Binance Named Counterparty of Platform in Illegal Funds Case

Suvashree Ghosh and Olga Kharif, Bloomberg News

The logo for Binance Coin stands on display during the Dubai Crypto Expo at the Festival Arena in Dubai, United Arab Emirates, on Wednesday, Oct. 5, 2022. An already bad year for cryptocurrencies took another turn for the worse after a $568 million hack affecting Binance Coin became the latest in a string of security incidents to buffet digital assets. Photographer: Christopher Pike/Bloomberg , Bloomberg

(Bloomberg) -- Binance Holdings Ltd., the world’s largest crypto exchange, was named among the key counterparties to digital-asset platform Bitzlato, which has been accused of processing millions of dollars in illegal funds.

Bitzlato’s Russian founder Anatoly Legkodymov was arrested Tuesday in Miami on charges alleging the masking of proceeds from illegal gambling and drug deals valued at more than $700 million.

Read more: Russian Charged by US With Running $700 Million Crypto Scheme

Binance “provided substantial assistance to international law enforcement partners in support of this investigation,” a Binance spokesperson wrote in a statement. “This exemplifies Binance’s commitment to working collaboratively with law enforcement partners worldwide,” the spokesperson added.

The Financial Crimes Enforcement Network of the Department of the Treasury wrote in an order that “approximately two-thirds of Bitzlato’s top receiving and sending counterparties are associated with darknet markets or scams.”

It named Binance as the top receiving counterparty by total amount of Bitcoin between May 2018 and September 2022, according to the document. Hydra — a Russia-connected dark net web market — and TheFiniko — a Russia-based scheme — were listed as second and third.

The top three sending counterparties during the same period were Hydra, Local Bitcoins in Finland and TheFiniko, the Treasury Department document showed.

Local Bitcoins didn’t immediately reply to an email for comment sent outside regular business hours.

Bitzlato, a Hong Kong registered entity, has “significant ties to and connections with Russia,” according to the Treasury Department document, which added that the exchange is a “financial institution of primary money laundering concern in connection with Russian illicit finance.”

Bitzlato processed illegal funds including millions of dollars in ransomware gains, according to a Justice Department statement.