The cryptocurrency exchange, Bitzlato, allowed clients to withdraw up to 50% of their stuck bitcoin funds on the spot.
The US Department of Justice (DOJ) shut down the company in January for allegedly processing more than $700 million in illegal funds and arrested its founder, Anatoly Legkodymov.
grant some access
The company revealed that users could withdraw a maximum of 50% of their assets previously frozen by the authorities. Those willing to do so should use the Telegram bot, bz_phoenix_bot, to move funds to another exchange or an external wallet.
Every withdrawal is processed in bitcoin since the company converted all altcoin holdings to BTC when the US Department of Justice shut down the platform nearly two months ago.
The company further urged customers to hit the “Support Bitzlato” button when using the feature, which could help the team “restore justice” and grant access to the remaining 50% of assets.
Some users have already withdrawn their holdings, while others kept they were able to move their stash to other exchanges, such as Bybit. On the other hand, some prefer to keep their properties on Bitzlato, hoping that the entity will provide a service for peer-to-peer (P2P) cryptocurrency trading in early April 2023.
The platform hit the headlines in mid-January after the US Department of Justice, with the support of Europol, halted its operations. According to the officials’ charges, it was a hotbed of criminal activity, processing more than 700 million dollars in illicit transactions.
The DOJ also arrested Bitzlato founder Anatoly Legkodymov over allegations that he ran an unlicensed money transfer business. Prosecutors insisted that the exchange failed to implement necessary anti-money laundering standards and required only minimal authorization from clients.
“The result was that Bitzlato became a safe haven for criminals such as drug dealers and ransomware groups. They knew that when the police traced their funds to Bitzlato, Bitzlato would not be able to reveal the true identities of its users,” said Breon Peace, a federal prosecutor in Brooklyn.
The Hydra Market Connection
Various sources indicated that Russia-linked Bitzlato facilitated a substantial sum of illicit cryptocurrency transactions for Hydra Market users. The latter was a Dark Web marketplace involved in drug trafficking, money laundering, and other criminal activities.
German law enforcement officers shut down their servers in April 2022 and seized 543 BTC, worth approximately $25 million at the time.
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