The US Treasury's FinCEN unit labels crypto exchange Bitzlato as a “money laundering concern” related to Russian illicit finance; French police seize Bitzlato
wherever they are. https://www.reuters.com/... Jameson Lopp / @lopp : Nobody knows what Bitzlato was because criminal activity is (estimated to be) less than 1% of crypto transaction volume. @fbi : Anatoly Legkodymov, the co-founder and majority shareholder of Bitzlato, a Hong Kong-registered cryptocurrency exchange, has been arrested and charged with allegedly operating Bitzlato as an unlicensed money transmitting business. https://fbi.gov/... @certikalert : #CertiKSkynetAlert 🚨 Founder and majority owner of @BitzlatoA, Anatoly Legkodymov, was arrested last night and charged with conducting an unlicensed money-transmitting business & failing to meet anti-money laundering rules. See below 👇 https://www.justice.gov/... @vxunderground : The Department of Justice has announced the arrest of Anatoly Legkodymov. Legkodymov, the Founder and Majority Owner of Bitzlato Ltd, is accused of laundering more than $700,000,000 in illicit funds from ransomware groups and Hydra Marketplace More info: https://www.justice.gov/... Jordan Schachtel / @jordanschachtel : Here's announcement. They're going after a Russian exchange called “Bitzlato” which has allegedly moved more than $700 million in assets over the course of its biz life. This indicates a very small customer base. Coinbase does 2 billion in *daily* volume https://www.justice.gov/... @therecount : Bitzlato marketed itself as requiring minimal identification from its users. As a result, Bitzlato allegedly became a haven for criminal proceeds and funds intended for use in criminal activity. https://www.justice.gov/... Benedict Evans / @benedictevans : Does Gartner have a magic quadrant for this? https://www.justice.gov/... https://twitter.com/... @chainalysis : The DOJ just announced they've shut down and arrested the founder of crypto exchange Bitzlato. More analysis on this from us soon, but you can read about the activity of the exchange in this blog from July. ⬇️ https://twitter.com/... Laurence / @functi0nzer0 : Do you reckon they've just all confused Bitzlato with Binance this entire time because they're both foreign And they really do think they've done something @lilmoonlambo : everyone trying to withdraw from Bitzlato right now: https://twitter.com/... @dsentralized : This big announcement from the DOJ about an “international crypto action” ended up being a misleading headline, but hit just at resistance creating a sell off. Going after the “Bitzlato” exchange that no one has heard about, but has ties with China/Russia. Let's move on now🤣 @tier10k : If I had $1 for every Bitzlato meme posted in the past 30 mins, I would have more money than Bitzlato Dylan LeClair / @dylanleclair_ : Someone tell the DoJ that 7 figures crime in crypto is called a regular Wednesday. https://twitter.com/... @0xquit : gg Bitzlado https://twitter.com/... @icebergy_ : 1/69 🧵 time for a thread Here's what bitzlato means for [my bags] @zerohedge : TREASURY DEPT SAYS ITS FINANCIAL CRIMES ENFORCEMENT NETWORK HAS ISSUED ORDER PROHIBITING CERTAIN TRANSMITTALS OF FUNDS INVOLVING BITZLATO BY ANY COVERED FINANCIAL INSTITUTION And this is why “diamond hands” dumped everything? Eleanor Terrett / @eleanorterrett : Since the @USTreasury is involved it could be an OFAC or AML violation or perhaps a violation of doing business with a state that's on the prohibited list. While there's much speculation that it might have something to do with @binance, a source inside the exchange tells me https://twitter.com/... Eleanor Terrett / @eleanorterrett : it's not. My sources tell me there's currently an open investigation into Russian P2P firm Bitzlato, which could be the target, but this is just speculation. Others say @Nexo following the raid of its Bulgaria offices or maybe @CelsiusNetwork? We'll see in ten minutes. Dylan LeClair / @dylanleclair_ : LOL I spend 8+ hours hours a day following this lovely industry and I've literally never heard of Bitzlato. https://t.co/tKaUR2NYV0
Reuters
Context & Ripple Effects
The Bitzlato action establishes an AML-enforcement lane distinct from the later securities-focused cases against Bittrex and Binance. FinCEN paired its designation with a prohibition on certain fund transmittals by covered financial institutions, while the DOJ arrested Bitzlato’s majority owner and French police seized the exchange.
Later DOJ allegations that KuCoin violated anti-money-laundering requirements show that enforcement pressure extended beyond Bitzlato to exchanges accused of operating without the controls U.S. authorities expect. The immediate significance here is the use of both financial-system restrictions and criminal action against an exchange tied by authorities to Russian illicit finance.
