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Following an investigation into money laundering charges, the United States Department of Justice shut down the crypto currency exchange Bitzlato last week and detained the company's founder in Miami.
However, according to the most recent claim (1) published by Reuters, the crypto currency behemoth Binance is said to have handled 346 million dollars worth of Bitcoin on behalf of Bitzlato.
Bitzlato and Binance Connection
Anatoly Legkodymov, the creator of Bitzlato, was accused by the Justice Department on January 18 of operating an unlawful money exchange, fuelling "a high-tech axis of cybercrime," and processing $700 million worth of illegal transactions.
Per the Department of Justice, Bitzlato did not do adequate background investigations on its customers. They went on to say that despite Bitzlato carrying out an adequate number of background checks on its customers, the company "repeatedly enabled them to supply information belonging to "straw man" registrants."
As per Chainalysis, which specializes in blockchain analytics, the crypto currency exchange Binance has handled more than 20,000 Bitcoins in over 205,000 transactions for Bitzlato since 2018. This comes out to an astounding figure of around 346 million dollars.
Financial Crimes Enforcement Network (FinCEN) of the United States Treasury says that the crypto currency exchange Binance was one of the top three counterparties of the defunct crypto currency exchange Bitzlato.
According to FinCEN, Binance was the only crypto currency exchange making the list of top counterparties for Bitzlato.
In addition, 175 million dollars were sent from Bitzlato to Binance in a direct transfer, making Binance the largest recipient of the money. That 90 million dollars of such transactions took place after August 2021 is intriguing. During the same month, Binance began conducting identification checks as part of the Anti-Money Laundering Program it had established.
Bitzlato in Troubled Waters
FinCEN said in its probe that Bitzlato was the "main money laundering risk" tied to Russia's unlawful financing. This was said to be the case because of how Bitzlato was involved.
A spokesman for Binance stated, in an email sent to Reuters, that the company had offered "significant assistance" to FinCEN to help the investigation they are doing. Binance clarified that it is dedicated to "operating collaboratively" with law enforcement agencies.
A lawyer for Finiko's creator, Kirill Doronin, stated that the statement made by FinCEN was "unfortunate for him" because his client "continues to expect the recovery of the crypto currency to shareholders from the criminals who stole it."
LocalBitcoins, a crypto currency exchange in Finland, has said unequivocally that it has never had "any form of collaboration or contact" with Bitzlato.
On the other hand, it stated that some of the P2P traders on LocalBitcoins "would also have been dealing in BitZlato's P2P market." However, after October 2022, there were no transactions completed between LocalBitcoins and Bitzlato.
Reuters pointed out that even though Binance and LocalBitcoins are mentioned, there is no proof that either site broke any rules in conducting business.