Bitzlato is preparing to resume operations following the government shutdown

Bitzlato is preparing to resume operations following the government shutdown

Two weeks ago, a little-known crypto exchange called Bitzlato was shut down in a raid coordinated by Europol and led by French and American authorities.

The company founder now assumes that operations will resume soon.

A coordinated effort

The sting operation was carried out in the two countries mentioned above, as well as in Portugal, Spain and Cyprus, where the company's system administrator was arrested (and subsequently released).

According to Europol, 46% of all transactions on Bitzlato had ties to criminal activity, with over 1.5 million BTC between the exchange and the now-defunct dark web platform Hydramarket.

“The analysis found that about 46% of the assets exchanged through Bitzlato, worth around 1 billion euros, were linked to criminal activity. (…) Research showed that 1.5 million BTC transactions were made directly between Bitzlato users and the Hydramarket, which was shut down in April 2022.”

The platforms' management team faced money laundering charges from US authorities, accusing them of laundering around $700 million for OFAC-centric agencies.

Bitzlato denied the allegations and the platform's founder, previously imprisoned in Miami, was released and declared his intention to bring the platform back online shortly.

Rushed operation

According to Anatoly Legkodymov, the platform's founder, the raid was carried out in a hurry as the platform intended to move to the jurisdiction of the Russian Federation. Since the founder is already around two weeks after the raid, it is likely that the operation was carried out without sufficient evidence to convict the platform's management.

In the interview with Legkodymov, he stated that a hot wallet containing about 35% of users' funds was actually seized by the authorities - most likely in France, where a majority of Bitzlato's servers were located. However, according to Legkodymov, the hot wallet has been coded to be useless to the authorities and the funds it contains will reportedly be returned to Bitzlato shortly.

Legkodymov did not confirm the exact date when the platform will be back online, only promising that it will be soon. He also stated that 50% of users' funds in Bitcoin will be available for withdrawal on the day the platform is operational again. Withdrawals for other cryptocurrencies would resume shortly afterwards.

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