The US Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department, has alleged that Binance is linked to the illegal cryptocurrency exchange Bitzlato.

In an order published on January 18, FinCEN said that cryptocurrency exchange Binance was among Bitzlato’s “top three recipients” in terms of Bitcoin.
BTC

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According to the authority, Binance was among the largest counterparties receiving Bitcoin from Bitzlato between May 2018 and September 2022. Other counterparties include Russia-connected darknet market Hydra and an alleged Russia-based Ponzi scheme known as “TheFiniko,” according to FinCEN.

On the other hand, FinCEN did not mention Binance as the top three senders in the ranking. According to the document, the largest senders of Bitcoin to Bitzlato between May 2018 and September 2022 were Finnish LocalBitcoins exchange Hydra and TheFiniko.

“Almost two-thirds of the counterparties received and sent from Bitzlato are related to darknet markets or scams,” FinCEN wrote in the request. The agency noted that between 2019 and 2021, Bitzlato received $206 million worth of cryptocurrency from darknet markets, $224 million from scams, and $9 million from ransomware attackers.

The news comes amid several US authorities initiating major enforcement action against Bitzlato, accusing the company of money laundering and allegedly facilitating the circumvention of sanctions against Russia. As part of the case against Bitzlato, the FBI arrested Bitzlato founder Anatoly Legkodimov on January 17 in Miami.

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Unlike major cryptocurrency exchanges like Binance or Coinbase, Bitzlato was an unknown cryptocurrency service. Founded in 2016, the platform reportedly has an office in the Federation Tower skyscraper in Moscow, where it has accepted transactions of $100,000 or more.

Binance’s alleged involvement in the Bitzlato case appears to raise some concerns about the exchange’s operations and potential ties to Russia. As previously reported, Binance was among the exchanges that chose to continue serving non-sanctioned Russians after the European Union adopted its eighth sanctions package against the country.

Related: Binance Registers as a Virtual Asset Service Provider in Poland

A Binance spokesperson, addressing Cointelegraph’s request for comment regarding FinCEN’s reference to Binance in the Bitzlato case, said the company is cooperating with regulators, saying:

“Binance is pleased to have provided significant assistance to its international law enforcement partners in support of this investigation. This exemplifies Binance’s commitment to working collaboratively with law enforcement partners around the world.”
FinCEN did not immediately respond to Cointelegraph’s request for comment.

Source: CoinTelegraph

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