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Bitzlato received more than one billion euros from criminal entities, most of which were later converted to Russian rubles, the EU’s Law Enforcement Cooperation Agency (Europol) said.
In a statement, Europol confirmed it was leading the crackdown which resulted in the arrest of senior management at the exchange. It also brought down the exchange’s digital infrastructure, which is based in France.
🚨 #Bitzlato: senior management arrested.
The operation, which was led by 🇫🇷 & 🇺🇸 authorities with the support of Europol, paralyzed the service’s digital infrastructure in France.
👥 Prominent members of the platform management were also questioned.
Press release ⤵️https://t.co/k0dGy3rNQk pic.twitter.com/lv5stazDeY
— Europol (@Europol) January 23, 2023
As CoinGeek reports, US authorities arrested and charged Anatoly Legkodymov, majority owner of Bitzlato, for facilitating illegal fund transfers. The exchange, formerly known as Changebot, was closely associated with Hydra, the largest dead dark web marketplace globally before being seized by US authorities in April 2022.
Europol now claims that Bitzlato received more than 2.1 billion euros ($2.3 billion) in BTC, Dogecoin, Ether, Litecoin, BCH and other digital assets. An estimated 46% of assets, or approximately $1.1 billion, are related to criminal activity.
Blockchain analysis by European law enforcement agencies reveals that most of the entities that transact on Bitzlato are sanctioned by the US Department of the Treasury. It also found links to money laundering, ransomware, and child abuse-related funds.
Europol discovers extensive links between Bitzlato and Hydra. It claims that there were 1.5 million BTC transactions between the two entities.
Working with law enforcement agencies in Cyprus, the Netherlands, Spain, Portugal, France and Belgium, Europol’s crackdown led to the arrests of five people. It conducted eight home searches across Europe and the US and seized an estimated $19.5 million worth of digital asset wallets. It also froze more than 100 accounts on other exchanges holding about $55 million.
Binance moves $346 million for Bitzlato: report
Whenever crime in the digital asset sector emerges, Binance is rarely left behind as a key player enabling criminals to move illegal funds seamlessly around the world. With Bitzlato, it’s no different.
A new report by Reuters reveals that Binance processed over $300 million for the Hong Kong-based exchange. The report reveals that Binance was one of the top three Bitzlato partners based on the amount of BTC traded between 2018 and 2022, alongside Hydra and peer-to-peer marketplace LocalBitcoins.
Analysis by Chainalysis found that Binance processed over 200,000 transactions, moving over 20,000 BTC (worth $345.8 million at the time) for Bitzlato.
Chainalysis further revealed that around $90 million in transfers between the two entities took place after August 2021, when Binance announced enhanced verification and KYC measures. At the time, the exchange claimed it would toughen identification for its users to “deal with the funding and money laundering of illicit activities.”
At this point, it’s no surprise that Binance is saying one thing and doing a completely different thing. In recent years, nearly every other cybercrime group has been exposed to rely on Binance to cash out their illicit funds. Reuters reported last year that more than $10 billion in illegal funds flowed through Binance despite supposed “enhanced KYC and AML checks.” Changpeng Zhao was also found to have instructed his subordinates to deliberately observe weak AML controls in order to encourage the growth of the exchange.
While it’s a wonder Binance has lasted this long, the end is near. Regulators are already investigating exchanges for continued violations, and the link to Bitzlato could be the roadblock that breaks the camel’s back.
As Deputy Attorney General Lisa Monaco noted last week, operating without a physical headquarters would no longer protect CZ and his cronies.
“Operating offshore or moving your servers outside of the continental US will not protect you. Whether you violate our laws from China or Europe or abuse our financial system from a tropical island — you can expect to answer your crimes in a United States courtroom.
Follow CoinGeek’s Crypto Crime Cartel series, which investigates the group streams — from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple, Ethereum, FTX, and Tether — that have co-opted the digital asset revolution and turned the industry into a minefield for players. naive (and even inexperienced) in the market.
New to Bitcoins? Check out CoinGeek Bitcoins for Beginners section, the ultimate resource guide for learning more about Bitcoin—as Satoshi Nakamoto originally envisioned it—and the blockchain.
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