Binance blocks some accounts in Bitzlato case: funds are safe

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Cryptocurrency exchange Binance has silently shut down several accounts on the platform in connection with the Bitzlato investigation, according to multiple users.

On January 18, a group of Russian-speaking Binance customers complained about frozen accounts and the inability to withdraw their funds from the exchange. Affected users created a Telegram group chat to report the issues, saying the accounts were blocked without warning.

Members of the group which now has more than 1,000 members were quick to draw parallels between the blockages and the enforcement actions against crypto firm Bitzlato by the United States Department of Justice. The US Financial Crimes Network has also listed Binance among Bitzlato’s top bitcoin (BTC) counterparties.

Many chat members openly admitted to using Bitzlato, including inbound and outbound transactions between Bitzlato and Binance accounts. Some affected users have also expressed outrage and confusion over the action against Bitzlato.

Although I haven’t been banned anywhere yet, I just lost some on BTC-e, Wex, now his Bitzlato, but I consider these bans anarchy, one chat member wrote.

Lockdowns relative to Bitzlato are nonsense. They haven’t been found guilty as long as there are only charges, so how can this money be dirty? another user asked.

A Binance spokesperson told Cointelegraph that the recent suspensions were indeed related to Bitzlato. Last week, our Compliance and Investigations team, in connection with the Bitzlato matter, suspended certain user accounts from several countries, including Eastern Europe and the CIS, the representative said.

The Binances spokesperson pointed out that the majority of the suspensions were temporary, stating:

At present, more than 90% of accounts have been unlocked, users have been informed. All funds are safe. Affected users under the age of 20 have been provided with contact details from the relevant authorities.

The crypto exchange also advised users to check out Binances’ article on multiple reasons why their Binance account might be blocked and what to do in such a situation.

Related: Banking partner Binance SWIFT set to ban USD transfers below $100,000

As mentioned earlier, Bitzlato was a little-known cryptocurrency service that allowed users to trade cryptos through an exchange and peer-to-peer services. The platform is known to maintain significant operations in Russia, allegedly operating from the Federation Tower skyscraper in Moscow.

According to US government allegations, Bitzlato conducted its operations without proper know-your-customer procedures, which helped it become a haven for criminal proceeds and funds intended to be used in criminal activity.

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