According to a number of users, the biggest cryptocurrency exchange in the world, Binance, has been Closing down numerous accounts covertly in connection with the Bitzlato investigation.
This comes shortly after the founder of Bitzlato, Anatoly Legkodymov, was arrested by the Department of Justice.
On January 18, 2023, several Russian-speaking Binance customers complained about restricted accounts and being unable to withdraw money from the exchange. The affected individuals complained about the problems in a Telegram group conversation, claiming that the accounts had been abruptly shut off.
The group’s members, who number over 1,000 at this point, immediately connected these restrictions to the US Department of Justice’s punitive action against the crypto company Bitzlato. Binance was classified among the top Bitcoin counterparties of Bitzlato by the U.S. Financial Crimes Enforcement Network as well.
A large number of discussion participants have publicly acknowledged using Bitzlato, including incoming and outgoing transactions between Bitzlato and Binance accounts. Others who were impacted by the action against Bitzlato expressed fury and perplexity.
Notifying the community of his situation, a user stated that “though I haven’t been banned anywhere yet, I just lost some on BTC-e, Wex, now it’s Bitzlato, but I consider these bans to be lawlessness.”
Expressing their dissatisfaction with the blockages, a user expressed: “blockages in relation to Bitzlato are nonsense. They haven’t been proven guilty so far as there are only accusations, so how can this money be dirty?”
In an interview with Cointelegraph and Binance’s spokesperson, it was revealed the recent suspensions were indeed connected to Bitzlato. The representative explained, “Last week, our compliance and investigations team, in relation to the Bitzlato case, suspended some users’ accounts from several countries including in Eastern Europe and the CIS.”
The spokesperson however added that this suspension is temporary with more than 90% of the affected accounts unlocked, and their owners have been notified about this. The remaining affected users who still have their accounts suspended have been provided with relevant law enforcement contact information for them to reach out to.
Bitzlato is a cryptocurrency platform that allows users to trade crypto via an exchange and peer-to-peer services. The platform is known to have significant activities in Russia, presumably out of Moscow’s Federation Tower Towerr.
The U.S. government has made claims that Bitzlato operated without following proper Know Your Customer protocols, which contributed to it turning into a sanctuary for criminal proceeds and funds intended to fund criminal activities.
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