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Cryptocurrency exchange BINANCE allegedly handled close to $346 million in crypto transactions for bitzlato, the trading platform for coins that was closed in an international law enforcement operation. The US authorities claim that the world's largest digital asset trading platform was one of Russia's leading bitcoin counterparties.
Blockchain data shows binance shifted more than 20,000 for Bitzlato since 2018.
The world leader in crypto trading, Binance, allegedly transferred cryptocurrency worth nearly 346 million dollars for the Hong Kong-based Bitzlato, Reuters said citing data from Chainalysis. Bitzlato was a little-known trade until it was recently targeted in what U.S. officials described as a "major blow to the crypto crime ecosystem."
Last week, the Justice Department announced that Bitzlato’s co-founder and majority shareholder, Russian citizen Anatoly Legkodymov who lives in China, was arrested in Miami and charged with operating an unlicensed money exchange business that processed $700 million in illicit funds.
On Wednesday, the United States Treasury's Financial Crimes Enforcement Network (FinCEN) declared that Binance was the only major crypto trading center that dealt with Bitzlato and one of its main counterparties. Among the others were darknet marketplace Hydra, peer-to-peer (P2P) exchange Localbitcoins, and the crypto investment scam , Russia’s largest financial pyramid in recent years.
The bitzlato recorded in Hong Kong, better known to Russian-speaking users, was a "main money laundering concern" linked to illicit Russian finance, according to fincen. The bureau did not reveal details about the scale of said platforms’ transactions with Bitzlato but said it will ban financial institutions from transferring funds to the exchange without specifying the entities it was referring to.
Based on data collected by the blockchain forensics company chainalysis and seen by reuters, Binance has displaced more than 20,000 for Bitzlato, $345.8 million in transactions, from May 2018 to closing. Bitcoin for about $175 million was transferred to the binance of bitzlato over the period, making binance its biggest counterparty recipient, the report also noted.
The biggest crypto exchange is said to have helped the Bitzlato investigation.
Binance has "provided substantial assistance" in enforcing international law to support their investigation into Bitzlato, An exchange spokesman informed the news agency by email, while refusing to provide more details on the relationship between the crypto giant and Bitzlato or his co-operation with the authorities.
The Finland-based LOCALBITCOINS said it has never had “any kind of cooperation or relationship” with Bitzlato while admitting that some P2P traders at its platform “would also have been trading in Bitzlato’s P2P market” but pointing out that there have been no transactions between the two exchanges since October, 2022.
Reuters points out that it has no evidence that binance, localbitcoins or finiko deals with bitzlato have violated any laws or regulations. Nor has it been able to establish whether Binance transactions with Bitzlato are currently under revision. At the same time, the United States' action against Bitzlato is taking place while the Department of Justice is investigating the possibility of money laundering and sanctions violations.
Several countries in Europe are also involved in the investigation against Bitzlato. The announcement last week revealed that the French repressive authorities have dismantled the digital infrastructure of the platform in the country and seized its website. On Monday, Europol informed that four more members of the exchange’s team have been arrested in Spain and Cyprus.
Do you expect further investigation into Bitzlato's suspected transactions with Binance and other crypto platforms? Reflect on the topic in the comments section below.
