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Monday, May 29, 2023

Binance Processed $346 Million for Crypto Exchange Bitzlato

Binance Processed $346 Million for Crypto Exchange Bitzlato – Binance, a leading company in the cryptocurrency trading industry, reportedly transferred approximately $346 million in crypto to Bitzlato, a Hong Kong-based exchange, according to Reuters and data from Chainalysis. Bitzlato was not well-known until it was recently targeted by U.S. authorities in a move that was described as a significant setback for the criminal activity in the crypto space.

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The co-founder and majority shareholder of Bitzlato, Russian citizen Anatoly Legkodymov who resides in China, was arrested in Miami last week. He was charged by the Justice Department for operating an unlicensed money exchange business that processed $700 million in illegal funds. On Wednesday, FinCEN reported that Binance was the primary crypto exchange that conducted transactions with Bitzlato and was one of its major trading partners. 

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Other notable trading partners included the darknet marketplace Hydra, P2P exchange Localbitcoins, and the fraudulent crypto investment scheme Finiko, which was Russia’s largest financial pyramid in recent years. The Hong Kong-registered Bitzlato, better known to Russian-speaking users, was a “primary money laundering concern” related to Russian illicit 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. According to data compiled by the blockchain forensics firm Chainalysis and seen by Reuters, Binance moved over 20,000 BTC for Bitzlato, worth $345.8 million at the time the transactions took place, between May 2018 and its shutdown. 

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Bitcoin for about $175 million was transferred to Binance from Bitzlato during the period, making Binance its largest receiving counterparty, the report also noted. 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 further details about the crypto giant’s dealings with Bitzlato or its cooperation with 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 stated that it found no proof that Binance, Localbitcoins, or Finiko’s transactions with Bitzlato violated any laws or regulations, and it couldn’t confirm if Binance’s dealings with Bitzlato are currently being investigated. 

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Meanwhile, the U.S. is taking action against Bitzlato as the Justice Department investigates Binance for potential money laundering and sanctions violations. Multiple European countries are investigating Bitzlato. French authorities have taken down the platform’s digital infrastructure in France and seized the website. Europol announced on Monday that four more members of Bitzlato’s team have been arrested in Spain and Cyprus.

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