First-order effects
Covered financial institutions must stop specified fund transmittals involving Bitzlato, cutting the exchange off from the institutions subject to FinCEN’s order.
Bitzlato loses operational capacity after French police seizures, while Anatoly Legkodymov faces DOJ charges alleging operation of an unlicensed money-transmitting business.
Second-order effects
Exchanges that, like Bitzlato, offered minimal identification face sharper pressure to strengthen AML controls as the DOJ’s later KuCoin case makes clear that enforcement is not limited to one venue.
Banks and other covered intermediaries must treat exposure to Bitzlato as a compliance risk, fragmenting the routes through which its customers can move funds.
Third-order effects
The combined FinCEN and DOJ approach points toward crypto-market access being determined increasingly by an exchange’s ability to meet AML obligations, not merely by its technical ability to process transactions.
If this enforcement pattern persists, exchanges serving cross-border users will face a more divided liquidity landscape as regulated intermediaries withdraw from venues designated or charged by U.S. authorities.
The trend: Crypto enforcement is increasingly using AML controls and financial-system access restrictions to isolate exchanges authorities say facilitate illicit finance.
US' FinCEN also identified Bitzlato as a primary money laundering concern over illicit Russian financing. As of February 1, 2023, this action prohibits covered financial institutions from transacting with Bitzlato and its corporate officers. https://www.fincen.gov/...
This indictment does not bode well for the lax KYC offshore exchanges like Huobi that $SI has been banking. https://twitter.com/... https://twitter.com/...
Anatoly Legkodymov, the co-founder and majority shareholder of Bitzlato, a Hong Kong-registered cryptocurrency exchange, has been arrested and charged with allegedly operating Bitzlato as an unlicensed money transmitting business. https://fbi.gov/...
Hydra users exchanged more than $700m in cryptocurrency with Bitzlato, Bitzlato also received more than $15 million in ransomware proceeds. Although Bitzlato claimed not to accept users from the US, it did substantial business with U.S.-based customers. https://www.justice.gov/..…
This action by @USTreasury and @TheJusticeDept is an important step in the fight against crypto money laundering. I have a bipartisan bill to give regulators the resources they need to continue going after criminal crypto operations—wherever they are. https://www.reuters.com/...
#CertiKSkynetAlert 🚨 Founder and majority owner of @BitzlatoA, Anatoly Legkodymov, was arrested last night and charged with conducting an unlicensed money-transmitting business & failing to meet anti-money laundering rules. See below 👇 https://www.justice.gov/...
The Department of Justice has announced the arrest of Anatoly Legkodymov. Legkodymov, the Founder and Majority Owner of Bitzlato Ltd, is accused of laundering more than $700,000,000 in illicit funds from ransomware groups and Hydra Marketplace More info: https://www.justice.gov/.…
Here's announcement. They're going after a Russian exchange called “Bitzlato” which has allegedly moved more than $700 million in assets over the course of its biz life. This indicates a very small customer base. Coinbase does 2 billion in *daily* volume https://www.justice.gov/.…
Bitzlato marketed itself as requiring minimal identification from its users. As a result, Bitzlato allegedly became a haven for criminal proceeds and funds intended for use in criminal activity. https://www.justice.gov/...
The DOJ just announced they've shut down and arrested the founder of crypto exchange Bitzlato. More analysis on this from us soon, but you can read about the activity of the exchange in this blog from July. ⬇️ https://twitter.com/...
Do you reckon they've just all confused Bitzlato with Binance this entire time because they're both foreign And they really do think they've done something
This big announcement from the DOJ about an “international crypto action” ended up being a misleading headline, but hit just at resistance creating a sell off. Going after the “Bitzlato” exchange that no one has heard about, but has ties with China/Russia. Let's move on now🤣
TREASURY DEPT SAYS ITS FINANCIAL CRIMES ENFORCEMENT NETWORK HAS ISSUED ORDER PROHIBITING CERTAIN TRANSMITTALS OF FUNDS INVOLVING BITZLATO BY ANY COVERED FINANCIAL INSTITUTION And this is why “diamond hands” dumped everything?
Since the @USTreasury is involved it could be an OFAC or AML violation or perhaps a violation of doing business with a state that's on the prohibited list. While there's much speculation that it might have something to do with @binance, a source inside the exchange tells me https…
it's not. My sources tell me there's currently an open investigation into Russian P2P firm Bitzlato, which could be the target, but this is just speculation. Others say @Nexo following the raid of its Bulgaria offices or maybe @CelsiusNetwork? We'll see in ten minutes.