The Spanish Civil Guard detained three citizens of Russia and Ukraine. They are charged with participation in illegal operations on the Bitzlato exchange. According to a press release from Europol, 46% of transactions on the platform were somehow related to illegal activities, including cyber fraud, cyber extortion, child abuse and sanctions circumvention. According to investigators, the amount could reach 1 billion euros.
It is also reported that during the entire existence of the exchange received only about 2 billion euros. In comparison, market leader Binance sees this kind of traffic in a few hours. So Bitzlato is a small fish? Alena Narignani, CEO of Crypto-A, comments:
“As an exchange, Bitzlato has never been included in any top cryptocurrency exchanges rated by CoinMarketCap or any other aggregators. But for the Russian market, for the Russian speaker, it is even more correct to say that this is a really significant platform. It was very popular in the Russian-speaking market due to the fact that it was very convenient. Bitzlato had a very convenient bot in Telegram, which allowed you to exchange cryptocurrency on a card directly in the messenger. That is, without leaving Telegram, using the P2P exchanger aggregator, you could choose the most favorable rate offered by the other party and make a deal. All this went very quickly, within 15 minutes. They had a very serious system for protecting the interests of users, there was confidence that you would not be deceived, if a dispute arises, they sort it out. And due to this, this site was really very popular in the Russian-speaking market.”
The founder and, according to Europol, the “chief administrator” of Bitzlato, Anatoly Legkodymov, was arrested in Miami in mid-January. Now, according to Anadolu, the police carried out simultaneous raids in Spain, Portugal, France, the United States and Cyprus. More than 18 million euros in assets are reported to have been seized, including cryptocurrencies, cash, cars, smartphones and other electronics.
Three people were arrested on the Iberian Peninsula – the general, financial and marketing director of Bitzlato, another arrest was made in Cyprus. All defendants have Russian or Ukrainian citizenship. The charges are not reported, but the general line is clear: the management of the exchange is suspected of “facilitating money laundering.”
Can we assume that the collapse of Bitzlato marks a new trend in the crypto market: that now sites will no longer be able to do the Know Your Client procedure just for show? The opinion of Grigory Klumov, the founder of the platform of stable cryptocurrencies Stasis.net:
“This is not about trends in the crypto market, but about the fact that there are people who believe that ignorance of the laws exempts from responsibility. Our platform has spent 500 million euros equivalent of crypto transactions. And the only difference is that we did it as legally as possible, we have a legal opinion, that is, a legal opinion that it can be done. Naturally, clients were identified according to all existing laws of the jurisdictions in which we operate. We even passed an external audit for compliance with anti-money laundering legislation. This is when an external auditor comes in, raises the transaction database, takes random transactions from there and requires documentation, which we were guided by when approving this transaction through our platform. Obviously, the Bitzlato exchange did not do this. And it doesn’t matter how many billions there were – half a billion or a hundred – the main thing is that there were several times. More than once, there has been a breach of remote client identification and anti-money laundering legislation.”
This week Bitzlato co-owner Anton Shkurenko gave an interview to Satoshkin Live YouTube channel. According to the businessman, the exchange has always strived to comply with KYC and AML requirements under European laws. Shkurenko expressed hope that the charges would soon be dropped. Now Bitzlato is looking for a data center contractor in Russia to restart the service. After that, the exchange promises to return at least part of the funds to users: according to the entrepreneur, 50% of the funds on Bitzlato wallets can be withdrawn on the first day of the service.