Bitzlato, a cryptocurrency exchange well known to the Russian-speaking segment of the market, was taken down as part of “international cryptocurrency enforcement actions,” the US Department of Justice announced. The platform’s Russian owner was arrested on suspicion of fraudulent money transfers; Bitzlato claimed it had been hacked.
U.S., France hit cryptocurrency exchange Bitzlato; Russian co-founder detained in Miami
U.S. authorities have arrested Anatoly Legkodymov, a resident of China, on charges that his Hong Kong-registered crypto trading platform, Bitzlato, processed hundreds of millions of dollars worth of illicit funds. The Russian, co-founder and majority owner of the exchange, was arrested by three e FBI in Miami on Tuesday, a senior U.S. Department of Justice (DOJ) official said.
At a press conference, Deputy Attorney General Lisa Monaco said DOJ agents and prosecutors worked with the U.S. Treasury Department and French law enforcement to “disrupt the Bitzlato and ransomware attacks, a China-based cryptocurrency exchange notorious for laundering criminal proceeds from the darknet.” He stated. He also stated.
Today, the DOJ dealt a major blow to the crypto-crime ecosystem.
Legkodymov is accused of operating the exchange as a “high-tech financial hub that, in his own words, caters to ‘known fraudsters,'” Monaco explained. She further alleged that Bitzurat was a “significant source of funding” for Hydra, the largest darknet marketplace with Russian roots, which was shut down by German police last April with the support of U.S. agencies.
According to the DOJ, Hydra buyers funded illicit purchases from crypto accounts hosted on Bitzlato, while sellers of drugs, stolen financial information, and hacking tools sent criminal proceeds to the exchange accounts, and between 2018 and 2022 direct and indirect transfers totaling $700 million.
The deputy attorney general also stated that participants in the operation engaged in a “coordinated campaign to disrupt.” This included law enforcement in a number of European countries and the seizure of Bitzlato’s servers. Reuters reports that by noon Wednesday, Bitzlato’s website had been replaced by a notice that the service had been seized by French authorities.
Crypto exchange Bitzlato claims to have been hacked and stops withdrawals
Also on Wednesday, Bitzlato’s operators announced via telegram that the exchange had suffered a hacking attack. They informed users that withdrawals had been suspended indefinitely and asked them to refrain from sending coins to the platform until the problem was resolved.
“Our service was hacked and some of our funds were withdrawn from the service.” The Exchange noted that the attackers were able to steal a portion of the funds without identifying the amount. In a second message, it also attempted to assure customers that no assets had been lost, stating.
We guarantee refunds to all victims.
“As a security measure, we have disabled the service and we ask you not to refill the wallets of our service until the work is restored,” Bitzlato reiterated, adding that its team is working on the issue. At the time of this writing, the platform is still offline.
The hack supposedly took place on Tuesday after the exchange announced maintenance scheduled for Thursday, January 19, “aimed at improving the operation of the service and its security.” The notice informed users that it would suspend trading between 5 and 9 a.m. Moscow time.
“We strongly recommend that you organize your work activities in consideration of the amendments in order to avoid unpleasant situations,” the platform advised customers, informing them that deposits, withdrawals and transactions will be disabled.
Bitzlato was launched in 2016 under the name Changebot and later became a cryptocurrency exchange offering peer-to-peer (P2P) trading services. It lists pairs of the Russian Ruble andBTC, ETH, USDTand other digital coins that can be bought and sold with various payment methods.
Online crypto exchanges like Bitzlato are popular in Russia and the former Soviet bloc, but are often targeted by authorities throughout the Commonwealth of Independent States, as crypto assets are not yet fully regulated in this region. Recently, press reports revealed that Belarusian judicial authorities imposed a hefty fine on the operator of one such platform.
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