Binance, the world’s largest crypto exchange by trading volume, has been identified as a counterparty to the little-known exchange Bitzlato, which is now accused of money laundering in the USA .
The controversy surrounding Bitzlato now also affects Binance, after the US Treasury Department wrote in orders that Binance was Bitzlato’s largest bitcoin receiving counterparty (BTC) in the period from May 2018 to September 2022.
The second and third receiving counterparties were the Russian dark web market Hydra and the Russian website TheFiniko, which is accused of being a pyramid scheme.
Hydra, a peer-to-peer trading platform, was identified as the largest sending counterparty LocalBitcoins and TheFiniko.
The order alleged that about two-thirds of “Bitzlato’s largest counterparties that receive and send data related to darknet markets or fraud.” It also said the Hong Kong-registered exchange had “significant links and connections with Russia” and that it had been used to launder money by “Russian illicit finance”.
Investigating with Binance
Commenting on the news that Binance was the largest recipient of funds from Bitzlato, a representative of Binance said Bloomberg that the exchange has fully cooperated with law enforcement in this case.
Binance “provided substantial assistance to international law enforcement partners in support of this investigation. This exemplifies Binance’s commitment to working with law enforcement partners around the world,” the spokesperson said.
The founder of Bitzlato, Russian citizen Anatoly Legkodymov, was arrested in Miami on Tuesday this week on charges of money laundering from illegal gambling and drug trafficking. It is noted that about 700 million dollars of illegal income was laundered through Bitzlato.
The news has been derided in the crypto community
The US government’s announcement that it was bringing charges against Bitzlato was largely derided in the crypto community, where few had even heard of Bitzlato before.
“LOL I spend 8+ hours a day following this amazing industry and I have literally never heard of Bitzlato,” tweeted popular Bitcoin supporter Dylan LeClair when the news became available on Wednesday.
Others agreed, with popular crypto investor Mike Alfred calling the news “pretty boring.”
Stuart Alderoti, Ripple’s general counsel, also admitted on Twitter that he had never heard of Bitzlato before, but said that the Justice Department had recently made it clear that it would pursue cryptocurrency-related crimes.
“It’s a good policy,” he said.
