Arrests of the founders of the Bitzlato exchange continue
According to a report from the Turkish news agency Anadolu on February 2nd, Spanish authorities have arrested the CEO of the Hong Kong-based cryptocurrency exchange Bitzlato, as well as the heads of sales and marketing. In total, six individuals from Russia and Ukraine, associated with the exchange, were arrested with the joint efforts of law enforcement agencies from France, Portugal, Cyprus, and the United States.
According to the Spanish police, the anonymity of the exchange made it a preferred platform for criminal organizations seeking to launder money through cryptocurrencies. Authorities seized digital assets worth 18 million euros (approximately 19.8 million dollars), luxury cars, cash, smartphones, and other items related to the investigation, and also blocked more than 100 exchange accounts.
Funds held in Bitzlato wallets may be withdrawn when the exchange resumes its operations, after investigators seized approximately 35% of users' funds stored in the exchange's hot wallets. In response to this, the CEO mentioned that the new Bitzlato will be based in Russia and "beyond the reach of law enforcement agencies."
On January 18th, the U.S. Department of Justice filed a lawsuit against Bitzlato, alleging that the exchange's failure to comply with "Know Your Customer" and anti-money laundering rules helped cybercriminals launder over $700 million through Bitzlato. On the same day, Bitzlato's websites were shut down, and a portion of the exchange's funds was seized by the police. The co-founder, Anatoly Legkodymov, a Russian citizen residing in China, was arrested in Miami on or around the same day.