The US Department of Justice (DoJ) on January 18 claimed a major international crypto enforcement action. After such an intriguing announcement, it turned out that international efforts had shut down the crypto exchange Bitzlato.
The majority shareholder and one of the co-founders was arrested in Miami. He is Anatoly Legkodymov (also known as “Anatolii Legkodymov”, “Gandalf”, and “Tolik”), a Russian citizen living in China. Legkodymov is accused of laundering hundreds of millions of dollars.
FinCEN, the financial intelligence unit of the U.S. Treasury Department, has banned all financial institutions from transferring funds and conducting financial transactions with this cryptocurrency exchange.
If you go to the Bitzlato website, you will see a message that law enforcement agencies have arrested the service.
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And shortly before the U.S. authorities’ official announcement, Bitzlato wrote that the service was not working because of hacking.
Many investors and traders reacted to the news with incomprehension. Why did they so loudly proclaim the closure of a crypto exchange that many of them had never even heard of?
It’s not about the size of the exchange itself, but about who it cooperated with and what it specialized in.
“Today marks the elimination of the Hydra-Bitzlato cryptocrime axis. We have also busted the business model of the cyber criminals that Bitzlato supported,” the DoJ representative said.
Even just the announcement caused a stir in the crypto market. Traders and investors began to wonder if this concerns the Binance exchange, or if the US authorities want to ban altcoins.
Following that, the Bitcoin price fell below $21,000, and most of the altcoins began to decrease.
Global conspiracy theories supporters even suggested that the action with the exchange was started only to stop Bitcoin from initial growth.
The co-founder of Frensprotocol, who goes by the nickname Science&SELFHOSTED, claimed that authorities try to create a precedent:
Here are key takeaways from Science&SELFHOSTED’s tweet:
The cryptocurrency exchange Binance is listed as one of the largest partners, according to FinCEN. Between May 2018 and September 2022, the platform received the most bitcoins from Bitzlato.
The second place is taken by Hydra, the largest Russian darknet marketplace, which operated from 2015 to 2022. Last April 5, the German Federal Criminal Police Office reported the liquidation of the organization and the confiscation of bitcoins worth about 23 million euros (at the time, Bitcoin was worth about $40,000). The trading platform had about 17 million registered customers and more than 19,000 sellers.
The alleged Russia-based Ponzi scheme “TheFiniko” came in third place.
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