The judge explained that under the American Bar Association's "shadow guidelines"—an alternative the United States Sentencing Commission's sentencing guidelines—he felt that Anatoly Legkodymov had already served a sentence in that range during pre-trial detention.
The Russian founder of cryptocurrency exchange Bitzlato was sentenced to time served on Thursday for running an unlicensed money-transmitting business that federal prosecutors say facilitated illegal activity.
Anatoly Legkodymov beamed after U.S. District Court Judge Eric Vitaliano of the Eastern District of New York handed down the sentence.
Prosecutors sought 48 months, while federal sentencing guidelines placed Legkodymov in the carceral range of 70-87 months.
The Russian national and resident of China has been held at the Metropolitan Detention Center for more than 18 months following his arrest. He pleaded guilty in December to one count of operating a money-transmitting business that transmitted and transported illicit funds.
Vitaliano explained that under the American Bar Association's "shadow guidelines"—an alternative to the United States Sentencing Commission's sentencing guidelines—he felt that Legkodymov had already served a sentence in that range.
Federal prosecutors alleged the exchange, which was registered in Hong Kong, processed over $700 million in illicit proceeds. They allege the exchange served as a conduit for purchases on the dark web and platforms for drugs, stolen financial and identification information, and money laundering.
Vitaliano said it was clear Legkodymov "put on very thick blinders" when it came to certain aspects of his business, but that he was also clearly "an entrepreneur and a visionary."
Defense attorney Mark Schamel of Venable focused much of his time on the horrors faced by his client while in the custody of the MDC.
Within days of being taken into custody, another inmate threatened Legkodymov's life, Schamel said.
"Mr. Legkodymov does not deserve more jail, he candidly did not deserve the jail he had," Schamel said of his client's time in the MDC. "He's been caged like an animal in a very bad zoo."
In an unusual scene, the defendant's wife also took the stand to tell the judge that her husband has always taught her and their children "to be better people."
"I am not a bad person," Legkodymov said in his own statement to the judge. "I am worthy of a second chance."
Assistant U.S. Attorney Alexander Mindlin reminded the court the parties were not there because Legkodymov is a "bad person."
"Bitzlato became a clearing house for dirty money," Mindlin said, noting the defendant had been warned that criminals were flocking to his exchange. "He effectively created a bank that did not require ID cards or 'Know Your Customer' forms."
Vitaliano at one point likened the exchange to a post office.
"Imagine a post office where 25 percent of the mail has drugs in it," Mindlin responded.
Following a 2-hour sentencing hearing, the judge imposed a sentence of time served and two years probation. As part of the plea, Legkodymov agreed to forfeit $23 million in assets, which are now in the custody of the French government.
Vitaliano's sentence was preceded by comments about the "impracticable" problems of the MDC.
"You will get no quibble from me about the MDC," the jurist sighed. "It has been the bane of this court and our sister court across the bridge for years."
"It's a terrible place and the court does consider that," he added.
Legkodymov remains in custody, as his U.S. visa expired while he was in custody and he is now subject to an immigration detainer.
As he left court, Schamel thanked Vitaliano. "He understands what's going on in the criminal justice system," he said.
A spokesperson for the U.S. Attorney for the East District of New York declined to comment.