Binance Alleged to Have Had Ties to Bitzlato, a Now Defunct (Criminal) Exchange

Just yesterday, Live Bitcoin News put out an article talking about a Russian crypto executive running an unlicensed money transmitting business. Known as Bitzlato, the crypto exchange was an unregistered trading platform for those who sought to use digital assets to obtain illicit products. The exchange also did very little to obtain necessary information about its clients and customers. Now, it looks like Binance – the world’s largest and most popular digital currency trading platform – has been implicated in playing a major role in the operations of the firm.

Binance May Have Been on Bitzlato’s Roster

Binance has been at the center of several controversies as of late. For example, the company was initially slated to purchase FTX after Sam Bankman-Fried said that his company was in quick need of cash. However, the larger exchange backed out soon after, claiming that the problems FTX was dealing with were too big for it to handle.

This would all be fine and dandy except for one thing… Not long before FTX entered bankruptcy, Changpeng Zhao – the man behind Binance – liquidated several FTT units (FTT is the native token of the FTX exchange). In addition, he said that Binance would no longer be providing support for the asset. It’s almost as if he knew FTX would be crashing and burning soon, and he wanted to prepare himself before any wealth could be lost.

While there’s no way to know if this is true, the situation causes traders to raise their eyebrows in suspicion. Now, it appears Binance was a top receiver of BTC from Bitzlato, which was recently shut down by the Department of Justice (DOJ). A report says Binance worked with the company for approximately two years and received more BTC than any of the company’s other counterparts.

A spokesperson for Binance issued the following statement regarding the company’s alleged ties to the China-based Bitzlato:

Binance is pleased to have provided substantial assistance to international law enforcement partners in support of this investigation. This exemplifies Binance’s commitment to working collaboratively with law enforcement partners worldwide.

FinCEN – a Treasury department unit – explained that more than two thirds of the transactions associated with Bitzlato were scam-related or were part of larger criminal schemes. The agency said:

Approximately two-thirds of Bitzlato’s top receiving and sending counterparties are associated with darknet markets or scams.

So Much Criminal Activity!

Deputy Treasury Secretary Wally Adeyemo was also quick to ring in with his two cents, saying:

Bitzlato was particularly active in facilitating illicit activity, but it is ultimately part of a larger ecosystem of cybercriminals that are allowed to operate with impunity within Russia.

Not long ago, it was implied that Binance was involved in helping Iran utilize crypto transactions as a means of avoiding U.S. sanctions. It is estimated that Iran took part in $8 billion worth of trades.

Tags: Binance, Bitzlato, FTX