The US Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury Department, argued that the famous Bitcoin and altcoin exchange Binance is linked to the illegal cryptocurrency platform Bitzlato. Here are the details…
FinCEN thinks Bitzlato is linked to Binance
In an instruction published Jan. 18, FinCEN stated that Bitzlato is “one of the top three parties” in Bitcoin transactions, with Binance exchange. According to the official, Binance was among the largest parties to buy Bitcoin from Bitzlato between May 2018 and September 2022. FinCEN states that other counterparties include Russia-linked darknet market Hydra and the alleged Russia-based Ponzi scam “Finiko”.
On the other hand, FinCEN did not say that Binance was among the sending parties. According to the document, between May 2018 and September 2022, Hydra, Finland-based exchange LocalBitcoins and Finiko were the ones who sent the most Bitcoin to Bitzlato. “About two-thirds of Bitzlato’s largest senders and receivers are associated with darknet markets or scams,” FinCEN said in its statement. The agency noted that between 2019 and 2021, Bitzlato received $206 million worth of cryptocurrencies from darknet markets, $224 million from fraud, and $9 million from ransomware attackers.
Bitcoin exchange founder arrested two days ago
The news came as multiple US authorities launched major sanctions action against the platform, alleging Bitzlato for money laundering and facilitating the circumvention of sanctions against Russia. As part of the lawsuit filed against Bitzlato, the Federal Bureau of Investigation arrested Bitzlato founder Anatoly Legkodymov in Miami on January 17. The executive action was a coordinated effort across Europe and the US to seize many of Bitzlato’s resources, including the company’s servers, as well as to detain the founder. Monaco even described the case as the “most significant enforcement effort” against an exchange since the launch of the National Cryptocurrency Enforcement Team in October 2021.
Unlike major crypto exchanges like Binance or Coinbase, Bitzlato was a little-known cryptocurrency service. Founded in 2016, the platform reportedly has an office in the Federation Tower skyscraper in Moscow. According to some, Binance’s alleged involvement in the Bitzlato case raises some concerns about the exchange’s operations and possible ties to Russia.
Binance supports the investigation
As we reported as Kriptokoin.com, Binance was among the exchanges that chose to continue serving the non-sanctioned Russians after the European Union accepted the eighth package of sanctions against the country. Meanwhile, a Binance spokesperson stated that the firm is collaborating with regulators and said:
Binance is pleased to provide significant assistance to international law enforcement in support of this investigation. This is an example of Binance’s commitment to working collaboratively with law enforcement partners around the world.
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