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Binance Part of Countersuit to Bitzlato Criminal Case

by BSCN

January 19, 2023

Bitzlato was subject to a major DOJ announcement this week and is the center of ongoing investigations into money laundering and other financial crimes.

Binance Joins Counterparty to Bitzlato

Binance was included as a counterparty in an imposition filed by the Financial Crimes Enforcement Network (FinCen) under the US Department of Treasury against Bitzlato, a digital finance institution charged with money laundering and other financial crimes.

Binance was named by FinCen as one of the top receiving and sending counterparties of bitcoin connected to Bitzlato, according to the imposition issued on January 18. FinCen also named Hydra, a major darknet marketplace from Russia, and a Russian-connected Ponzi scheme as counterparties. Bitzlato is accused of being responsible for over $700 million in financial fraud.

“Approximately two-thirds of Bitzlato’s top receiving and sending counterparties are associated with darknet markets or scams,” reads the imposition. “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; (2) the Russia-connected darknet market Hydra; and (3) the alleged Russia-based Ponzi scheme “TheFiniko.”

On Wednesday, Bitzlato was the subject of a major announcement from the US Department of Justice (DOJ). The DOJ arrested the CoFounder of Bitzlato and revealed a widespread investigation into the company that included an international support system.

The imposition will prohibit the transfer of funds involving any domestic or covered international institutions through Bitzlato especially considering its connections to Russia. A Binance spokesperson confirmed to CoinDesk that the exchange “provided substantial assistance to international law enforcement partners in support of this investigation.”

The order placed down in the imposition will be effective February 1.

What is Binance:

Binance positions itself as the world’s leading blockchain ecosystem and crypto-asset infrastructure provider with a financial product suite that includes the largest digital asset exchange by volume. The Binance platform aims to increase the freedom of money for users and features a comprehensive portfolio of crypto-asset products and offerings, including trading and finance, education, data and research, social good, investment and incubation, decentralization, and infrastructure solutions.