Exclusive: Binance moved $346 mln for seized crypto exchange Bitzlato, data show

LONDON (Reuters) – Crypto giant Binance has processed about $346 million worth of bitcoin for cryptocurrency exchange Biturat. The founder of Biturat was arrested by US authorities last week on suspicion of running a “money laundering engine,” according to blockchain data obtained by Reuters.

On Jan. 18, the Justice Department accused Bitzlato co-founder and majority shareholder Anatoly Legkodymov, a Russian national residing in China, of an unlicensed exchange that “facilitated the high-tech axis of cryptocrime” by processing $700 million. He said he was indicted for running a business. illicit funds.

The Justice Department said Bitzrath advertised lax background checks on its customers, and repeatedly provided information belonging to registrants of “Strawman” when the exchange asked users for identity information. added that it was allowed.

Binance, the world’s largest cryptocurrency exchange, was one of Bitzlato. Top 3 Counterparties According to the amount of Bitcoin received between May 2018 and September 2022, the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) said last week.

Binance is the only major cryptocurrency exchange among Bitzlato’s top counterparties, FinCEN said. Other companies that have done business with Bitzlato are the Russian-language darknet drug marketplace Hydra, a small exchange called LocalBitcoins, and a cryptocurrency investment website called Finiko, described as a “Russian-based crypto Ponzi scheme. It is expressed as “what is done”. FinCEN did not elaborate on the scale of the entity’s interactions with Bitzlato.

Bitzlato, registered in Hong Kong, “A Major Money Laundering Concern” FinCEN added that it was linked to illegal finance in Russia. Beginning February 1st, we will prohibit US and other financial institutions from sending funds to Bitzlato. FinCEN said. Binance and other individual companies that are subject to the ban have not been named.

A Binance spokesperson said in an email that it “provided material assistance” to help international law enforcement agencies investigate Bitzlato. The company is engaged in “cooperation” with law enforcement agencies, they added, and declined to provide details about its dealings with Bitzrath or the nature of its cooperation with such agencies.

Reuters was unable to contact Bitzrath, whose website said it had been seized by French authorities. Legkodimov has not made a public comment since he was arrested in Miami last week, nor has he responded to an emailed request for comment.

Hydra’s operator, who was indicted in the US, and a lawyer representing the Finiko founder did not respond to requests for comment.

Finland-based LocalBitcoins said it does not have “any kind of cooperation or relationship” with Bitzlato. Some peer-to-peer (P2P) traders on LocalBitcoins said, “He at BitZlato should have traded on the P2P market as well,” adding, “There has been virtually no trading between LocalBitcoins and BitZlato since October 2022.” Added.

Reuters said transactions with Binance, LocalBitcoin, or Finiko and Bitzrat, which the Justice Department described as “a haven for criminal proceeds and funds intended for use in criminal activities,” violated regulations and laws. I have no proof that I did.

However, one former U.S. banking regulator and former law enforcement official said that Binance’s position as one of the top counterparties meant the Department of Justice and U.S. Treasury departments would be subject to Binance’s compliance checks with Bitzrat. said he would pay attention to

“I wouldn’t call it a warning shot in the bow. said: His FinCEN citations for Binance and LocalBitcoins.

The Justice Department and Finsen declined to comment.

According to a review of previously unreported data, Binance has sold 20,000 bitcoins worth $345.8 million at the time they were traded in around 205,000 transactions on Bitzrat from May 2018 until its closure last week. moved. The figures were compiled by leading US blockchain researcher Chainalysis and confirmed by Reuters.

Data shows that around $175 million worth of bitcoin was transferred from Bitzlato to Binance during that period, with Binance being the largest recipient.

According to Chainalysis data, around $90 million was transferred after Binance announced in August 2021 that it would require users to provide identification to fight financial crime. Binance said in a blog last year that such checks deal with “illegal fundraising and money laundering.” Reuters was unable to determine whether Binance applied the ID requirement to Bitzlato.

darknet market

Chainalysis, which is used by US authorities to track illegal cryptocurrency flows, warned in February last year that Bitzlato was risky. In the report, Chainalysis said: Nearly half of Biturat’s transfers About $1 billion was identified in such transactions between 2019 and 2021 as “illegal and risky”.

The US action against Bitzlato comes as the Department of Justice investigates Binance for possible money laundering and sanctions violations. Some federal prosecutors concluded that the evidence gathered warranted indictment against executives, including founder and CEO Changpeng Zhao, Reuters reported in December.

Reuters was unable to confirm whether Binance’s deal with Bitzlato is under review.

Binance, which has not disclosed the location of its core exchange, has processed at least $10 billion in payments for criminals and businesses trying to evade U.S. sanctions, Reuters reported last year, according to blockchain data. I found a series of articles based on court and corporate records.

The report also found that Binance maintain intentionally weak anti-money laundering measures When Designed to evade regulators in the United States and elsewhere, according to former executives and company documents.

Binance disputed the article, saying the calculation of illegal funds was inaccurate and the description of compliance controls was “outdated.” The exchange said last year that it was “promoting higher industry standards” and aimed to improve its ability to detect illegal crypto activity.

Both Binance and Bitzlato were key counterparties in Hydra, the world’s largest darknet drug marketplace. The Russian-language site was shut down by US and German authorities last year. The Justice Department said Bitzlato exchanged more than $700 million of his cryptocurrency with his Hydra, either directly or through an intermediary.

soArticle published last JuneReuters has reviewed blockchain data showing that Hydra buyers and sellers used Binance to make about $780 million worth of crypto payments between 2017 and 2022.

Reporting in London by Tom Wilson and Angus Berwick. Edited by Elisa Martinuzzi and Louise Heavens

Our criteria: Thomson Reuters Trust Principles.

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