Crypto Exchange Bitzlato “Temporarily” Halts Withdrawals

The troubled crypto exchange Bitzlato has suspended withdrawals and technical support to its customers, calling it a “temporary measure.” The suspension occurred weeks after the co-founder and former CEO of the exchange, Anatoly Legkodymov, pled guilty and agreed to dissolve the crypto exchange.

A Deliberate Move or Forced?

“At the moment, we are faced with the need to suspend special balance withdrawals and technical support. This is a temporary measure to prepare for and go through the upcoming court hearings regarding the seizure of user assets in France. We are determined and optimistic about this issue,” the team behind Bitzlato wrote on Telegram.

The message further highlighted that the exchange was “able to close 70 percent of the balance that we had at the time the service was stopped.”

The Troubles of the Exchange

Bitzlato came to the limelight earlier this year when the US authorities arrested Legkodymov and pressed charges against him for processing over $700 million of illicit funds in cryptocurrency for darknet criminals between 2018 and 2022. The US authorities cooperated with their French counterparts to crack down on the exchange.

Registered in Hong Kong, the crypto exchange was the largest counterparty in cryptocurrency transactions of Hydra Market, a darknet marketplace for narcotics and other illicit drugs. The authorities of the US and Germany shuttered Hydra Market in April 2022.

Bitzlato further received more than $15 million from ransomware proceeds. On the same day of Legkodymov’s arrest, the French authorities blocked the crypto exchange’s website. Apart from the US and France, the authorities in Spain, Portugal, and Cyprus, along with the European Union Agency for Law Enforcement Cooperation (Europol), cooperated in the crackdown against the exchange.

Changpeng 'CZ' Zhao could get dragged into this.The Anatoly Legkodymov case is as much about Binance as it is Bitzlato.Keep an eye on this one...@TheDigitalComJB @TheDigitalCom_X #Bitzlato #Binance #crypto https://t.co/uwQCdLJLYF

As a part of the guilty plea earlier this month, Legkodymov agreed to dissolve the exchange and forfeit $23 million in cryptocurrency.

“Legkodymov’s guilty plea today confirms that he was well aware that Bitzlato, his cryptocurrency exchange, was being used like an open turnstile by criminals eager to take advantage of his lax controls over illicit money transactions,” Breon Peace, the United States Attorney for the Eastern District of New York, said earlier.