Taken down a month ago
Bitzlato, a crypto exchange based in Hong Kong, was recently shut down by a coordinated effort by Europol and the authorities in France, the United States, Portugal, Spain, and Cyprus. The platform was accused of laundering money for Russian cybercrime syndicates and over 46% of its transactions were linked to criminal activities. According to Europol, 1.5 million Bitcoin transactions were made directly between Bitzlato and the dark web platform Hydramarket, which was shut down in April 2022. The management team of Bitzlato was charged with money laundering by the U.S. authorities, who accused them of laundering around $700 million.
Despite the accusations, the founder of Bitzlato, Anatoly Legkodymov, was released and stated his intention to bring the platform back online shortly. In an interview, Legkodymov mentioned that the raid was carried out in a hurry due to the platform’s intention to move to the jurisdiction of the Russian Federation. He also stated that a hot wallet containing about 35% of the users’ funds was seized by the authorities, but the wallet was coded in such a way that it was useless to the authorities and the funds within would be returned to Bitzlato shortly.
Legkodymov did not confirm the exact date on which the platform will be back online, only promising that it will be soon. He also stated that 50% of users’ funds in Bitcoin will be available for withdrawal the day the platform is up and running again, and withdrawals for other cryptocurrencies would be restarted shortly after. The co-founder of Bitzlato, Anton Shkurenko, also stated that the platform would reopen and that he could say with “100% certainty” that 50% of user funds in Bitcoin held in Bitzlato wallets could be withdrawn on the same day the platform launches.
Collaborative effort
The Hong Kong-registered platform was seized by international law enforcement in an action aimed at cracking down on crypto crime, which the U.S. authorities described as a “blow to crypto crime.” The platform was alleged to have processed $700 million in illicit funds from criminal entities like the darknet market Hydra and the Russian crypto Ponzi scheme Finiko. The exchange’s other co-founder, Anton Shkurenko, announced in an interview with Satoshkin Live that the company plans to relocate to Russia and permit partial withdrawals for its users.
Shkurenko revealed that French authorities were able to seize Bitzlato’s hot wallet, which held around 35% of user funds in various cryptocurrencies at the time of the seizure. He denied reports that the amount seized exceeded $1 billion and assured that the company has always complied with European know-your-customer and anti-money laundering regulations. Four Bitzlato employees were arrested in the operation, including former Executive Director Mikhail Lunev, Marketing Manager Alexander Goncharenko, and Pavel Lerner, a contractor working on the implementation of the Monolithos DAO.
Down but not out
Bitzlato is currently auditing its losses and is seeking an infrastructure contractor, according to Shkurenko. The exchange plans to allow users to withdraw 50% of their bitcoin on the day of its relaunch and will release holdings in altcoins gradually, though a timetable has not been specified. Binance, which processed $346 million of funds from Bitzlato and was one of the platform’s largest recipients, temporarily blocked some accounts of Bitzlato users following the law enforcement action but later restored access to most of these accounts.
Bitzlato is preparing to resume operations following the shutdown by authorities. The platform has faced allegations of money laundering and its management team has been charged with money laundering. However, the founder of Bitzlato has been released and stated his intention to bring the platform back online soon. The exact date of the platform’s launch has not been confirmed, but the founder has stated that 50% of users’ funds in Bitcoin will be available for withdrawal on the same day the platform launches, and withdrawals for other cryptocurrencies would be restarted shortly after.
