DOJ Accuses Small Crypto Exchange Bitzlato Of Money Laundering After Teasing ‘Major’ Crypto Announcement

After a hellish 2022, was the biggest crypto calculus about to hit in the first weeks of 2023? That’s what many thought after news quickly spread on Wednesday from the United States Department of Justice about an upcoming press conference announcing “major international action on cryptocurrencies.”

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Many speculated that the announcement could most likely relate to the world’s largest crypto exchange, Binance. And the news from the DOJ was indeed about a crypto exchange. And the name of this exchange? Bitzlato!

No, it’s not Binance… but they both start with “B”. Pretty close, right? Not enough.

Crypto wallets associated with Bitzlato held No more over $6 million at its peak. So what’s the deal with Bitzlato? How did this small crypto exchange end up on the US radar?

The GM announcement that the company was charged with money laundering for transmitting money without a license. According to the DOJ press release, Bitzlato “operated a money transmission business that transported and transmitted illicit funds and failed to comply with U.S. regulatory safeguards, including anti-money laundering requirements.”

Prosecutors also announced that the founder of the Hong Kong-based crypto exchange, Russian national Anatoly Legkodymov, was arrested in Miami on Tuesday evening. If convicted, Legkodymov faces a maximum of 5 years in prison for running an illegal money transmission business.

And what likely caught the attention of US officials were the crypto exchanges’ connections to the dark web market, Hydro Market. Users of the illicit market, where they can buy drugs, stolen credit cards, etc., have traded over $700 million in cryptocurrency with Bitzlato. The exchange also received “over $15 million in ransomware proceeds” according to the DOJ.

Still, it was odd that the DOJ would make much of a rather insignificant player in the crypto industry, even going so far as to categorize it as a “major international cryptocurrency action.”

On social media, crypto users were preparing for the worst before the news broke. In a post-FTX collapse world, any major player seems vulnerable. In fact, just last month, a Reuters report shared that the DOJ has been investigating Binance for the past four years for potential money laundering and criminal sanctions violations. It looked like something big was about to fall.

Instead, the big news from the US Department of Justice was about Bitzlato, a company that many in the industry had never heard of until today.



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DOJ Accuses Small Crypto Exchange Bitzlato Of Money Laundering After Teasing ‘Major’ Crypto Announcement


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