Bitzlato briefly became one of the most talked-about names in crypto in January 2023, when US authorities announced charges against the little-known P2P exchange as part of a “major enforcement action.” Its founder, Anatoly Legkodymov, was arrested during a family vacation and accused of operating an unlicensed money transmitting business tied to illicit activity.
We recently spoke with Anatoly Legkodymov, the founder of Bitzlato, who became a central figure in the US government’s crypto enforcement actions in early 2023.
The announcement spawned memes and drew ridicule from the crypto community, quickly turning Legkodymov into an unlikely viral figure at the height of the Biden administration’s crypto crackdown. Having already served 18 months in detention, he now faces the possibility of another 20 years in French prison.
In this Q&A, Legkodymov explains his side of the story, details his time in the US prison system, and discusses his ongoing legal battle.
When Bitzlato launched in 2016, crypto was still in its early stages, and KYC often ran against the prevailing decentralised ethos. What was your intention with the exchange at inception, both practically and ideologically?
First, allow me to clarify my background. Many people hear my Russian name and the name of the exchange I founded, Bitzlato, and assume I am a Russian mafia figure because of the prosecution. On the contrary, I am a trained engineer and inventor.
I worked in Silicon Valley for several years at respected tech companies and personally wrote the code for our P2P crypto exchange. Even while detained in an ICE facility since January 2025, I have continued inventing, including a patent-pending cold-weather mask that I believe represents a significant technological leap. I am also a devoted husband and father to young children.
I founded the exchange because I was excited about crypto’s potential to democratise payments. My primary goal was to provide a convenient, fast way to buy or sell cryptocurrency, addressing transactions that took days and incurred 3% to 5% fees.
I wanted to help people save money by introducing a new, better system for transactions. It was obvious to me then, as it is to others now, that crypto is a poor vehicle for illicit transfers. Unlike the US $100 bill or diamonds, it is fairly traceable. No one would create a crypto exchange for that purpose, and I certainly did not. I do not regret a single day spent developing Bitzlato.
Bitzlato marketed itself as requiring minimal identification, advertising simple registration with no selfies or passports. Was that approach part of your long-term vision, or a reflection of the environment at the time?
The world these days is fast-paced. You can set up a Venmo, Amazon, or Zelle account very quickly. We weren’t trying to cater to shady people, but to busy people who expect easy on-ramps to their activities. And remember, these were the very early days of an exciting new technology, and we were aiming to be among the first to bring it to potential customers.
I think all businesses focus first and foremost on the core customer experience and later add deeper compliance functions. Crypto was no different.
Court documents refer to internal discussions suggesting that by 2019, you were aware that some users were “known to be crooks.” How accurate was the DOJ indictment?
It was not accurate. While I understand that prosecutors select facts to present a defendant in the worst possible light, that narrative often sacrifices the truth.
In reality, Bitzlato took KYC/AML compliance seriously. We hired multiple consultants and worked closely with them to improve their services. We also responded to hundreds of law enforcement requests for transaction data, often receiving thanks for our cooperation. These are not the actions of a criminal enterprise.
The indictment relied on language barriers to distort the facts. For instance, we had internal discussions about protecting our customers from scams. In one chat, I used hyperbole, saying “all users are known to be cheaters,” referring to potential scammers on the platform. Prosecutors changed “cheaters” to “crooks” to imply I knew of money laundering.
Furthermore, the charge relied on a Chainalysis report that inferred knowledge from statistical flows to targeted websites, not on specific evidence that we knew a customer was committing a crime. The DOJ never charged me with money laundering or financing terrorism.
The statute used was so broad that prosecutors could bring similar charges against the leadership of any bank or payment service without a specific US licence. The volume of illicit funds moving through those major platforms dwarfs anything that ever passed through Bitzlato.
FinCEN designated Bitzlato a “primary money laundering concern” under the Combating Russian Money Laundering Act. How do you think 2023’s political climate affected the case against you?
While I cannot speak to FinCEN’s internal motivations, the facts are clear. I was never charged with money laundering. I was charged only with a single count of operating an unregistered money transmission business.
The driving factor was undoubtedly the Biden administration’s “War on Crypto.” The administration seemed determined to eliminate the industry, frequently using criminal allegations against foreign companies to achieve that goal.
They targeted Bitzlato despite the fact that only $31,000 in total ever flowed to or from the US through our platform. This figure was so low because our terms of service explicitly banned US persons. That small amount likely came from users who falsified their identity to bypass our controls. We had no desire to operate in the US, yet we became collateral damage in a political crackdown.
Why plead guilty?
I want to be clear that I properly pleaded guilty and do not challenge that plea. The DOJ asserted jurisdiction based on even a single dollar moving through the US and argued that generalised knowledge of dark web activity constituted criminal intent.
