US Department of Justice arrests illegal exchange Bitzlato! Deals worth hundreds of millions of dollars with Binance

The U.S. Department of Justice (DOJ) announced on 1/19 that the FBI has arrested a Hong Kong-based exchange, "Bitzlato," for facilitating hundreds of millions of dollars in illegal fund transfers and serving as a key payment channel for the dark web marketplace Hydra.

Binance and Bitzlato Engage in Significant Transactions

However, according to a report by Reuters, the world's largest exchange, Binance, appears to have a certain level of business dealings with Bitzlato. The Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury indicated in a document that based on the amount of Bitcoin received between May 2018 and September 2022, Binance is one of the top three recipients of Bitcoin from Bitzlato, alongside the darknet drug market Hydra and the crypto Ponzi scheme website Finiko.

In response to this, a Binance spokesperson stated via email that they have provided substantial assistance to international law enforcement agencies to aid in the investigation of Bitzlato. However, they did not disclose the details of their transactions with Bitzlato or the nature of their cooperation.

Furthermore, the Reuters report also pointed out that between May 2018 and Bitzlato's closure last week, Binance transferred approximately 20,000 Bitcoins to Bitzlato in about 205,000 transactions, valued at around $345 million based on the exchange rate at that time. During this period, Binance also received around $175 million worth of Bitcoin from Bitzlato.

Currently, the relationship between Binance and Bitzlato remains unclear. However, FinCEN has stated that as of February 1, the U.S. and other financial institutions are prohibited from transferring funds to Bitzlato.