FinCEN Ranks Binance Among Bitzlato’s Top Bitcoin Counterparties

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The US 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 issued Jan. 18, FinCEN said cryptocurrency exchange Binance was among the top three receiving counterparties to Bitzlato in terms of Bitcoin (BTC) transactions.

According to the authority, Binance was one of the largest counterparties that received Bitcoin from Bitzlato between May 2018 and September 2022. Other such counterparties included Hydra, the Russian-connected darknet market, and the system alleged Russian-based Ponzi scheme known as TheFiniko, FinCEN noted.

On the other hand, FinCEN did not mention Binance as the three main issuing counterparties of the order. According to the document, the biggest senders of Bitcoin to Bitzlato between May 2018 and September 2022 were Hydra, Finnish exchange LocalBitcoins, and TheFiniko.

About two-thirds of Bitzlatos’ top receiving and sending counterparties are associated with darknet marketplaces or scams, 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 noted.

The news comes as several US authorities are launching major enforcement actions against Bitzlato, accusing the company of money laundering and allegedly facilitating the evasion of sanctions against Russia. In connection with the case against Bitzlato, 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 had an office in the Federation Tower skyscraper in Moscow, where it accepted transactions of $100,000 or more.

Binance’s alleged involvement in the Bitzlatos case apparently raises concerns about exchange operations and potential 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 set of sanctions against the country.

Related: Binance registers as a virtual asset service provider in Poland

Responding to Cointelegraphs’ request for comment regarding FinCEN’s reference to Binance in the Bitzlatos case, a Binance spokesperson said the company was working with regulators, stating:

“Binance is pleased to have provided substantial assistance to international law enforcement partners in this investigation. This illustrates Binance’s commitment to working collaboratively with law enforcement partners around the world.

FinCEN did not immediately respond to Cointelegraphs’ request for comment.

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