- Europol said that around 46% of the $2.3 billion that Bitzlato received was linked to criminal entities sanctioned by the U.S. Office of Foreign Assets Control (OFAC) and activities like ransomware, money laundering, cyber scams, and child abuse.
- Bitzlato users transferred around 1.5 million BTC to and from Hydra Market, a now-defunct Russian darknet marketplace for drugs and stolen financial information.
- Authorities have arrested five people so far, including Bitzlato CEO Anatoly Legkodymov and financial and marketing directors.
- Authorities have also searched eight houses, shut down the exchange, seized crypto wallets holding around $19.5 million, and froze more than 100 accounts worth over $108 million.
Bitzlato, a tiny Russian crypto exchange that was charged with money laundering by the U.S. Department of Justice last week, converted around $1 billion in assets linked to criminal activities, according to EU Agency for Law Enforcement Cooperation, or Europol.
Europol said on Monday that Hong Kong-registered Bitzlato received $2.3 billion in total. Around 46% of the funds were linked to criminal entities sanctioned by the U.S. Office of Foreign Assets Control (OFAC) and activities like ransomware, cyber scams, 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 roubles.
Bitzlato Ties to Hydra Market
Bitzlato was especially close to Hydra Market, a Russian darknet marketplace for drugs and illegally obtained financial information. Europol said that around 1.5 million BTC was transferred between Bitzlato users and Hydra Market, which was shut down in April 2022.
Europol said that five people have been arrested so far, including Bitzlato CEO Anatoly Legkodymov who got arrested by the U.S. Department of Justice (DOJ) in Miami last Wednesday. The exchange’s financial and marketing directors have also been arrested.
On top of that, authorities have searched eight houses, taken down the digital infrastructure of the exchange, seized crypto wallets holding around $19.5 million, and frozen over 100 accounts involving over $108 million.
Authorities investigating the case come from Cyprus, Belgium, France, the United States, Spain, the Netherlands, and Portugal. Both the Federal Bureau of Investigation (FBI) and the Department of Justice (DOJ) are involved in the case.
On the Flipside
- Users on Twitter have criticized the DOJ and other regulatory agencies for taking action against a small exchange and bragging about it.
- While it’s important to stop wrongdoers like Bitzlato, the amount of money laundering in this case is tiny compared to, say, FTX, which lost around $8 billion of its customer assets.
Why You Should Care
The shutdown of Bitzlato and the arrest of the alleged crime perpetrators is a good sign that regulators are serious about bringing justice to crypto criminals. However, the wider crypto community often criticizes regulators for not preventing crime but merely punishing for it after the fact. Users should be careful when interacting with different centralized crypto platforms.
Crypto Twitter Makes Fun of DOJ’s ‘Major Action’ Against Obscure Russian Exchange Bitzlato