Binance accused of helping Russian exchange Bitzlato

According to blockchain transaction data accessed by the media, the world’s largest cryptocurrency exchange Binance was a counterparty to the Russian exchange Bitzlato, whose founders were arrested. 46% of the digital assets that passed through Bitzlato are linked to criminal activity. As FinCEN representatives found out, Binance laundered about $ 346 million in BTC obtained by Bitzlato illegally.

It is worth noting that Binance representatives are assisting law enforcement agencies in the Bitzlato investigation. Anatoly Legkodymov, the main shareholder and co-founder of Bitzlato, is accused of laundering $ 700 million. The US authorities claim that Mr. Legkodymov’s crypto exchange has been hiding profits from illegal gambling and drug trafficking for a long time. Rumors that Bitzlato fraudsters used Binance to conduct illegal transactions have been circulating for several days, but information about the amount of laundered funds could «damage the reputation and prestige of the exchange,» some users believe.

«I wouldn’t call it a warning shot. No. It’s more like a missile launch ,» said Ross Delston, an independent American lawyer, about the possible reaction of the authorities to Binance’s ties with Bitzlato. As Incrypted journalists found out, since May 2018, 205 thousand transactions for Bitzlato have been made through Binance.

Experts estimate that Bitzlato could have made a profit of $ 2.1 billion. Part of Bitzlato’s funds — $ 19.5 million in cryptocurrency — was confiscated by Europol on January 23. Representatives of the platform did not adhere to the KYC (know-your-customer) policy or even the basic principles of verifying their users, which attracted fraudsters. As explained by the US Deputy Attorney General, the Bitzlato exchange was a «critical financial resource» for the black market in the darknet — the Russian Hydra marketplace. In total, since 2021, Hydra has accounted for 80% of the global darknet market revenue.