Global cryptocurrency exchange Binance handled about $346 million in bitcoin for the controversial crypto currency exchange Bitzlato.
According to a Reuters report, Binance is one of Bitzlato’s top three counterparties in terms of bitcoin received between May 2018 and September 2022, as per the US Treasury’s Financial Crimes Enforcement Network (FinCEN).
In an email, a representative for Binance said that the company had “provided substantial assistance” to foreign law authorities in support of their Bitzlato investigation.
While refusing to provide specifics of its interactions with Bitzlato or the nature of its collaboration with such organizations, the representative noted that Binance is working collaboratively with law authorities.
According to a former U.S. banking regulator and a former law enforcement official, the Justice Department and U.S. Treasury will pay close attention to Binance’s compliance checks with Bitzlato because it is one of the top counterparties.
Between May 2018 and Bitzlato’s shutdown last week, Binance processed approximately 20,000 bitcoin, worth $345.8 million at the time of the transaction, spanning almost 205,000 transactions.
According to Chainalysis, at that time, Bitzlato sent Bitcoin worth about $175 million to Binance, making Binance its biggest receiving counterparty. FinCEN even stated that Binance was the only major crypto exchange among Bitzlato’s top counterparties.
In order to curb financial crime, Binance announced in August 2021 that it will require users to provide identity. Roughly $90 million of the total transfers related to Bitzlato occurred after that date.
Last week, Bitzlato founder Anatoly Legkodymov was arrested in Miami for laundering $700 million. The case is the “most significant enforcement effort” against an exchange since the National Cryptocurrency Enforcement Team was established in October 2021.
The biggest and longest-running darknet market in the world, Hydra Market (Hydra) was Bitzlato’s biggest counterparty in crypto transactions. A small exchange LocalBitcoins and a crypto investment website Finiko were the other counterparties of Bitzlato.
