Bitzlato, the beleaguered cryptocurrency exchange, has taken drastic measures by suspending withdrawals and technical support for its users, citing this action as a “temporary measure.”
This decision comes in the wake of recent developments that have rocked the exchange, including the co-founder and former CEO, Anatoly Legkodymov, pleading guilty to criminal charges and agreeing to dissolve the platform.
In a communication shared on Telegram, Bitzlato’s team explained the reasons behind the suspension, stating that it is necessary to prepare for the upcoming court proceedings in France related to the seizure of user assets.
Despite this challenging situation, the team conveyed their determination and optimism regarding the matter, assuring users that they are actively addressing the issue.
The message also revealed that the exchange has successfully closed 70 percent of the outstanding balances it held at the time of the service interruption.
This move may provide some relief to affected users, as it indicates progress in resolving the situation.
Bitzlato first gained notoriety earlier in the year when US authorities arrested Anatoly Legkodymov on charges of facilitating the processing of more than $700 million in illicit funds through cryptocurrency transactions for darknet criminals between 2018 and 2022.
The collaborative efforts of US and French authorities led to the crackdown on the exchange.
The exchange, registered in Hong Kong, notably served as the primary counterparty for cryptocurrency transactions on Hydra Market, a darknet marketplace for illegal narcotics and other contraband, which was shut down by US and German authorities in April 2022.
Bitzlato’s woes extended further, as it was found to have received more than $15 million in ransomware proceeds. Following Legkodymov’s arrest, French authorities promptly blocked the exchange’s website.
In addition to the United States and France, authorities in Spain, Portugal, and Cyprus, along with the European Union Agency for Law Enforcement Cooperation (Europol), collaborated in the extensive crackdown against the exchange.
As part of his guilty plea, Anatoly Legkodymov has agreed to dissolve Bitzlato and forfeit $23 million in cryptocurrency.
The United States Attorney for the Eastern District of New York, Breon Peace, commented on the plea, affirming that Legkodymov was well aware that Bitzlato had become a conduit for criminals seeking to exploit lax controls over illicit financial transactions.
The exchange’s future remains uncertain as it navigates legal challenges and attempts to address the concerns of its users amidst ongoing investigations.