The actions of Bitzlato’s management seem suspicious. In particular, they initially claimed that the platform had been hacked, which allegedly happened shortly after the founder of the exchanger was arrested. At the time the U.S. authorities published information about the platform, its wallets contained the equivalent of 11 thousand dollars. At its peak, it exceeded $6 million.

Bitzlato cryptocurrency wallet balances

The equivalent of 670 thousand dollars was withdrawn from the wallets during the last 24 hours. It’s possible that we’re talking about a withdrawal by the authorities, but the prospect of such a “timely” hack is hard to believe.

Changing the balance of Bitzlato wallets

As a result, it seems that we can’t count on any kind of restart of the platform and return of the funds to the users. Still, the extent of Bitzlato’s problems has essentially become worldwide.

What is going on with the Bitzlato platform

During last night’s press conference, Deputy Attorney General Lisa Monaco said that the authorities had taken action against Bitzlato in coordination with law enforcement agencies in France. The platform’s website has been taken down, with a notice now displayed when you go to it.

Message on the Bitzlato website

According to Monaco, the US Department of Justice was working in cooperation with the US Treasury Department and French law enforcement agencies to investigate Bitzlato. More than $700 million worth of illegal transactions are believed to have taken place through the platform between 2018 and 2022.

Bitzlato could indeed have become an important tool in the hands of criminals, as the trading platform’s requirements to disclose the identity of its customers were minimal. As a reminder, almost all major crypto-exchanges today require customers to undergo KYC procedures, which means disclosing information on passports and other official documents.

The following message is still hanging on Bitzlato’s Telegram. As you can tell from the reactions, users are not particularly happy with this kind of communication. In addition, the platform’s management only reported the alleged hacking of the exchanger, but the arrest of Legkodimov was not commented on in any way.

A message in the Telegram group Bitzlato

This is most likely an attempt to reassure customers - it is unlikely that the platform will be able to continue to operate as usual given the current activity of various authorities. In addition, experienced users of the platform have noted that the site's administrators have already changed their own profiles, signing them differently. And this is clearly not a sign of a willingness to get out of trouble.

Discussion in the Bitzlato Telegram group

According to CryptoPotato’s sources, FBI officers arrested Anatoly Legkodymov, a Russian citizen living in China, on January 17 in Miami as part of the case. He is due to appear in US District Court for the Southern District of Florida.

Law enforcement officials said Bitzlato was an important hub for the Hydra darknet platform. It allowed money to be laundered, including from ransomware hacking attacks. Here is the relevant statement from authorities.

Hydra users spent more than $700 million in cryptocurrency through Bitzlato, either directly or through intermediaries, until Hydra was shut down by US and German law enforcement in April 2022. Bitzlato also received more than $15 million in revenue from ransomware hacking attacks.

Legkodymov was one of the first users of the Bitcointalk forum

The authorities’ action was a coordinated effort across Europe and the US to seize many of Bitzlato’s resources, including the company’s servers, as well as taking its founder into custody. Monaco called the case “the most significant enforcement action” against the exchange since a special cybersecurity unit was created in October 2021.

As officials have pointed out, the situation is a clear signal to anyone who wants to exploit darknet and cryptocurrency opportunities for bad purposes. In addition, the deputy attorney general noted that the agency would not only go after the criminals themselves, but also those who help them.

The case documents cite a “competitor analysis” that was compiled by Bitzlato’s head of marketing. The platform was cited as having no identity verification procedure, support for nine coins and three interfaces. The downsides were “dirty money”, an abundance of scams and high withdrawal fees.

Documents on the Bitzlato case from the authorities

There is also an example of communication with a user dated May 7, 2022, who was asked to confirm personal details. He directly admitted that he had bought the account he was using, and added that “in case you didn’t know, verified accounts are sold by the hundreds”. As a result, the user offered to find the user whose data was used to pass the verification process and get all the necessary documents from him for money, because the assets of the current user were at stake. Bitzlato representatives responded with the phrase “it’s your right”.

Data from the Bitzlato exchange case

Another story is the communication between one of the platform’s executives and the founder of Legkodimov. According to the former, if a serious hunt for drug dealers was announced, the latter would simply start using another platform. So he suggested a “nominal fight” in the form of blocking some drug-related user once a month. Legkodymov responded that the proceeds from the seized cryptocurrency of drug dealers would be a bonus for Bitzlato’s coffers.

Case file from the prosecution on Bitzlato


This situation is a clear reminder that it is extremely dangerous to get involved with such platforms. It is also a good idea to keep most of your digital assets in cold storage rather than hot wallets. In this case, however, any restart of the platform, along with a refund to users, is hard to believe. A withdrawal of crypto-assets from Bitzlato wallets seems more likely, if it hasn't happened already.