Russia-linked cryptocurrency exchange Bitzlato has managed to partially restore access to user funds despite being officially seized by European authorities.
Bitzlato has allowed its users to withdraw up to 50% of assets stuck on the platform due to enforcement by the United States and Europol, the company announced on its Telegram channel on March 20.
According to the statement, Bitzlato users can now recover half of their wealth using Telegram bot @bz_phoenix_bot, which allows users to move assets from web Bitzlato account to an external wallet or exchange.
All Bitzlato withdrawals are processed in Bitcoin (BTC) as the platform converted all user altcoin holdings to BTC when the service shut down on Jan. 18. According to the firm, Bitzlato had to convert user funds to Bitcoin due to technical difficulties related to the maintenance of several altcoins after Bitzlato was seized.
In a public Bitzlato chat, some suspected Bitzlato users said they were able to offload their bitcoins to exchanges like ByBit and Binance. Some alleged Bitzlato customers also reportedly used software wallets like Trust Wallet and ViaBtc, as well as hardware wallets like Ledger, to withdraw their bitcoin.
Bitzlato’s 50 percent payout option follows the previously announced roadmap to restore user access to the platform and resume operations. According to the plan, Bitzlato will continue its work to restore the platform and intends to provide a peer-to-peer (P2P) cryptocurrency trading service by early April 2023.
A number of users have preferred not to withdraw 50% of their assets from Bitzlato this time, opting to wait for the exchange to resume P2P trading. Once the P2P platform is restored, users will be able to access all the features previously available, a spokesperson for Bitzlato told Cointelegraph.
Bitzlato users shouldn’t expect to recover the remaining 50% of their wealth once the P2P exchange launches, the representative said.
“There will be no second half once the P2P opens as these are two separate issues and processes,” the Bitzlato spokesperson explained.
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According to the representative, the issue with customer funds is not yet resolved, but Bitzlato plans to return the funds either by restoring access to confiscated funds from Europol, or from the company’s own funds. The spokesman said.
“Lawyers have challenged the French government’s decision and if the outcome is positive, the funds will be returned […] If it fails, users will have to wait for the company to earn enough to recoup the losses.”
As previously reported, the US Department of Justice announced a major international crypto enforcement lawsuit against Bitzlato in mid-January. Europol then reported that European authorities seized more than $19 million in crypto from Bitzlato as part of the enforcement efforts.
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