In Jan 2023, Europol announced the arrest of senior management of crypto exchange Bitzlato for its alleged roles in money laundering and cybercrime. On Dec 6, 2023, the U.S. Department of Justice (DOJ) claimed that the exchange had processed over $700 million in unlawful funds, including substantial amounts related to ransomware attacks. Its Russian owner Anatoly Legkodymov plead guilty and agreed to dissolve the exchange. However, withdrawals were recently halted.
The U.S. Financial Crimes Enforcement Network (FinCEN) as a focal point in the investigation into illegal Russian financial activities, issued an order identifying Bitzlato as a “primary money laundering concern” in connection with Russian illicit finance. The DOJ has separately emphasized Bitzlato‘s involvement in money laundering, particularly linking it to the Hydra Market, a former Russian darknet marketplace.
On December 27, 2023, Bitzlato announced a temporary suspension of certain withdrawal requests. This decision followed the January seizure of its assets by French authorities. Bitzlato communicated via Telegram that the suspension was necessary to manage the legal proceedings related to the asset seizure in France. However, the details about which transactions were affected by this “special balance withdrawals” freeze were not disclosed, nor was it clear if the suspension was confined to France.
Despite the January seizure of its assets and infrastructure by French and other international law enforcement, including the U.S., Bitzlato‘s website was shut down, displaying a message from the authorities. In its latest statement, the company claimed it managed to settle 70% of the balances it held when its services were disrupted, despite the asset freeze. Bitzlato did not provide further details on how it intended to fulfill its obligations with its assets frozen.
