Binance, the world's largest crypto exchange, was named as a counterparty in an order against the little-known cryptocurrency exchange Bitzlato, accused of laundering $700 million by U.S. authorities on Wednesday.
Binance, the world's largest crypto exchange by trading volume, was named as one of the receiving and sending counterparties associated with Bitzlato, according to the order from the Treasury Department's Financial Crimes Enforcement Network (FinCEN).
"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 total amount of BTC received between May 2018 and September 2022, were: (1) Binance, a VASP [virtual asset service provider]; (2) the Russia-connected darknet market Hydra; and (3) the alleged Russia-based Ponzi scheme “TheFiniko,” the order said.
During the same period, the top three sending counterparties were Hydra, Local Bitcoins and TheFiniko, the order added.
"Binance is pleased to have 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," a Binance spokesperson said.
Local Bitcoin and TheFiniko did not immediately respond to a request for comment from CoinDesk.
FinCEN formally labeled Bitzlato a “primary money-laundering concern,” that usually cuts off a business from the global financial system.
The order seeks to prohibit the transmittal of funds involving Bitzlato by any domestic financial institution or all covered financial institutions as it has had a key role in handling illicit transactions for ransomware actors in Russia.
"In addition to receiving ransomware proceeds, Bitzlato’s receiving and sending transactional activity shows a significant connection to counterparties associated with other suspected illicit activities, such as darknet markets and scams with ties to and operations in Russia."
The order, effective, Feb. 1, 2023, "to ensure orderly implementation" is "the only means of adequately addressing the threat Bitzlato poses."
Bitzlato's Russian founder, Anatoly Legkodymov, was arrested in Miami on Tuesday.
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