Crypto Exchange Bitzlato Laundered $1 Billion Linked To Criminal Activities, Says Europol By DailyCoin

Europol says cryptocurrency exchange Bitzlato laundered $1 billion linked to criminal activities
  • About 46% of the $2.3 billion Bitzlato received was related to criminal entities sanctioned by the US Office of Foreign Assets Control (OFAC) and activities such as ransomware, money laundering, wire fraud and child abuse, Europol said.
  • Bitzlato users moved around 1.5 million BTC to and from Hydra Market, a now-defunct Russian dark market for drugs and stolen financial information.
  • Authorities have arrested five people so far, including Bitzlato CEO Anatoly Legkodimov and his finance and marketing directors.
  • Authorities also searched eight homes, shut down the exchange, seized crypto wallets worth about $19.5 million, and froze more than 100 accounts worth more than $108 million.

Bitzlato, a small Russian crypto exchange that was indicted by the US Department of Justice last week for money laundering, has transferred about $1 billion in assets linked to criminal activities, according to the European Union’s law enforcement cooperation agency, or Europol.

Europol said on Monday that Hong Kong-listed Pizzlato received $2.3 billion in total. About 46% of the funds were linked to criminal entities sanctioned by the US Office of Foreign Assets Control (OFAC) and activities such as ransomware, online fraud, money laundering, and child abuse.

Europol said that users mostly converted bitcoin (BTC), ether (ETH), litecoin (LTC), bitcoin cash (BCH), dash (DASH), dogecoin (DOGE), and USDT into Russian rubles.

Bitzlato’s relationship with the Hydra Market

Bitzlato was particularly close to the Hydra Market, a Russian dark web marketplace for drugs and the illegal acquisition of financial information. Europol said about 1.5 million BTC was transferred between Bitzlato users and the Hydra marketplace, which closed in April 2022.

Five people have been arrested so far, Europol said, including Bitzlato CEO Anatoly Legkodimov who was arrested by the US Department of Justice in Miami last Wednesday. The financial and marketing managers of the stock exchange were also arrested.

Furthermore, authorities searched eight homes, removed the exchange’s digital infrastructure, seized cryptocurrency wallets worth approximately $19.5 million, and froze more than 100 accounts involving more than $108 million.

The authorities investigating the case are from Cyprus, Belgium, France, the United States, Spain, the Netherlands and Portugal. Both the FBI and DOJ are involved in the case.

on the flip side

  • Users on Twitter criticized the Department of Justice and other regulators for taking action against a small exchange and showing off about it.
  • While it is important to stop violators like Bitzlato, the amount of money laundering in this case is negligible compared to, say, FTX, which has lost about $8 billion of its clients’ assets.

Why should you bother

Shutting down Bitzlato and arresting alleged perpetrators is a good sign that regulators are serious about bringing justice to crypto criminals. However, the broader crypto community often criticizes regulators for not preventing crime but simply punishing it after the fact. Users should be careful when interacting with different crypto-central platforms.

Crypto Twitter mocks DOJ’s “major action” against obscure Russian exchange Bitzlato

See the original on the Daily Queen

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