Weeks after the co-founder of Russia-based crypto exchange Bitzlato consented to cease operations during a court session in Brooklyn, the exchange made a significant announcement. Bitzlato’s team declared that they had to temporarily suspend Bitcoin withdrawal transactions in response to recent developments.
On December 27th, through a Telegram channel post, Bitzlato stated that this measure was merely a temporary precaution as they prepared for upcoming legal proceedings in France concerning seized assets, asserting that users were being readied for this process.
However, on December 6th, Bitzlato’s former CEO, Anatoly Legkodymov, agreed to end all of Bitzlato’s operations and forfeit $23 million worth of crypto assets as part of a criminal complaint addressing the management of an unlicensed crypto exchange.
Anatoly Legkodymov was arrested in January of this year in Miami as part of a raid conducted jointly by the U.S. Department of Justice, the Treasury Department, and French law enforcement, which resulted in the seizure of most of the exchange’s infrastructure, including its website.
Despite the seizure of the platform and its assets, the Bitzlato team managed to partially restore user fund access in March. The firm allowed users to withdraw 50% of their assets through a Telegram bot, and by November, they increased the withdrawal limit to 70% of users’ assets.
U.S. Attorney Breon Peace accused the crypto exchange of being an open turnstile for criminals, while the DOJ claimed it was a significant financial resource for the Hydra darknet market, allowing users to direct funds, including those from ransomware attacks. Since the FTX bankruptcy in 2022, heightened measures continue to be taken against crypto platforms, with legal regulations playing a crucial role in ensuring the security of user funds.