The closure of the anonymous Bitzlato exchange, as reported by CriptoFácil, may extend to the world’s largest exchange, Binance. This is because the US authorities claim that Binance received the bulk of the funds that passed through Bitzlato.
However, Binance categorically denies any involvement with the exchange, as stated by a company spokesperson. The exchange confirmed that it continues to cooperate with the authorities to ensure enforcement of the law.
Bitzlato founder arrested
According to the US Department of Justice (DOJ), Bitzlato committed money laundering and other financial crimes. Among them, there is suspicion that the exchange helped entities linked to the Russian government, which is facing US sanctions.
In addition, the US authorities also arrested Anatoly Legkodimov, a Russian citizen and founder of Bitzlato. In the indictment, Legkodimov was to handle US$700 million in money laundering.
According to the Department of Justice, the Bitzlato founder used the funds to carry out illegal activities such as gambling and drugs purchased on the dark web. Legkodimov was arrested on Tuesday (17), the day before the Ministry of Justice ordered the stock exchange to be closed.
“Nearly two-thirds of the major counterparties that Bitzlato receives and sends are associated with darknet markets or scams,” the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) wrote in the complaint.
Binance has received the largest amount of bitcoins
According to the Department of Justice, the relationship between Bitzlato and Binance allegedly began in 2018. From May 2018 to September 2022, Binance remained Bitzlato’s primary bitcoin-receiving ally.
The Treasury Department also alleged that two-thirds of Bitzlato’s receiving and sending allies are connected to illegal transactions with the dark web and other scams.
Russian sites Hydra and TheFiniko, a darknet market and Ponzi scheme, respectively, were named as the second and third peers, respectively, in terms of receiving amounts of Bitcoins. However, the DOJ did not say how much BTC Binance allegedly received from Bitzlato.
A Binance spokesperson commented on the case and denied any involvement. According to the spokesman, the stock exchange is closing business with the authorities and is cooperating with them. Thus, demonstrating that they are committed to working with law enforcement.
Hong Kong-based Bitzlato claims to have multiple relationships with Russia, according to the US Treasury Department, and the company is a major concern in terms of illicit financing of Russian activities.