According to Reuters, Binance processed almost $346 million in bitcoin for the Russian crypto exchange Bitzlato. The company’s founder Anatoly Legkodymov was arrested by U.S. authorities last week for allegedly running a money laundering scheme. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an order identifying Bitzlato Limited d/b/a Bitzlato (www.bitzlato.com) as a primary money laundering concern in connection with Russian illicit finance
Binance, the world’s largest crypto exchange by transaction volume, was among Bitzlato‘s top three counterparties by the amount of bitcoin received between May 2018 and September 2022, the FinCEN said. The others to transact with Bitzlato were the Russian-language darknet drugs marketplace Hydra, the peer-to-peer crypto exchange LocalBitcoins, and a crypto investment website called Finiko.
Allegedly, Binance processed over 20,000 BTC, worth $345.8 million, between May 2018 and its closure last week. BTC worth about $175 million was transferred to Binance from Bitzlato in that period, making Binance its largest receiving counterparty, the data show.
Reuters offers no evidence that the Binance, LocalBitcoins, or Finiko transactions with Bitzlato, which the U.S. DOJ described as a “haven for criminal proceeds and funds intended for use in criminal activity,” broke any rules or laws.
However, Reuters quoted one former U.S. banking regulator and one former law enforcement official who said Binance‘s status as one of the top counterparties would focus Justice Department and U.S. Treasury attention on Binance‘s compliance checks with Bitzlato.