Bitzlato was the target of what US authorities described as a “significant blow to the crypto crime ecosystem.”
Cryptocurrency exchange Binance reportedly processed nearly $346 million in cryptocurrency transactions for Bitzlato, the coin trading platform that was shut down in an international police operation. US authorities say the world’s largest trading platform for digital assets was among the main counterparties of Bitzlato.
Binance has allegedly transferred nearly $346 million worth of cryptocurrency to Hong Kong-based Bitzlato, a little-known Russian-owned exchange, Reuters reported.
Blockchain Data Shows Binance Moved over 20,000 BTC for Bitzlato Since 2018
Last week, the Department of Justice announced that Bitzlato’s co-founder and majority shareholder, Anatoly Legkodymov, a Russian national who lives in China, was arrested in Miami, and charged with operating an unlicensed money-changing business that processed $700 million in illicit funds.
On Wednesday, the US Treasury Financial Crimes Enforcement Network (FinCEN) said that Binance was the only major crypto exchange that traded with Bitzlato, and that it was one of its major counterparties. Among the others were darknet marketplace Hydra, peer-to-peer (P2P) exchange Localbitcoins, and crypto investment scam Finiko, the largest financial pyramid in Russia in recent years.
According to data compiled by Blockchain forensics firm Chainalysis, and seen by Reuters, Binance moved more than 20,000 BTC for Bitzlato, worth $345.8 million at the time the transactions took place, between May 2018 and its closure. Around $175 million worth of Bitcoin was transferred to Binance from Bitzlato during the period, making Binance its largest receiving counterparty, the report also noted.
Biggest Crypto Exchange Says It Helped in Bitzlato Investigation
Binance has “provided substantial assistance” to international law enforcement to support their investigation of Bitzlato, a spokesperson for the exchange told the news agency via email, while declining to provide any further details about the crypto giant’s dealings with Bitzlato or their cooperation with the authorities.
Finland-based Localbitcoins said it has never had “any kind of cooperation or relationship” with Bitzlato and admitted that some P2P merchants on its platform “would also have been operating on Bitzlato’s P2P marketplace,” but noted there has been no transactions between the two exchanges since October 2022.
Reuters commented that it has no evidence that Binance, Localbitcoins, or Finiko’s transactions with Bitzlato violated any laws or regulations. Reuters was also unable to establish whether Binance’s dealings with Bitzlato are currently being reviewed.
Several European countries are also involved in the investigation against Bitzlato. Last week’s announcement revealed that French law enforcement authorities have dismantled the platform’s digital infrastructure in the country and seized its website. On Monday, Europol reported that four more members of the exchange team have been arrested in Spain and Cyprus.
By Audy Castaneda
