Leading U.S. blockchain researcher Chainalysis has uncovered that Binance, the world’s largest crypto exchange, processed nearly $346 million in Bitcoin for Bitzlato, a crypto exchange that has been accused of operating a “money laundering engine,” according to a January 24th report.
An analysis of the data revealed:
Binance moved over 20,000 bitcoin, worth $345.8 million at they time they were transacted, across some 205,000 transactions for Bitzlato between May 2018 and its closure last week.
The figures indicate that Binance was the largest recipient of Bitcoin from Bitzlato in that period, with $175 million worth of Bitcoin transferred from Bitzlato to Binance.
Additionally, the data suggests that $90 million of the total transfers took place after Binance’s announcement in August 2021 requiring users to submit identification to combat financial crimes, but it remains uncertain if the exchange enforced these requirements for Bitzlato.
This revelation raises serious questions about Binance’s commitment to combatting financial crime and money laundering, and it is likely that the company will face intense scrutiny in the coming days and weeks.
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The founder of a prominent cryptocurrency exchange, Bitzlato Ltd., was taken into custody last week by authorities in Miami. Anatoly Legkodymov, a 40-year-old Russian national residing in Shenzhen, China, stands accused of operating an illegal money-transmitting business.
As reported by TronWeekly, the platform facilitated over $700 million in cryptocurrency trades for its users and allegedly received over $15 million in proceeds from ransomware attacks. Despite claiming not to accept customers from the United States, Bitzlato reportedly conducted significant business with American clients.
In a statement released last week, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) revealed that Binance, currently the largest crypto exchange in the world, was one of Bitzlato’s top three counterparties, with substantial bitcoin transactions taking place between May 2018 and September 2022.
A representative from Binance stated that “the company had provided substantial assistance to international law enforcement” during their investigation of Bitzlato and emphasized their commitment to working with such agencies. However, they declined to provide further details regarding their relationship with the now-seized exchange.
As of now, Bitzlato’s website has been taken over by French authorities, and the company could not be reached for comment. Legkodymov has yet to make any public statements since his arrest and did not respond to requests for comment sent by email.
Despite the accusations, there is currently no evidence to suggest that Binance’s transactions with Bitzlato broke any laws or regulations. However, some experts have pointed out that Binance’s status as one of the top counterparties in these transactions may draw closer scrutiny from the Justice Department and U.S. Treasury regarding their compliance checks with Bitzlato.