Binance Named as Counterparty in an Order Against Bitzlato

• Binance has been named as a key counterparty to a digital asset platform Bitzlato.
• Bitzlato’s founder was arrested on Tuesday for a laundering scheme worth $700 million.
• Allegedly, the Hong Kong-based company has been facilitating transactions to grow dark net markets in Russia.

In a recent update, Binance Holdings Ltd. has been named as a key counterparty of Bitzlato, a digital asset platform accused of laundering $700 million.

As per an order by Treasury’s Financial Crimes Enforcement Network (FinCEN), Binance has been identified as one of the three counterparties. According to the order, “Approximately two-thirds of Bitzlato’s top receiving and sending counterparties are associated with darknet markets or scams. For example, Bitzlato’s top three receiving counterparties, by the total amount of BTC received between May 2018 and September 2022 were: (1) Binance, a VASP; (2) the Russia-connected darknet market Hydra; and (3) the alleged Russia-based Ponzi scheme TheFiniko.”

The other top three receiving parties are Hydra, Local Bitcoin, and “TheFiniko,” as per the order.

FinCEN also added, “Bitzlato, a P2P CVC exchanger with significant operations in Russia, is a financial institution of primary money laundering concern in connection with Russian illicit finance, namely, through (1) its facilitation of deposits and funds transfers by Russian ransomware groups or affiliates, such as Conti; and (2) its facilitation of transactions with Russian darknet markets on behalf of both darknet customers and darknet vendors.”

FinCEN Acting Director Himamauli Das was quoted saying:

Bitzlato poses a global threat by allowing Russian cybercriminals and ransomware actors to launder the proceeds of their theft.

The order also called out Russia for being a haven for cybercriminals and the government using them for malicious purposes. However, according to Binance’s spokesperson, “Binance provided substantial assistance to international law enforcement partners in support of this investigation. This exemplifies Binance’s commitment to working collaboratively with law enforcement partners worldwide.”

Bitzlato’s founder Anatoly Legkodymov was arrested in the US on Tuesday for allegedly laundering drugs and illegal gambling. Legkodymov is a Russian by origin, and his company is registered in Hong Kong. Bitzlato has been facilitating transactions for Russia’s dark net markets, including Blacksprut, OMG! OMG! and Mega.

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