The United States Financial Crimes Enforcement Network (FinCEN), an office of the Treasury Department, has argued that Binance is linked to the illegal cryptocurrency platform Bitzlato.
In an order published on Jan. 18, FinCEN stated that cryptocurrency exchange Binance is among Bitzlato’s “top three counterparties” for Bitcoin (BTC) transactions.
According to the agency, Binance was among the largest counterparties to receive bitcoin from Bitzlato between May 2018 and September 2022. Other such counterparties included the Russia-linked dark web market Hydra and the supposedly Russia-based Ponzi scheme known as “TheFiniko,” FinCEN noted.
On the other hand, FinCEN did not mention Binance as the top three sending counterparties in the order. According to the document, the top bitcoin senders to Bitzlato between May 2018 and September 2022 were Hydra, Finland-based exchange LocalBitcoins, and TheFiniko.
“About two-thirds of Bitzlato’s top receiving and transmitting partners are associated with dark web markets or fraud,” FinCEN wrote in the order. Between 2019 and 2021, Bitzlato received $206 million worth of crypto from darknet markets, $224 million from scams, and $9 million from ransomware attackers, the agency found.
The news comes amid multiple US agencies launching extensive enforcement actions against Bitzlato, accusing the company of money laundering and allegedly facilitating the evasion of sanctions against Russia. As part of the Bitzlato case, the Federal Bureau of Investigation arrested Bitzlato founder Anatoly Legkodymov on January 17 in Miami.
Unlike major crypto exchanges like Binance or Coinbase, Bitzlato was a little-known cryptocurrency service. Founded in 2016, the platform reportedly has an office in the Federation Tower skyscraper in Moscow, where it accepted transactions of $100,000 or more.
Binance’s alleged involvement in Bitzlato’s case appears to raise some concerns about the exchange’s operations and possible ties to Russia. As previously reported, Binance was among the exchanges that opted to continue serving unsanctioned Russians after the European Union passed the eighth package of sanctions against the country.
Related: Binance registers as a virtual asset service provider in Poland
Regarding Cointelegraph’s request for comment regarding FinCEN’s reference to Binance in the Bitzlato case, a Binance spokesperson said the company had been cooperating with regulators, stating:
“Binance is pleased to have provided significant assistance to international law enforcement partners in this investigation. This is an example of Binance’s commitment to working with law enforcement partners worldwide.”
FinCEN did not immediately respond to Cointelegraph’s request for comment.
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