The United States Financial Crimes Enforcement Network (FinCEN), which is a division of the Department of the Treasury, has asserted that there is a connection between Binance and the unlawful cryptocurrency site Bitzlato.
In an order that was made public on the 18th of January, FinCEN noted that the cryptocurrency exchange known as Binance was among the “top three receiving counterparties” of Bitzlato when it came to the transactions involving Bitcoin (BTC).
Binance was reportedly one of the largest counterparties that received Bitcoin from Bitzlato between May 2018 and September 2022, as stated by the regulator.
FinCEN observed that other counterparties included the darknet market Hydra, which had connections to Russia, and the suspected Ponzi scam operating in Russia under the name “Finiko.”
However, FinCEN did not include Binance in their list of the top three sending counterparties in the order.
According to the paper, the three companies Hydra, the Finland-based exchange LocalBitcoins, and Finiko were the most significant contributors of Bitcoin to Bitzlato between May 2018 and September 2022. According to what FinCEN said in the order, about two thirds of Bitzlato’s top receiving and sending counterparties are linked with darknet marketplaces or frauds.
The agency said that between 2019 and 2021, Bitzlato collected cryptocurrency worth a total of $406 million via frauds, $224 million from darknet marketplaces, and $9 million from ransomware perpetrators.
The disclosure comes at a time when many agencies in the United States have begun serious enforcement action against Bitzlato. These authorities accuse the company of engaging in money laundering and allegedly enabling the circumvention of sanctions against Russia.
Anatoly Legkodymov, the creator of Bitzlato, was taken into custody by the Federal Bureau of Investigation on January 17 in Miami as part of the ongoing investigation into the company.
Bitzlato was a cryptocurrency service that wasn’t very well recognised, in contrast to prominent cryptocurrency exchanges like Binance and Coinbase.
The platform is said to have been established in 2016, and it had an office in the Federation Tower skyscraper in Moscow, where it processed transactions of at least one hundred thousand dollars.
The fact that Binance was allegedly involved in the Bitzlato case gives rise to certain worries about the activities of the exchange as well as possible relations with Russia.
As was previously reported, Binance was one of the exchanges that made the decision to keep serving non-sanctioned Russians after the adoption of the eighth sanctions package by the European Union against the nation.