Anton Shkurenko was a co-founder of the Russian crypto exchange Bitzlato. In January, the U.S. Department of Justice closed Bitzlato. The DOJ had disputed allegations of money laundering by the U.S. authorities.
After Russian media, Shkurenko spoke to CoinDesk reported He was arrested in Moscow Monday. After a brief conversation, he stated that he was stopped by police to conduct an ID check. Although he refused to identify the unit of law enforcement that detained him at the time, he stated that he had signed an obligation to appear upon request by investigators. He was then issued a no-detention warrant in order to avoid any further arrests.
Shkurenko stated that he was on the Interpol wanted lists and that he had been detained by police. However, he said that he does not know of any criminal cases in Russia involving him. He said, “Otherwise I wouldn’t have been speaking to you now” during a Zoom call. He was sitting in front of what appeared to be an apartment wall with patterned wallpaper.
He said that he hoped he convinced the prosecutor of his innocence, but he could not disclose details about an ongoing investigation. Bitzlato was shut down last month after a cross-jurisdictional investigation of several U.S. agencies and European agencies. They found links between the then-unknown exchange and the darknet marketplace Hydra.
Shkurenko claimed he is a “tech advisor” for Bitzlato. However, he appears to have a lot more power than that: He was once one of the key holders of crypto wallets for the exchange. According to CoinDesk, he allegedly gave control of those wallets over to other members.
Bitzlato’s allegations and those it has processed $700 million in illicit fundsAccording to authorities, Shkurenko stated that the exchange did everything possible to stop criminals and was not ashamed of its work. Officially, the U.S. Treasury Department’s Financial Crimes Enforcement Network – FinCEN – called the exchange a “fraudulent” exchange.Primary money-laundering concern“” is a powerful way to remove a company from the global financial system.
Shkurenko stated that Bitzlato was only a “bulletin board” for crypto trades. An earlier interview Shkurenko stated that Bitzlato didn’t have any bank accounts, and all its revenues came from crypto.
Bitzlato had already begun migrating its infrastructure to Russia from Europe before January’s enforcement action. Most of the funds of users are now under the control of the team, Shkurenko stated. Shkurenko said that Bitzlato is willing to relaunch the company and slowly refund those who have lost their money due to the law enforcement shutdown.
Also see: In FinCEN Order Against Bitzlato, Binance is named as counterparty
He said that it won’t require much effort and that he could launch the exchange from his apartment. Two servers are sufficient.
Arrests all over the globe
Bitzlato was a Hong Kong-registered foreign exchange that had Russian founders. It shut down in January when FinCEN representatives arrested Anatoly Legkodymov. Charged He transmits unlicensed money.
Europol operates almost simultaneously Arrest Four more individuals were allegedly connected with Bitzlato Europe. They also seized the server that hosted the hot wallet of the exchange at a France-based data center. Shkurenko stated that the authorities took 18 million euros worth crypto, accounting for 35% in Bitzlato users funds. European authorities also confiscated over 100 accounts on other crypto exchanges linked with Bitzlato. They took $32 million worth of assets into their custody.
The U.S. Department of Justice The largest competitor to Bitzlato was the now-defunct, sanctioned darknet marketplace Hydra. It also received more than $15 million in ransomware proceeds and was associated with “TheFiniko,” a Russian Ponzi scheme. Europol 46% of crypto sent through Bitzlato was linked to criminal activities.
In Interview According to Satoshkin Live, a Russian-language cryptocurrency YouTube channel, Shkurenko identified four individuals arrested in Europe in January as former CEO Mikhail Lunev (no family), marketing director Alexander Goncharenko and contractor Pavel Lerner, while Konstantin was dev-ops engineer Konstantin. While the first three are still being held, Konstantin has been released on bail and is currently at Cyprus.
Legkodymov is still being held in U.S. custody
Cryptocurrency is dirty
Europol and the DOJ stated that criminal money flowed because of Bitzlato’s loose approach to KYC and AML (antimoney laundering) measures. Shkurenko claimed that Bitzlato had been following E.U. Since July 2021, Shkurenko claimed that Bitzlato has been following E.U. protocols and using “AML Services,” which would flag suspicious transactions to trigger an investigation at the company.
Shkurenko refused to identify the exact blockchain analytics products Bitzlato used, stating that he didn’t want to cause any problems for the provider.
Shkurenko claims that Bitzlato responded to all requests from law enforcement agencies including the U.S. Federal Bureau of Investigation. When Shkurenko was asked if he can recall what transpired from those interactions, he replied that he didn’t. Shkurenko stated that Bitzlato believed all users were innocent until proven guilty.
He asked, “How should I respond when someone stands in front of me and gives me money, up until there are criminal charges against him?” Bitzlato’s answer was, apparently, to do nothing.
He also said that the team was proactive in catching criminals using the exchange. From time to time, the Hydra darknet marketplace was accessed by the team in search for Bitzlato users. He said that those accounts would be blocked if they were found. Shkurenko recalls that a tech support worker walking to the office noticed a sign for an illegal drug shop on a fence. It turned out to have been a Bitzlato user. He said that the exchange had blocked his account.
Legkodymov’s U.S. court papers state that although Bitzlato may have blocked or terminated users who transacted with Hydra, or were otherwise suspected to be engaging in drug transactions, employees of the company sometimes assisted users in transacting with Hydra and sometimes did not take any action at all.”
An old exchange
Legkodymov was a former colleague at Rostelecom, Russia’s state-owned communications company. They left to start their own businesses. A joint crypto mining company called A-XBT operated mining farms in Russia and China.
Russia’s company registry shows that A-XBT’s 2021 revenue was just over $1 million. Shkurenko stated that the company ceased operation a year later after Russian law enforcement opened a criminal investigation against the Siberia data center owner where A-XBT stored its ASIC mining machines. He said that Shkurenko and Legkodymov concluded that the project was not worth their time.
Shkurenko explained that the idea to create a crypto exchange was born out of their experience operating mining farms in different parts of the world. They realized that there wasn’t an easy way to trade bitcoin, so they created a Telegram chatbot called BTC Banker. This bot matched buyers and sellers of crypto, later becoming Bitzlato.
Shkurenko stated that Bitzlato now has more than 100 employees.
Bitzlato wasn’t the only Russian exchange to be subject to legal sanctions for its allegedly lax KYC or AML procedures. SUEX was a Moscow-based OTC that processed large amounts crypto related to ransomware, scams and the drug market. OFAC sanctioned it in October 2021. Soon thereafter, Chatex was sanctioned by OFAC, a Telegram-based cryptocurrency trading platform and wallet service that is linked to SUEX.
Also see: Bitzlato, a shuttered crypto exchange, says it plans to resume operations
The U.S. Treasury will be closed April 2022 Garantex sanctionedAnother Russian-based exchange is XEX. SUEX and Chatex as well as Garantex and Bitzlato used Binance to source their major liquidity sources. Binance stated that it had frozen the accounts of SUEX and Garantex before the OFAC sanctioned them.