Crypto Exchange Bitzlato Laundered $1 Billion Linked to Criminal Activities, Europol Says

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.

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.

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