Cryptocurrency exchange Binance has reportedly processed nearly $346 million in crypto transactions for Bitzlato, the coin trading platform shut down as part of an international law enforcement operation. US authorities say the world’s largest digital asset trading platform was among Russian-owned Bitzlato’s key counterparties.
Blockchain data shows Binance has moved over 20,000 BTC for Bitzlato since 2018
Global crypto trading leader Binance has reportedly transferred nearly $346 million worth of cryptocurrency for Hong Kong-based Bitzlato, Reuters reported, citing data from Chainalysis. Bitzlato was a little-known exchange until it was recently targeted in what US authorities described as a “significant blow to the cryptocrime ecosystem.”
Last week, the Justice Department announced that Bitzlato’s co-founder and controlling shareholder, China-based Russian citizen Anatoly Legkodymov, was arrested in Miami and charged with operating an unlicensed foreign exchange business that processed $700 million in illicit funds.
On Wednesday, the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) said that Binance is the only major crypto exchange to have transacted with Bitzlato and is one of its main counterparties. Among the others were dark web marketplace Hydra, peer-to-peer (P2P) exchange Localbitcoins, and crypto investment scam Finiko, Russia’s largest financial pyramid in recent years.
The Hong Kong-registered Bitzlato, better known to Russian-speaking users, was a “primary money laundering problem” related to Russian illegal funding, according to FinCEN. The bureau didn’t provide details on the scope of those platforms’ transactions with Bitzlato, but said it will ban financial institutions from sending funds to the exchange without specifying the companies to which it relates.
According to data compiled by blockchain forensics firm Chainalysis and viewed by Reuters, between May 2018 and its shutdown, Binance moved over 20,000 BTC for Bitzlato, worth $345.8 million at the time of the transaction. About $175 million in Bitcoin was transferred from Bitzlato to Binance during the period, making Binance its largest receiving counterparty, the report also states.
Largest Crypto Exchange Says It Supported Bitzlato Investigation
Binance has provided “significant assistance” to international law enforcement agencies to aid their investigations into Bitzlato, a spokesman for the exchange told the news outlet via email, but declined to give further details about the crypto giant’s dealings with Bitzlato or its to disclose cooperation with the authorities.
Finland-based Localbitcoins said it never had “any collaboration or relationship” with Bitzlato, but acknowledged that some P2P traders on its platform “also traded in Bitzlato’s P2P market,” but pointed out, that there have been no transactions between the two exchanges since October 2022.
Reuters noted that there is no evidence that Binance, Localbitcoins, or Finiko’s transactions with Bitzlato violated any law or regulation. It also failed to determine whether Binance’s dealings with Bitzlato are currently under review. Simultaneously, the US-led action against Bitzlato comes as the Justice Department probes Binance for possible money laundering and sanctions violations.
Several European countries are also involved in the investigations against Bitzlato. Last week’s announcement revealed that French law enforcement agencies have dismantled the platform’s digital infrastructure in the country and confiscated its website. On Monday, Europol said four other members of the exchange team had been arrested in Spain and Cyprus.
Do you expect Bitzlato’s alleged dealings with Binance and other crypto platforms to be further investigated? Do share your thoughts on this topic in the comments section below.
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