I faced a stark choice. I could plead guilty and cap my potential sentence at five years, or I could go to trial and risk twenty years in prison. I chose to plead to the single count. The judge sentenced me to time served, rejecting the government’s request for a sentence twice as long.
Pleading guilty was the only logical move. When facing a potential twenty-year sentence versus a significantly shorter term, the decision becomes clear, regardless of how much I stand behind Bitzlato’s work. That is the leverage prosecutors hold in the US system. I have served 100% of my sentence, as confirmed by the judge. This chapter should be closed.
What did you do while you were incarcerated? What was it like in prison?
I am still in custody, having just marked three years without seeing my family or children. The isolation is total; I even missed my father’s funeral.
I have been moved through seven prisons, experiencing “diesel therapy” transfers that dragged on for weeks. The worst was a New York facility where I was housed with violent gang members and murderers. I witnessed suicide attempts, fatal medical negligence, and guard brutality. It was a terrifying introduction to a criminal world I had never known.
Despite the violence, I found a small group of innocent men among the population. To survive the constant lockdowns, I turned to books. I read over a hundred titles on business and IT to keep my mind active.
This experience exposed the flaws of the American justice system, similar to the corruption seen in the Silk Road case. Fortunately, I have been moved to a safer facility where the staff is more humane, and the environment is calmer.
You’ve claimed there was an understanding around immunity when you cooperated with French authorities, yet court filings say no such agreement existed. What happened?
Only the government’s filings deny the agreement. Our filings explicitly contradict this by citing the transcript of the three-day interview I gave to French prosecutors. In that record, my lawyer reiterates the terms of the agreement not to prosecute, and the French prosecutor simply replies, “Thank you,” signalling assent rather than objection.
To understand “what happened,” we must examine the terminology. In February 2024, my lawyers met with French prosecutors who were holding two other Bitzlato executives. When we requested standard “immunity” in exchange for my testimony, they explained that this specific legal concept does not exist in the French system.
Fortunately, the Assistant US Attorney prosecuting my case speaks fluent French. He helped bridge the conceptual gap by noting that while they could not grant “immunity,” they could enter into an “agreement not to prosecute.” He explicitly noted that in English, this was a “distinction without a difference.”
The French prosecutors subsequently breached this agreement by adding more defendants to their weak case. To justify this, they are now hiding behind that linguistic technicality.
The extradition letter supporting the US request denies the existence of an “immunity” agreement but does not deny an “agreement not to prosecute.” This is a dishonest word game that has resulted in a miscarriage of justice in both France and the US.
A US judge ruled that your detention constituted sufficient punishment. What does it mean to now face the possibility of decades more in prison?
You are correct. The federal court judge, a judge with decades of experience and with the DOJ and FBI, with all their resources, arguing on the other side, said 18 months was a sufficient punishment. 18 months in what has been called “the worst jail in America.” A place where my life was threatened. A terrible place.
What does it mean? It means I might face 20 years in a French prison for precisely the same actions for which I already served 18 months, and that my own testimony would be used against me, which would violate the US Constitution were the trial held here.
I have young children and a wife. That means they won’t know me. It also means I will contribute nothing to society or to my family. For a crime supported only by a single Chainalysis report, I may face the equivalent of a life sentence.
It means the Biden War on Crypto has won. And it continues to win, even though Biden did not win re-election. My hope is that someone in the Trump Administration, or in the crypto industry who can speak with the White House, will see this and stop the extradition. This is, in fact, within the power of the Secretary of State to do with the stroke of a pen. That is my hope.
Do you believe your outcome would be different under the Trump administration?
I do not believe the Trump Administration would have ever brought this case. This prosecution was a clear product of the Biden War on Crypto. It is hard to imagine the current administration spending millions of dollars to prosecute a foreign exchange owner over a mere $31,000 in US volume.
The Biden approach demanded impossible standards. They expected 100% perfect KYC/AML compliance from day one, a benchmark that even major banks and platforms like PayPal cannot meet. Even when we explicitly banned US users, they prosecuted us because a tiny fraction of funds slipped through the cracks.
President Trump holds a different philosophy, and I applaud him for it. He recognises crypto as an innovation capable of revolutionising payments and reducing costs for ordinary people. He understands that new technology needs time, space, and the freedom to be imperfect during its experimental phase. I hope someone in the Trump Administration recognises this injustice and acts to end this holdover from the Biden era.
What advice would you give to future crypto founders?
That is a hard question, given where I am sitting and my situation. I would love to say they should explore the far-reaching uses of the technology without fear, but the fact is that some people and politicians oppose crypto and its promise to democratise payments, money, and other systems that powerful organisations use for profit, and they see crypto as a threat.
I would say, proceed with caution. Get excellent legal advice. Be diligent about whether you are or are not exposed to jurisdictions such as the US. But also, don’t live your life in fear. That isn’t how humans got here.