According to [Chainalysis research](https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-russia-ransomware-money-laundering/), Binance crypto exchange processed almost $346M in illicit Bitcoin (BTC) funds for seized cryptocurrency exchange Bitzlato.

Bitzlato's Russian co-founder Anatoly Legkodymov was arrested in Miami last week on charges of operating the platform as an unlicensed money exchange business and processing $700M in illegal funds.

Reportedly, Legkodymov admitted to catering to "known crooks" through the medium of the cryptocurrency exchange. On 18 January, 2023, he was charged by the US Justice Department for fueling a "high-tech axis of cryptocrime”.

## Binance's role in Bitzlato's money laundering spree

Between May 2018 and September 2022,[ it is reported ](https://www.fincen.gov/sites/default/files/shared/Order_Bitzlato_FINAL%20508.pdf)that Binance was among Bitzlato’s top three Bitcoin-receiving counterparties, the others being Hydra, a Russia-connected darknet market, and “TheFiniko”, the supposed Russia-based Ponzi scheme.

In the same period, the seized cryptocurrency exchange’s top three Bitcoin-sending counterparties were Hydra, LocalBitcoins, a VASP incorporated in Finland, and “TheFiniko”.

According to the US Treasury's Financial Crimes Enforcement Network (FinCEN), each of these sending/receiving counterparties is associated with illicit activities, and a majority of them have substantial ties and/or operations in Russia.

It is evident that Binance is the only [high-end cryptocurrency trading platform](/news/article/guide-to-binance-uk) among Bitzlato’s top sending/receiving counterparties.

According to Chainalysis research, Binance crypto platform moved more than 20,000 BTC, worth about ~$346M at the time, across 205,000 transactions, between May 2018 and the time of Bitzlato’s closure (last week).
Around $175M worth of Bitcoin was transferred from the seized trading platform to the crypto exchange in this period, making it the largest receiving counterparty of Bitzlato.

Nearly $90M of these transfers took place after August 2021. What adds interest to this is that the Binance crypto exchange had enforced mandatory user identification at this point to combat financial crimes.

Furthermore, in a blog last year, Binance said this would help tackle ["the funding and laundering of money from illicit activities"](/news/article/binance-news-dea-uses-exchange-to-track-cartels). Moni Talks could not confirm whether the identification check was enforced in dealings with the seized cryptocurrency platform.

It is worth noting that Binance is providing assistance to international law enforcement in the quest to support the Bitzlato investigation. Currently, it is unclear whether the trading platform's financial dealings with Bitzlato are under judicial review.

The news has been met with a downturn in crypto markets, as top cryptocurrencies have tumbled in price.


Red image of bitzlato logo and falling binance coins

Binance Crypto Exchange Linked to Bitzlato

On 18 January, 2023, US authorities confirmed the arrest of a co-founder and major shareholder of Hong Kong-registered crypto exchange platform Bitzlato for facilitating and harboring money laundering criminals.

A Russian native currently living in China, Anatoly Legkodymov, was arrested in Miami on 17 January, 2022. 

He was booked under a section of the US Patriot Act aimed at preventing money laundering and terrorist financing. His charges included operating an unlicensed money exchange business.

Bitzlato is a crypto exchange platform [based out of Hong Kong](/news/article/is-crypto-legal-in-hong-kong) with global operations. The platform allegedly exchanged more than £500 million in cryptocurrency on the Hydra Market. The Hydra Market was the largest darknet marketplace in the world before it was shut down in April 2022. The crypto exchange co-founder also allegedly received £12 million in ransomware proceeds.

## Bitzlato labeled primary money-laundering concern 

The US FinCEN (Treasury's Financial Crimes Enforcement Network) previously named the crypto giant a "primary money-laundering concern".

This is among the most serious sanctions from the US anti-crime team as it usually works by cutting the target off financially around the globe.

The platform allowed users to sign up and operate by providing little to no personal information, making it a haven for criminals. It also allegedly posted ads on Russian-language sites telling users that they can sign up and start using the site by only providing their email address and nothing else. The company made it exceptionally easy for users to buy crypto for cash for a negligible fee and practically no personal information.

The seizure of Bitzlato does not come as a surprise. US law enforcement has been hard at work because the crypto community has been under a microscope since last year following [scandals in the industry](/news/article/how-to-avoid-crypto-scams). US authorities charged [FTX CEO Sam Bankman Fried in 2022 with eight counts of fraud](https://www.bbc.com/news/business-64036615) after the exchange filed for bankruptcy.

The operations of the Hong Kong-based exchange platform Bitzlato have been seized until the trial.


Latest Moni

Latest Bitzlato news

Read the latest Bitzlato news at Moni Talks.

Binance Crypto Exchange Linked to Bitzlato

Bitzlato co-founder charged with laundering over £500m