransomware actors to launder the proceeds of their thefts," said Acting Director of the Special Investigation Team, Himamauli Das.
Partner of what was once the largest Darknet marketplace
The platform's most important partner for cryptocurrency transactions is said to have been the "Hydra Market" dark web marketplace, which was shut down by German and US investigators last April and was once the illegal marketplace on the dark web with the highest turnover worldwide.
"Hydra users exchanged more than $700 million in cryptocurrency through Bitzlato, directly or through intermediaries," the US Department of Justice said.
According to the prosecutor, Bitzlato has processed cryptocurrencies worth $4.58 billion since May 2018, the Reuters news agency reported.
Parallel to the arrest of the Russian, the French authorities, in cooperation with the police organization Europol and partners in Spain, Portugal and Cyprus, dissolved Bitzlato's digital infrastructure, as the US ministry said.
Deputy Attorney General Lisa Monaco said: "Today's action sends a clear message: Whoever breaks our laws from China or Europe - or abuses our financial system from a tropical island - can have an answer to their crimes in a courtroom in the United States USA expect.” Monaco's mention of a tropical island appeared to be a reference to the arrest of Sam Bankman-Fried, former CEO of failed cryptocurrency firm FTX.
He was arrested in the Bahamas in December.
The current operation against Bitzlato was the first major operation by the US Department of Justice's National Cryptocurrency Enforcement Network.
mamk/kko/Reuters/AFP
