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Bitzlato founder Anatoly Legkodymov made his first appearance on Tuesday in New York, where the Russian national accused of processing more than $700 million in illicit funds was denied bail.
United States Magistrate Judge Vera M. Scanlon cited Legkodymov’s “access to cryptocurrency” and status as a Russian national who was in the US on a visa as reasons for keeping him detained.
Under no conditions of release could Legkodymov be trusted to remain in the US and in good standing, Scanlon said in the order of detention filed Tuesday.
The hearing was Legkodymov’s first since the US announced charges for allegedly facilitating the laundering of illicit funds in January.
Legkodymov, the founder and majority owner of Hong Kong-based exchange Bitzlato, also helped process “millions in ransomware proceeds,” the Department of Justice said.
The bail hearing comes as more reports of cryptocurrency being used to evade Russian sanctions surface.
The Russian branch of Transparency International, an international anti-corruption nongovernmental organization, said at least eight different exchanges are currently operating in Russia without know your customer (KYC) policies.
Concerns about Russian government officials and citizens using crypto to side-step sanctions prompted by the invasion of Ukraine in 2022 have swirled for the past year.
US-based cryptocurrency exchanges and wallet providers must follow the same reporting and KYC regulations as banks, but decentralized exchanges and marketplaces in other countries may offer a workaround.
As for Legkodymov’s case, his next hearing has not yet been scheduled. His attorneys can appeal the bail decision.