A Russian citizen pleaded guilty to running the cryptocurrency exchange Bitzlato, which became “a haven for illicit transactions by ransomware criminals,” according to the U.S. Department of Justice.

The platform's co-founder, Anatoly Legkodymov, who also goes by the aliases Tolik and Gandalf, has agreed to forfeit $23 million in proceeds from operating Bitzlato. Legkodymov, 41, who was arrested earlier this year, now faces a maximum penalty of five years in prison. He has been held at the Metropolitan Detention Center in Brooklyn.

“Legkodymov operated a cryptocurrency exchange that was open for business to money launderers and other criminals,” Acting Assistant Attorney General Nicole Argentieri said in the DOJ’s Wednesday statement. “He profited from catering to criminals, and now he must pay the price.”

According to court documents, Bitzlato, a Hong Kong-registered cryptocurrency exchange, “required minimal identification from its users (neither selfies nor passports), and thus became popular among fraudsters, thieves, and other criminals, who used it to launder illicit proceeds."

Bitzlato's infrastructure and its cryptocurrency were seized by law enforcement earlier in January. “Today’s conviction of Bitzlato’s founder is the latest product of our efforts,” the DOJ said.

Bitzlato’s largest counterparty in cryptocurrency transactions wasHydra Market, a long-running darknet marketplace that sold narcotics, stolen financial information, and money laundering services. Hydra Market was shut down by U.S. and German law enforcement in April 2022.

According to the DOJ, between 2018 and 2022, Bitzlato facilitated $700 million in direct or indirect transfers of sales on Hydra. More than $15 million in ransomware proceeds have allegedly been laundered through the exchange.

“Legkodymov’s guilty plea confirms that he was well aware that Bitzlato was being used like an open turnstile by criminals eager to take advantage of his lax controls over illicit money transactions,” said Breon Peace, U.S. Attorney for the Eastern District of New York.