In a FinCEN order against Bitzlato, Binance is listed as a counterparty.
U.S. investigators accuse Bitzlato Exchange of money laundering $700 million.
In an injunction against the obscure cryptocurrency exchange Bitzlato, which U.S. officials suspect of laundering $700 million, Binance was mentioned as a counterparty.
Why Binance was mentioned as a counterparty?
The Financial Crimes Enforcement Network (FinCen) of the Treasury Department listed Binance as one of the receiving and sending counterparties connected to Bitzlato, making it the largest cryptocurrency exchange by trading volume worldwide (FinCEN).
“Roughly two-thirds of Bitzlato’s top sending and receiving counterparties are connected to frauds or darknet markets. For instance, according to the total amount of BTC received between May 2018 and September 2022, Bitzlato’s top three counterparties by receiving amount were Binance, a VASP [virtual asset service provider], Hydra, a darknet market connected to Russia, and TheFiniko, a purported Ponzi scheme with a base in Russia, the order stated.
The top three sending counterparties during that time were Hydra, Local Bitcoins, and TheFiniko, the order added.
“Binance is happy to have helped international law enforcement partners with this investigation in a significant way. This demonstrates Binance’s dedication to collaborating with law enforcement partners around the world, “a representative for Binance said.
A request for comment from CoinDesk was not immediately answered by Local Bitcoin or TheFiniko.
Bitzlato was formally designated by FinCEN as a “major money-laundering concern,” which often excludes a company from the global financial system.
The decision aims to forbid any domestic financial institution or all covered financial institutions from transmitting cash via Bitzlato because it has played a significant part in managing illegal transactions for Russian ransomware operators.
The order is “the only means of appropriately addressing the threat Bitzlato poses,” and it will take effect on February 1, 2023.
“Bitzlato’s receiving and sending transactional activity shows a significant connection to counterparties associated with other suspected illegal activities, such as darknet markets and scams with ties to and operations in Russia, in addition to receiving ransomware proceeds,” according to the report.
The order is “the only means of appropriately addressing the threat Bitzlato poses,” and it will take effect on February 1, 2023. Anatoly Legkodymov, the founder of Bitzlato from Russia, was detained on Tuesday in Miami.
